CSR Spending Triples in a Decade: A ₹1.44 Lakh Crore Opportunity for MSMEs

India Inc’s corporate social responsibility (CSR) spending has more than tripled over the past decade, touching a record ₹34,909 crore in FY24 — up from ₹10,066 crore in 2014-15. According to the latest data from the Ministry of Corporate Affairs, the cumulative CSR expenditure between 2019-20 and 2023-24 surged 89% over the previous five-year period, totalling ₹1.44 lakh crore. This expanding pool of funds presents a remarkable opportunity for India's MSMEs to collaborate, contribute, and innovate within the CSR ecosystem.

Education and Health Dominate the CSR Landscape

While companies have the freedom to choose from 30 development sectors under the CSR framework, education and healthcare continue to draw the lion’s share of the funds. In FY24 alone, education accounted for 35% of total CSR spending, while healthcare claimed 20%. This duo has steadily increased its combined share from 44% a decade ago to over 55% now.

Interestingly, this trend is not just a matter of compliance—it reflects shifting priorities post-COVID. During the pandemic years (2020-21 and 2021-22), healthcare overtook education briefly, but the latter has now regained its lead, signalling a renewed focus on long-term capacity building.

Decline in Traditional Segments, Rise in Emerging Sectors

In contrast, traditional development areas like rural development, poverty alleviation, Swachh Bharat, sanitation, and women’s hostels saw a dip in their average CSR share during 2019-24 compared to 2014-19. However, lesser-highlighted sectors witnessed phenomenal growth, suggesting diversification is underway:

• Animal welfare: ↑310% to ₹1,331 crore

• Senior citizen welfare: ↑246% to ₹503 crore

• Conservation of natural resources: ↑150% to ₹1,536 crore

• Art and culture: ↑144% to ₹2,840 crore

• Livelihood enhancement: ↑137% to ₹6,961 crore

• Vocational skills: ↑137% to ₹5,556 crore

• Training to promote sports: ↑111% to ₹2,094 crore

These emerging priorities provide a fertile ground for MSMEs to pitch community-based or service-linked CSR partnerships.

The MSME Opportunity

With CSR spending now institutionalised under the Companies Act, 2013 — mandating firms with a net worth of ₹500 crore or more, turnover of ₹1,000 crore+, or net profit above ₹5 crore to spend 2% of their average net profits on CSR — the space is increasingly formalised. While most MSMEs remain below the CSR threshold, their role as on-ground executors, NGO partners, skill providers, or even beneficiary channel partners has become more critical.

Micro and small enterprises working in domains like vocational training, rural entrepreneurship, digital literacy, senior care, or environmental sustainability can align their capabilities with large corporations’ CSR mandates. Furthermore, as larger firms seek credible implementation partners in Tier II and Tier III geographies, MSMEs with local expertise are ideally positioned to fill this gap.

Need for Inclusion and Capacity Building

Despite the rise in CSR funds, one of the persistent challenges remains the limited visibility of MSMEs in mainstream CSR conversations. There is a strong case for enabling frameworks that support capacity building, fund access, and monitoring tools for small enterprises willing to enter the CSR value chain.

Associations, chambers, and CSR arms of corporates must also create more structured platforms to onboard MSMEs as partners, not merely beneficiaries.