Government Penalises 30 (Thirty) Companies for CSR Defaults.

Unmesh Gujarathi
Sprouts News Exclusive
Contact: +91 9322755098

The Indian government has penalised 30 companies over the past three financial years up to FY25 for violating Corporate Social Responsibility (CSR) norms. Minister Harsh Malhotra confirmed that actions were taken after examining records and complaints. Sprouts SIT demands full disclosure of defaulting firms to ensure transparency and public accountability.

In a strong regulatory move, the Government of India has penalised 30 companies for failing to comply with the mandatory Corporate Social Responsibility (CSR) expenditure norms as prescribed under the Companies Act, 2013. The action spans the last three financial years, culminating in FY25. This disclosure was made by Minister of State for Corporate Affairs Harsh Malhotra during a written reply in the Rajya Sabha.

Malhotra clarified that the penalties were initiated following a thorough examination of company records, public complaints, and procedural scrutiny under relevant provisions of the Companies Act. Notably, the action includes both companies and officers found in default. The government reaffirmed its commitment to enforcing legal compliance in corporate governance and CSR reporting.

Under the Companies Act, certain profitable companies are legally required to spend at least 2% of their average net profits of the preceding three years on CSR activities. The penalised firms failed to meet this obligation or submit compliant disclosures. These lapses, once identified either through internal audit mechanisms or public complaints, triggered investigations and punitive action.

The Sprouts News Investigation Team (SIT) notes that this is part of a larger trend of regulatory tightening by the Ministry of Corporate Affairs (MCA) to enhance transparency and ensure that CSR is not treated as a symbolic gesture but as a measurable commitment.

In the past, the MCA has faced criticism for inconsistent enforcement. However, with recent amendments to the CSR framework and increased disclosure obligations on the MCA21 portal, the government now seems to be adopting a zero-tolerance approach. The SIT observes that this shift is in line with the recommendations of the High-Level Committee on CSR constituted earlier to review the implementation and enforcement mechanisms.

While the government has confirmed action against 30 entities, the names of these companies have not yet been made public. This raises concerns around transparency and public accountability. Stakeholders in civil society and media, including the Sprouts News Investigation Team (SIT), have called upon the Ministry of Corporate Affairs to publish the complete list, along with the nature of default and penalty imposed.

Such disclosures would act as a deterrent and provide valuable insights for other companies to reassess their own CSR strategies. Moreover, this would empower NGOs, CSR watchdogs, and citizen activists to track impact against real corporate intent.

This development also comes in the backdrop of growing scrutiny around “CSR washing”—a practice where companies project inflated or unverified social contributions to improve brand perception. The Sprouts SIT has been tracking multiple such instances across the pharmaceutical, real estate, and financial sectors where CSR funds were allegedly diverted or underutilized.

As CSR continues to evolve into a major component of ESG (Environmental, Social, and Governance) compliance frameworks, legal adherence and ethical implementation will increasingly come under policy scanner. The MCA’s firm stance signals that companies can no longer treat CSR obligations as optional optics.

The penal action against 30 companies underscores the government’s evolving strategy to uphold the spirit and letter of CSR law in India. With a combination of legal penalties, stricter disclosures, and rising public awareness, India’s corporate CSR landscape is set for a more accountable and impactful phase.

Sprouts News Investigation Team (SIT) will continue to monitor the developments and push for full public disclosure of defaulting companies, ensuring that CSR serves its true purpose in building equitable, sustainable communities.