9
Section 135, as is the 2% requirement. No other provision in the Companies Act or earlier
Companies Bills used these thresholds. Thus, this is – to the best of our knowledge - the first
time the market learned of a mandatory CSR requirement, the amount involved, and the
applicable thresholds. The news story does not, however, discuss the possibility of requiring a
CSR committee.
The response of Indian business (often known collectively as “India Inc.”) to this
proposal was decidedly negative.
25
In short order, the Confederation of Indian Industry (a very
large trade group) came out against such a rule, as did others.
26
These concerns not only reflected
worries about mandating behavior previously thought to be voluntary, but also concerns that the
CSR mandate might signal instability in the overall liberalization process. Despite the negative
reaction of India Inc., the draft of the proposed CSR requirement put forward by the Standing
Committee of Finance on September 8, 2010 largely tracks the news report of August 6, 2010.
However, it appears to be silent on a penalty for non-compliance, preferring to rely on disclosure
of non-compliance as the remedy.
27
However, by December 24, 2010 news reports indicate that
the Government began to back away from its mandatory CSR requirement and now seemed to be
adopting a “comply-or-explain” rule rather than a mandatory one.
28
This was largely confirmed
by February 10, 2011 when news reports emerged that the MCA was planning to accept the
Standing Committee on Finance’s recommendations on CSR but would rely on a “comply-or-
explain” rule as its enforcement mechanism on the 2% spending requirement.
29
More
commentary on the move away from mandatory CSR appeared on March 14, 2011.
30
Umakanth Varottil, Viability of Mandatory CSR, INDIACORPLAWBLOG, August 7, 2010. Available at:
http://indiacorplaw.blogspot.com/2010/08/viability-of-mandatory-csr.html
.
25
As early as the first news reports on August 6, 2010, Indian firms responded with concerns about mandating CSR.
See M
ONEYCONTROL, CNBC-TV18 News, August 6, 2010, op. cit.
26
See Akhila Vijayaraghavan, Indian Industries Oppose Mandatory CSR Reporting, JUST MEANS, August 16, 2010.
Available at: http://www.justmeans.com/editorials?action=readeditorial&p=26759
. IT CEOs back Premji against
mandatory CSR, TIMES OF INDIA, March 26,
2011. Available at: http://articles.timesofindia.indiatimes.com/2011-03-26/software-services/29191926_1_csr-azim-
premji-corporate-social-responsibility; CSR Spend on Cards for India Inc., INDIAN EXPRESS, February 9, 2011.
Available at: http://www.indianexpress.com/news/2-csr-spend-on-cards-for-india-inc/747860/0.
27
See India Inc faces 2% CSR levy, BUSINESS STANDARD, September 8, 2010. Available at: http://www.business-
standard.com/article/economy-policy/india-inc-faces-2-csr-levy-110090800022_1.html.
28
See It’s Their Business, TIMES OF INDIA, December 24, 2010. Available at:
http://timesofindia.indiatimes.com/edit-page/Its-Their-Business/articleshow/7152001.cms
.
29
See Sidhartha, Companies Law Set to Mandate 2% CSR Spend, TIMES OF INDIA, February 10, 2011. Available at:
http://timesofindia.indiatimes.com/india/Companies-law-set-to-mandate-2-CSR-spend/articleshow/7464529.cms
.
30
See Akhila Vijayaraghavan, India CSR: 2% Spend No Longer Mandatory, Govt Rules, JUST MEANS, March 14,
2011 (noting that people should move away from a “mandatory or not” discussion towards a discussion on how CSR