Spending for Covid-care infrastructure an eligible CSR activity

K.R.Srivats New Delhi | Updated on May 05, 2021

The MCA clarification expected to be a booster dose for several corporates

In a significant move that could boost the creation of health infrastructure for Covid care, the corporate affairs ministry (MCA) on Wednesday clarified that spending CSR funds for the establishment of medical oxygen generation and storage plants; manufacturing and supply of oxygen concentrators, ventilators, cylinders and other medical equipment for countering Covid are eligible CSR activities under company law.

This clarification is expected to come as a booster dose for several corporates who had recently voluntarily come forward to provide medical oxygen supplies in this hour of need and even resorted to imports of cryogenic tankers to help fulfil the unexpected oxygen demand in the country. This MCA clarification is also expected to encourage corporates to manufacture of oxygen concentrators, ventilators and cylinders in the country, say corporate observers. It will encourage corporates to come forward and supplement government efforts in fulfilling the rising hospitalisation needs given the second Covid-19 surge, they said.

It may be recalled that MCA had in March 2020 clarified that spending of Corporate Social Responsibility (CSR) funds for Covid-19 is an eligible CSR activity. Now MCA has further clarified that spending of CSR funds for creating health infrastructure for Covid care is also an eligible CSR activity.

MCA has now advised in a circular — tweeted by Finance Ministry on Wednesday —that companies, including government companies, may undertake the activities or projects or programmes using CSR funds, directly by themselves or in collaboration as a shared responsibility with other companies, so long as existing rules around CSR policy and guidelines issued by the Ministry from time to time are adhered.

Medical oxygen shortage

Medical oxygen shortage has been one of the biggest pain points for India in Phoenix ongoing efforts Covid-19 treatment management. Several cities, including Delhi, have been grappling with oxygen shortage in the backdrop of a surge in new Covid infections during the ongoing second wave of Covid pandemic.

While several countries have come forward to augment the medical oxygen and medical equipment requirements, one thing that has come out starkly is the absence of adequate health infrastructure, especially in interior India, to cope with the rising cases of Covid-19.

The MCA has been from time to time clearing the air on the nature of spending for Covid-19 that would count as an eligible CSR activity. It had recently said that makeshift hospitals and temporary Covid care centres set up by corporates in consultation with the States will be an eligible CSR activity.

In January this year, MCA had allowed Corporate India to spend its CSR funds for carrying out awareness campaigns /programmes or public outreach campaigns on Covid-19 vaccination programmes.

In August last year, MCA went a step further to treat the R&D spend on Covid-19 vaccines, drugs and medical devices as an eligible CSR spend. On Wednesday, the MCA has highlighted that Schedule VII of company law permits contributions to specified research and development projects and contributes to public-funded universities and certain organisations engaged in research in science, technology, engineering and medicine as eligible CSR activities.

Published on May 05, 2021

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