India’s government has signalled
that it is confident it will secure parliamentary support for its new corporate
responsibility measures despite concerns it could force corporations to make
mandatory CSR contributions.
Expressing optimism that the new
companies bill will be passed in parliament’s budget session, corporate affairs
minister, Veerappa Moily insisted that the central government is not making
corporate social responsibility (CSR) a non-negotiable aspect of corporate
Speaking at a Calcutta Chamber
of Commerce meeting he said: “I am confident that the new companies bill
will be passed in the budget session. The standing committee on finance, headed
by Yashwant Sinha, had already submitted a report.”
The new companies bill was
referred to the standing committee December last year after opposition parties
demanded fresh scrutiny of the measures.
The new bill, which seeks to
replace the Companies Act, 1956, will introduce new provisions, covering areas
such as CSR, class action suits and a fixed term for independent
directors. But despite demands from some, the government has backed away
from making two per cent CSR spending mandatory for corporates.
He added:”There is some
apprehension from the part of the corporate bodies that we made it mandatory
but it is not so. Compliance is not mandatory but reporting is
Currently, the clause suggests that
large companies would have to set aside two percent of their three-year average
profit on CSR activities although failure to comply by the norm can be overcome
without penalty if companies mention the reason in their annual report.