However, hurdles in the guise of lack of clarity on laws, tax-related regulations remain obstacles, companies say.
A majority of corporates expect to spend more on social welfare activities in the next financial year as CSR increasingly becomes part of the strategic decision-making process, says a survey.
However, the survey by industry body Ficci also revealed that companies find the lack of clarity on laws and tax-related regulations along with some other factors as obstacles in implementing Corporate Social Responsibility (CSR) projects.
Under the Companies Act, 2013, a certain class of profitable entities is required to shell out at least 2% of their three-year average annual net profit towards CSR activities. The norm came into effect from April 2014.
Ficci said 83% of the participating companies anticipate an increase in their CSR spending in 2016-17.
"While 6% participants expected a decline, another 9% cited no change. The remaining 2% of the companies said that they have made a CSR allocation in their budget for the first time," it noted.
The findings are based on a survey conducted between January and February covering 150 responses. The respondents include public sector undertakings, private firms and foreign multinational companies, had a turnover ranging between Rs 1.7 crore and Rs 75,000 crore.
As much as 77% of the companies surveyed reported that an increase in their CSR budget in 2014-15 compared with 2013-14 period.
On the other hand, the survey found "inadequate clarity on laws and tax related regulations", among others, was seen as an obstacle by firms in implementing CSR projects.
When it comes to motivation, a majority of the respondents indicated ethical considerations as the primary factor behind the adoption of CSR activities.
"Companies are increasingly looking at integrating their businesses with the community to create shared value. About 49% of the respondents... stated creation of shared value as a motivation factor, followed by social good compliance," Ficci said.
Around 95% of the participants said their CSR projects are aligned with the government's development initiatives, including Swachh Bharat Mission, Skill India and National Health Mission.
"It is encouraging to note that companies have continued to base their CSR programmes according to community needs aligning with the national development agenda, especially those impacting women and children," said Rajashree Birla, Chairperson, Ficci-Aditya Birla CSR Centre for Excellence.
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