The Relationship between Corporate Social Responsibility and Financial Performance : Evidence from Indian firms across Industries.

Corporate social responsibility (CSR) has over the years from being an ethical obligation to being part of the corporate strategy and affecting the decisions made in various industries and countries. Sustainability and social equity are now key drivers of consumer behavior, regulatory policies, and corporate decision-making. At the same time, the discussion on CSR in scholarly literature has shifted from the debate on whether it is necessary to discussing how it can benefit CFP. India offers a unique case for study because of the mandatory CSR provisions of the Companies Act, 2013 and therefore offers a good opportunity to examine the relationship between CSR and CFP. This study investigates whether CSR adds value to financial performance in Indian publicly listed f irms with sectoral variations in the agriculture, manufacturing and service industries for the period 2015-2020. In line with the existing CSR research, the study examines accounting-based metrics such as Return on Total Assets (ROTA) and market-based indicators such as Tobin’s Q to analyze the financial performance. The purpose of this is to determine whether the positive relationship between CSR and CFP observed internationally is also present in the Indian context, which has its own unique regulatory environment and industrial priorities. The findings show that CSR spending is positively and significantly related to profitability as measured by ROTA, through greater operational efficiency and better stakeholder trust. It is evident from the sectoral analysis that agriculture and service industries are most likely to derive benefit from CSR investment because they are more in tune with societal and environmental priorities than manufacturing firms which realises delayed financial returns. However, for market-based metrics Tobin’s Q has mixed results which is due to variability in investor perceptions and market dynamics. This research adds to the global discourse on CSR by providing empirical evidence from a less explored regulatory and economic context. From a practical perspective, the findings underscore the importance of aligning CSR initiatives with sector specific needs and ensuring transparency in CSR disclosures to improve stakeholder engagement and investor confidence. Hence, CSR is positioned as a driver of both social and financial value, Indian firms can induce sustainable development and long-term success.