Corporate Social Responsibility and the Role of SME’s in India

The concept of Corporate Social Responsibility has changed over the years depending upon the changes in social, political, economical and legal environments. It includes many aspects which come under the fulfilment of CSR like charity, development of educational institutions, hospitals and temples, ethical functioning, respect to human rights and inclusive development which requires the companies to produce qualitative products up to the mark of international standards, adherence of laws relating to the business, etc. Small and Medium Enterprises (SMEs) have played a crucial role in India’s economic growth. With over 30 million units, SMEs accounted for 17 per cent of the country’s GDP in 2011 and employs around 60 million people, the second largest workforce in the country after the agricultural sector. SMEs always represent the model of socio-economic policies of Government of India which emphasized judicious use of foreign exchange for the import of capital goods, labour intensive mode of production, non-concentration of economic power in the hands of few and discouraging monopolistic practices. The small scale industry accounts for 40% of gross industrial value addition and 50% of total manufacturing exports. It is estimated that SMEs account for almost 90% of industrial units in India and 40% of value addition in the manufacturing sector. It can thus be said that the Small and Medium Enterprises play a pivotal role in ensuring overall development of a country. But when it comes to the question of shouldering corporate social responsibility (CSR) only a handful of small firms are seen successful. The present paper is an endeavor to examine the contributions of SMEs in societal development and benefits of CSR to SMEs.