The companies have now also been permitted to use their 2% CSR spends on incubation, IITs, NITs, and national laboratories.
Finance Minister of India Nirmala Sitharaman in a press conference declared that companies now permitted to spend their CSR 2% amount on incubation, IITs, NITs, and national laboratories.
This declaration will provide a more funding option for Indian startups. This announcement is made corporate houses to make incubator fund to support Indian early-stage startups. The move itself is revolutionary for startups activities in India.
Earlier governments make mandatory for companies to spent 2% of their income on social welfare programs. Corporate social responsibility (CSR) mandatory, following an amendment to the Companies Act, 2013 in April 2014. Businesses can invest their profits in areas such as education, poverty, gender equality, and hunger as part of any CSR compliance.
Now these funds available to incubating startups and also spend on higher technology research and development.
The Companies Act requires firms with a net worth of Rs 500 crore, turnover of Rs 1,000 crore or net profit of Rs 5 crore or more, to set aside 2% of their average net profits over the last three years towards ‘approved’ CSR activities.
Reputed national educational institutions like IITs, NITs, and national laboratories are getting benefits from this announcement.
After the mandatory CSR provision in 2014, CSR spending by corporate India has grown prominently. In 2018, businesses donated 47 % higher as compared to the amount in 2014-15, contributing INR 7,536 crores ($1 billion) to CSR initiatives, according to a survey.
Presently India’s spent on higher technology education is comparatively very low, and that negative on impacts innovation and R&D. Now, to meet the goal of digital India and make in India initiative, the government must spend more on higher-quality research-based education.
Now, large tech Indian companies like Infosys, TCS, Wipro, HCL, etc found a more option to spend their CSR funds in incubating startups and provide financial supports in technology development and research in innovative trending technologies.
Big Indian companies like ITC Group, TATA Group, Ultratech, M&M, etc are spending a large amount on CSR initiatives.