[News] Firms urged to be ready for India's new CSR law
By Cho Mu-hyun
The Korea Trade-Investment Promotion Agency (KOTRA) has called for local firms doing business in India to prepare for a new law there requiring them to commit to corporate social responsibility (CSR).
According to KOTRA, Wednesday, companies with annual revenue of more than 200 billion won ($175.5 million), net worth of more than 100 billion won or net income exceeding 1 billion won will have to spend at least 2 percent of their net income on CSR activities. The law has passed the lower house in India and is being reviewed by the upper house.
Though CSR initiatives are a global trend, for a government to require it by law is unprecedented, KOTRA said. It expressed concern for local companies that are likely to be unprepared for the change. “We expect the new law will severely burden companies,” KOTRA said in a statement.
The agency said India’s new law was part of the country’s inclusive growth strategy that includes the economic well-being of socially marginalized groups and small businesses. It aims to offset setbacks from its economic policies in the early 1990s that widened the gap between rich and poor.
KOTRA suggested Tata Group, a conglomerate owned by a Persian ethnic group, as an example for Korean firms. The group’s holding company, Tata Son, contributes one-third of dividends to social causes.
The agency strongly suggested companies take part in invigorating regional societies and supporting local partners to continue to succeed in India.