Foreign companies find it difficult to do CSR in India
The new company law in India has a mandate for a few qualified companies to spend 2% of profit on CSR. However, it is proving very difficult for companies with an overseas stakeholding of more than 50% to do just that. Such companies cannot set up CSR foundations because donations from such companies are treated as funds from a “foreign source”.
Thirty years old FCRA norms require the corporate foundation to be registered or have prior permission to receive funds from an MNC. Getting this approval is not easy because of the longstanding suspicion with which overseas funding for non-business activities is regarded.
Industry estimates that the new CSR requirement, legislated under the Companies Act, covers around 8,000 entities and the total CSR expenditure is estimated to be around $2.4 billion. The act does not insist that CSR activities be carried out only through a company’s own foundation. However, most companies prefer to route funds through their own foundations, said a top executive from a pharma MNC.
Source: The Economic Times
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