Confusion over tender and CSR obligations in India

A state-run housing corporation in Andhra Pradesh has floated a tender for 10 lakh tonnes of cement, creating some confusion over the tender wording and the mention of corporate social responsibility (CSR) obligations. In India, The Companies Act mandates that companies must set aside at least 2% from their net profit to put into CSR projects. The bill became law in August, leaving companies to find ways to meet their annual required CSR spend.

Part of the rule stipulates that CSR ‘cannot be interpreted as the main business activity of a company’. There is now some discussion as to whether this tender opens up potential for a loophole whereby companies can claim part of their business expenditure as CSR.

However, APSHC, the housing corporation in question, claims that the mention of CSR in the tender refers to the fact that the housing project is for so-called ‘weaker section housing’, and therefore they are asking companies to quote accordingly. Corporate Affairs Minister Sachin Pilot has said he is taking up the issue with the state government.

Edited from various sources by Katherine Guenioui