Section 135 and Corporate Social Responsibility in India: Analyzing Issues and Suggesting Reforms through a Global Lens

Abstract

With an increasing threat of climate change and social issues, and a strengthening global commitment towards sustainable development, the spotlight has increased on businesses to also play their part for people and planet. India's introduction of Section 135 to the country's Companies Act comes at a crucial time, albeit with criticism. The law, which took effect on 1 April 2014, requires companies earning above a certain profit (5 crore Rupees) to create a Corporate Social Responsibility (CSR) Committee, in charge of formulating, carrying out, and reporting the company's CSR policy. This brings with it a variety of unprecedented challenges, as CSR which originated as a charity act and later developed as a business strategy, is suddenly being forced to be an integral component of business. This research paper aims to explore these problems associated with both the language and the implementation of Section 135. It also discusses whether it is against the very spirit of CSR to mandate it or not. Towards the end, the paper provides suggestions to further amend Section 135 based on previous real-world examples of successes and failures of business-targeted government policies.