The govt. has decided to allow corporate India to use their mandatory CSR funds spending for investments in publicly-funded incubators and contribute to research efforts in science, technology, medicine, and engineering at major institutions and bodies.
Also read: The Companies Amendment Bill, 2019
- Finance Minister said that the rules governing CSR spending norms have been amended to pave way for greater investment into research, a parameter the country fares poorly on a global basis.
- India’s spending on R&D activities has been far less than 1% of GDP for years, with the private sector chipping in less than half of investments.
- The Companies Act requires firms with a net worth of ₹500 crores, turnover of ₹1,000 crore or net profit of ₹5 crores or more to set aside 2% of their average net profit over the last three years towards ‘approved’ CSR activities.
- This 2% can be spent on incubators funded by Central/State govt. or any agency of a Central or State public sector undertaking.
- They can also make contributions to publicly- funded universities, IITs, national laboratories and autonomous bodies, established under the auspices of ICAR, ICMR, CSIR, DAE, DRDO, DST and Ministry of Electronics and Information Technology.
- But today, there is a need for large investments and large pools of capital to be given to R&D. The govt. is opening up the CSR window also.
- When asked if the government was drawing on CSR funds, the Minister said, IIT receives funds from the govt. but it is an autonomous institution for engineering and technology. If science and tech-related research are being done there, CSR money can also go there.
- Revenue Secretary said that this would enable a private pharmaceutical company, for instance, to undertake research in pharmaceuticals in conjunction with a publicly funded institution like IIT or ICMR and derive benefit from it.