The ministry of corporate affairs (MCA) has already notified the two amendments in the CSR rules on Monday that would allow companies to spend their CSR funds in R&D activities related to new vaccine, drugs and medical devices in three financial years starting from 2020-21.
MCA has amended Schedule VII to include R&D for development of drugs to cure Covid-19 as one of the approved CSR activities for major companies.(BLOOMBERG PHOTO.)
The government has allowed companies to spend their corporate social responsibility (CSR) funds on research and development (R&D) for finding vaccines, medicines and medical equipments to combat the Covid-19 pandemic, two government officials said requesting anonymity.
“The decision was taken in line with the Prime Minister’s directive to encourage new drug discoveries for Covid-19, and a top official of the PMO [Prime Minister’s Office] played an active role in this,” one of the officials said.
The ministry of corporate affairs (MCA) has already notified the two amendments in the CSR rules on Monday that would allow companies to spend their CSR funds in R&D activities related to new vaccine, drugs and medical devices in three financial years starting from 2020-21.
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.
MCA has amended the Schedule VII to include R&D for development of drugs to cure Covid-19 as one of the approved CSR activities, a second official said. The government has specified broad areas of mandatory CSR spending in Schedule VII.
Accordingly, contributions to R&D projects in the field of science, technology, engineering and medicine, funded by the central or state governments or any public sector entity would also be counted under CSR, he added.
Companies can now contribute their CSR funds to public funded universities, Indian Institutes of Technology (IITs), Department of Atomic Energy (DAE), Department of Biotechnology (DBT), Department of Science and Technology (DST) and Department of Pharmaceuticals, he said. They can also participate in institutions under the ministry of ayurveda, yoga and naturopathy, unani, siddha and homoeopathy (AYUSH), he said.
Approved activities under Schedule VII of CSR include eradicating extreme hunger, poverty, promotion of education, promoting gender equality and women’s empowerment as well as reducing the child mortality, improving maternal health and combating diseases. Ensuring environmental sustainability and prompting employment enhancing vocational skills are other activities approved under CSR.
Article Credit: hindustantimes