Page 4 - Annual Review 2020

Indian National Shipowners’ Association
CEO Speak
By Mr. Anil Devli, CEO, INSA
The Corporate Social Responsibility (CSR) obliga- tions for Indian corporates began with effect from April 1, 2014 whereby every Indian company, pri- vate or public limited which either has a net worth of Rs. 500 crore or a turnover of Rs.1,000 crore or net profit of Rs. 5 crore, needed to spend at least 2% of its average net profit for the immediately preced- ing three financial years on CSR activities. Further, it was stipulated that CSR activities should not be undertaken in the normal course of business and must be with respect to any of the activities men- tioned in Schedule VII of the 2013 Act.
The concept of CSR is based on the premise that corporates should give back to India in segments and sectors where the government is unable to reach for any reason including lack or funds or sus- tained reach. The CSR activities were also meant to halt the wasteful and unscrupulous spends of com- panies on advertising and instead generate free and positive publicity and goodwill for the compa- nies while at the same time creating social gains.
While this may have been the stated and apparent- ly narrow objective, what goes without saying and is expected to have been understood in letter and spirit is that corporate profit should be redirected to nation building-be it Indian society or the Indian economy.
In today’s context maybe it is time to relook at this concept from the bird’s eye view.
Let us take a look at the CSR contributions of the 3 largest oil PSU companies in India and the two large private sector companies in India, namely RIL Ltd and the Adani Group. The CSR contribu- tion of the Indian oil sector has been substantial. HPCL spent Rs. 182.23 crore on CSR in FY20, IOCL spent Rs. 490.60 crore and BPCL Rs.159.81 crore in FY19. Equally impressive is the CSR expenditure of RIL and Adani of Rs. 908.71 crore and Rs. 901.71 crore, respectively, in FY20.
While these contributions via CSR remain com- mendable; what is equally relevant is examining whether this contribution alone is adequate and is real, meaningful and commensurate to the size and reach of these largest Indian corporates, public and private. The companies too need to introspect whether they are doing adequate and if there was
more that they could do that would accrue to India and the Indian economy.
Because the sad reality is that other than the mon- etary contributions made by these corporate behe- moths, in the course of conduct of their daily busi- ness, there are other steps that could be taken by them to lend business support to the Indian indus- try in real terms. CSR is also the corporate respon- sibility of building domestic markets and the nation itself. This obligation of CSR has to be understood and implemented by Indian corporates not only in letter but also in spirit; not just in monetary terms but in policy support too.
For example, our Indian oil PSU companies import a major share of the crude oil using foreign flagged ships. RTI enquiries show that this is the case de- spite the cost of import per tonne of crude oil being cheaper when Indian flag ships are hired. The net result is that Indian trade supports the growth of foreign tonnage, helps finance the banking system of those countries, pays large amounts of freight outside and the local industry is left to fend for itself and fight for what could have been - local partner- ships of mutual growth and prosperity. Instead, the Ministry of Shipping is under immense pressure ev- ery year to mandate larger quantities of crude oil imports on CIF basis in complete disregard of the stated policy of the government of India since 1957 that imports have to be on FOB basis and exports on CIF basis.
It is another matter that the oil PSUs are also not implementing the revised order of the Department for Promotion of Industry and Internal Trade Public Procurement (Preference to Make in India) 2017. The revised order of 4th June 2020 states that or- ders below Rs. 200 crore have to be floated among Indian companies only with no international com- petitive bidding. Yet these oil PSUs continue to float tenders among foreign companies that too in bla- tant disregard of government policy.
The very same IOCL that proudly says that every Indian is its customer could consider promoting it- self as a customer for the Indian flag industry and promote the use of Indian flag vessels for carriage of its crude oil imports. The same could be done by our private sector.
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