New Delhi, 27 August 2020: The Ministry of Corporate Affairs (MCA) has permitted companies to spend their CSR fund on research and development for finding vaccines, medicines and medical equipment meant to fight with Covid-19 pandemic. The ministry has made it possible for the companies through an amendment to the Companies (Corporate Social Responsibility) Rules, 2014. Now, the firms can claim CSR benefits for such activities until the 2022-2023 financial year, says the notification.
In a notification issued on August 24, the MCA said that Corporates can fund such research under their CSR activities for financial years from 2020-21, 2021-22 and 2022-23.
However, MCA has put certain conditions like, such research and development activities shall be carried out in collaboration with any of the institutes or organisations mentioned in item (ix) of Schedule VII to the Act.
In another notification, the ministry clarifies the organisations mentioned in item (ix) of Schedule VII to the Act. It includes public funded Universities; Indian Institute of Technology (IITs); National Laboratories and autonomous bodies established under Department of Atomic Energy (DAE); Department of Biotechnology (DBT); Department of Science and Technology (DST); Department of Pharmaceuticals; Ministry of Ayurveda, Yoga and Naturopathy, Unani, Siddha and Homoeopathy (AYUSH); Ministry of Electronics and Information Technology and other bodies, namely Defense Research and Development Organisation (DRDO); Indian Council of Agricultural Research (ICAR); Indian Council of Medical Research (ICMR) and Council of Scientific and Industrial Research (CSIR), engaged in conducting research in science, technology, engineering and medicine aimed at promoting Sustainable Development Goals (SDGs).
Other than these organizations, there are many incubators or research and development projects in the field of science, technology, engineering and medicine supported by the government. Those corporates interested in funding the Covid-19 related R&D, can collaborate with these organisations as well, says the notification.
THE MCA HAS ALSO ASKED THAT DETAILS OF SUCH ACTIVITY SHALL BE DISCLOSED SEPARATELY IN THE ANNUAL REPORT ON CSR INCLUDED IN THE BOARD’S REPORT.
It should be noted that the entire world is facing an unprecedented time because of a pandemic which has engulfed lakhs of lives and affected economies. India is also affected badly where daily reported cases of Covid-19 have crossed 75,000 mark.
To fight with the pandemic, the Union government has been taking help of CSR funds being spent by corporate. The central government created the PMCARES fund and asked corporates to donate saying that the fund will be used to fight Covid-19. Now, it wants them to spend on research and development.
The Companies Act requires firms with a net worth of Rs 500 crore or more, or turnover of Rs 1,000 crore or more, or net profit of Rs 5 crore or more in the immediately preceding financial year, to mandatorily spend 2% of average net profit of the preceding three years on CSR. Money earmarked for spending on CSR activities in a year is about Rs 15,000 crore.
