CSR in Focus: Research as a CSR Activity Under the Companies Act, 2013 and New CPSE CSR Priorities

In this issue, we cover two important Corporate Social Responsibility (CSR) updates relevant to non-profit organisations. First, we examine whether research can qualify as a CSR activity under the Companies Act, 2013 and second, we highlight the new CSR priority themes identified for Central Public Sector Enterprises (CPSEs) under the Department of Public Enterprises (DPE) Office Memorandum dated 18 June 2026.

Part 1: Can Research be Funded through CSR?

Legal Position

Research can qualify as CSR, provided it falls within the scope of Schedule VII and is not undertaken in the company's ordinary course of business.

Direct Route – Schedule VII, Item (ix)

CSR funding is expressly permitted for:

● STEM research projects funded through specified government bodies.

● Contributions to public-funded universities, IITs, national laboratories, and specified research institutions undertaking SDG-related research.

Liberal Interpretation

As clarified by MCA General Circular No. 21/2014, Schedule VII should be interpreted liberally. Accordingly, research that supports another eligible CSR activity may also qualify, such as:

● Baseline studies for education programmes

● Health research

● Livelihood assessments

● Monitoring and evaluation studies

Key Limitation

Research undertaken as part of the company's own commercial R&D or normal business activities cannot be treated as CSR expenditure.

Key Takeaway

Research may qualify as CSR where it:

● Falls within Schedule VII Item (ix); or

● Supports another Schedule VII activity; and

● Is not part of the company's ordinary business.

Part 2: New CPSE CSR Priorities (DPE Office Memorandum dated 18 June 2026)

The DPE has issued an Office Memorandum dated 18 June 2026 identifying the common CSR themes for all Central Public Sector Enterprises (CPSEs) for FY 2026–27 and FY 2027–28.

Purpose of the Office Memorandum

The Government has identified certain national development priorities and has requested all Central Public Sector (CPSEs) to align their CSR expenditure with these priorities. While CPSEs continue to comply with Section 135 of the Companies Act, 2013 and Schedule VII, they are encouraged to prioritise projects falling under these themes.

Common CSR Themes

1. Nutrition–Strengthening Anganwadi Infrastructure

The Government aims to improve early childhood care and nutrition by upgrading Anganwadi Centres. Central Public Sector Enterprises are encouraged to support:

● Construction of new Anganwadi buildings

● Functional toilets

● Safe drinking water facilities

● Smart TVs for early childhood education

● Boundary walls for safety

● Child-friendly furniture

Objective: Improve nutrition, health, and early childhood education outcomes.

2. Development of Sporting Activities

CPSEs are encouraged to promote sports by supporting:

● Development of sports infrastructure

● Provision of sports equipment

● Access to professional coaching

● Promotion of sports at various levels

● Identification and nurturing of talented sportspersons

Objective: Strengthen India's sporting ecosystem and develop future athletes.

3. Innovative Livelihood Enhancement

The focus is on improving employability and livelihood opportunities through modern infrastructure and technology.

CPSEs may support:

● Equipment for skill development

● Infrastructure for vocational education

● Digital learning tools

● Modern workshops and laboratories

● Smart classrooms and digital learning infrastructure

Additionally, CPSEs are encouraged to:

●  Adopt one or more of the 100 Prime Minister Dhan-Dhaanya Krishi Yojana (PMDDKY) districts, particularly those located within or near their operational areas.

Objective: Enhance skills, employment, and rural economic development.

Directions to Ministries

The Office Memorandum requests all administrative ministries and departments to communicate these themes to the CPSEs under their administrative control for implementation and compliance.

Legal Status

This Office Memorandum does not amend the Companies Act, 2013 or the CSR Rules. Instead:

● It is an administrative direction applicable to Central Public Sector Enterprises

● It guides Central Public Sector Enterprises on the Government's preferred CSR priorities for the specified financial years.

● Central Public Sector Enterprises must still ensure that all CSR projects fall within the permissible activities under Schedule VII of the Companies Act, 2013.

Actionables for Non-profit Organisations

● Review existing programmes to identify whether they align with the three priority CSR themes identified by the DPE.

● Tailor CSR proposals and concept notes for Central Public Sector Enterprises by highlighting how the proposed project contributes to the Government's identified priorities.

● Develop projects focused on Anganwadi infrastructure, sports development, vocational training, digital education, or livelihood enhancement where feasible.

● Map projects to PMDDKY districts or to locations where Central Public Sector Enterprises have operations, as these may be preferred for CSR implementation.

● Engage proactively with Central Public Sector Enterprises that have CSR budgets and whose operations align geographically or thematically with the organisation's work.

● Continue to comply with CSR eligibility requirements, including registration under Form CSR-1 (where applicable), as the Office Memorandum does not alter the legal requirements for receiving CSR funding.

● Update fundraising strategies and CSR outreach materials to reflect alignment with these government-identified priorities for FY 2026–27 and FY 2027–28.