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This article is written by Nishtha Garhwal, a student of Alliance School of Law, Bangalore. This article discusses the 2020 amendments made to the Foreign Contribution (Regulation) Act, 2010, and how this has led to the concerns being raised by the United Nations Human Rights Council regarding this.


When the then Prime Minister of India, Indira Gandhi imposed an emergency in India in 1975, it denoted a defining moment in the nexus among the NGOs and the State as the detaining of many political pioneers and activists was done including the grassroots NGOs. An enhanced authority over the NGOs and their data was sought by the state. In 1976, the need for making preparations against foreign contributions which could destabilize the nation was contended by the state.

With a motive to expand the amount of funding and subsidizing that comes from foreign or overseas sources for the associations and people working in the crucial spheres of national life, the legislature of India presented the Foreign Contribution (Regulation) Act, 1976 which was an internal law made by the Ministry of Home Affairs. This Act was enacted on 31 March 1976 and was intended to ensure that strict control is maintained over any Non-Governmental organization or voluntary association receiving funds from abroad.

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The Foreign Contribution (Regulation) Act, 1976 was amended in 1984 as per which all the Non-Governmental organizations were required to register themselves with the Ministry of Home Affairs.

However, in 2010 this Act was completely repealed and a new Act, that is, Foreign Contribution (Regulation) Act, 2010 (hereinafter referred to as FCRA) was enacted containing stricter provisions. After this, in 2020 this Act was further amended.

Foreign Contribution (Regulation) Act, 2010

The fundings or contributions from foreign sources to Indian associations are sought to be regulated by Foreign Contribution (Regulation) Act, 2010. The Act also seeks to ensure that the foreign contributions that may be damaging to the national interest are barred. 

The primary intention of passing this Act was to ensure that Indian decisions are not influenced by unfamiliar assets. Any association that wants to get access to assets from a foreign source is required to enlist with the Ministry of Home Affairs of India and it is required to consistently submit a reviewed account every year and to notify all the details of any contribution that is made by an individual.

A check on the influence of foreigners on the Indian electoral politics or public servants for wrongful purposes that may be harmful to the national interest is also to be performed by this Act. In case, a person violates any provision of the Act, imprisonment of 5 years will be imposed as per Section 35 of the Act.

Although the Act is in relation to financial legislation, the legislation primarily focuses on internal security. Thus, it comes under the purview of the Ministry of Home Affairs and not the Reserve Bank of India.

Notable provisions under the Foreign Contribution (Regulation) Act, 2010

As per Section 2(1)(b) of the Foreign Contribution (Regulation) Act, 2010, any deliveries, transfers, or donations are deemed to be foreign contributions provided they are made from a foreign source which may include:

  • Any article which is not being given as a gift for personal use. 
  • Any Indian or foreign currency.
  • Any foreign security that is been defined under Clause 2 (i) of the Foreign Exchange Regulation Act, 1973.

Any organization or association which is registered with the Ministry of Home Affairs and works for definite cultural, economic, social, religious, or economic purposes is eligible to accept and utilize funds from foreign sources provided it maintains a separate account containing the listing of all the donations that it received from overseas sources, gets it audit by a Chartered Accountant and submits it to the Ministry of Home Affairs every year.

However, some are barred from accepting and utilizing any foreign contribution which includes the Judges of the Court of law, candidates who are contesting elections, registered newspapers’ editors or publishers, Government servants, Members of the legislative assembly, and political parties.

In case the Ministry of Home Affairs believes that an organization is not neutral and is politically motivated, this Act allows the cancellation of the registration of such a Non-Governmental Organization (NGO). Under usual circumstances, the NGOs are granted a registration certificate that has a validity of five years. 

Any person who has become defunct, their assets are required to be disposed of in a way that is prescribed by the government as per the provisions of this Act. The maintenance of a separate account needs to be done by the organizations in which the funds received from foreign sources are deposited. It should be noted that only the foreign contributions and no other funds shall be deposited in that account. 

The prescribed authority needs to be reported by each and every bank about the received foreign remittances and other related details. 

2020 Amendment to the law

On 20 September 2020, the Foreign Contribution (Regulation) Amendment Act, 2020 was introduced in Lok Sabha. The Act amended the Foreign Contribution (Regulation) Act, 2010. Some of the notable provisions that were amended by this Act are as follows:

The prohibition imposed on ‘Public Servants’ from receiving foreign contribution

This amendment was made with a motive to prevent any decision of a public servant from being influenced by foreign fundings. Certain people which includes the candidates contesting elections, editors and publishers of registered newspapers, judges, government servants, political parties, and members of the legislature were barred from accepting any foreign contribution in the earlier Act. However, the Amendment to this Act also added public servants under this list. A person who is involved in the government service and is remunerated by the government for performing the assigned public duty is said to be a public servant.

The prohibition imposed on the transfer of foreign contribution

As per the 2010 Act, unless a person has obtained prior authorization in order to receive a foreign contribution or has registered for the approval of a foreign contribution, no foreign contribution can be transferred to such a person. However, this provision has been amended by the 2020 Act for restricting the transfer of foreign donations to any other citizen. As per this Act, any organization, entity or registered business comes under the term ‘Person’.

Mandatory identification requirements for registration

Provided a central government certificate of registration has been obtained by a person and in case not registered, prior authorization has been obtained by them for accepting the foreign contribution, such a person can accept foreign contribution. The government specifies a manner in which a person seeking registration or its renewal or prior authorization for accepting foreign contributions can apply. The 2020 Bill adds that if any person seeking prior permission for registration or the renewal of registration needs to include the Aadhaar number as a document of identification for all its directors, office bearers, or key functionaries. This Amendment has been made in order to promote the utilization of the Aadhaar Card. This provision also makes all the data related to the NGOs that receive foreign contributions available to the government. In addition to this, in case the person is a foreigner, a copy of the passport or overseas citizen of India card must be issued for the purpose of identification.

Compulsory opening of the FCRA Account

As per Section 17 of the 2010 Act, a receiver of foreign contribution was permitted to receive foreign contribution in an account that could be opened in any of the scheduled banks. However, the amendment has been made by the 2020 Act to Section, as per which, acknowledgement of the amount received from foreign funds needs to be done in a single branch of a scheduled bank that has been specified by the central government, that is, State Bank of India, New Delhi by a registered person or a receiver of the foreign contribution. This account is designated as an ‘FCRA Account’. The account at this branch is meant for receiving only foreign contributions and no other deposits. However, for the purpose of utilization of the contribution, accounts can be opened in other banks also. The Amendment is intended to make the monitoring and regulation of the funds easy through centralizing the inflow of the contribution into a single bank. 

Restriction imposed on the utilization of funds received from foreign sources

The Act amended Section 11 of the earlier Act and a new provision was included with this. It should be noted that the foreign contribution that is unreceived or unutilized shall be received or utilized with the prior approval of the government only. If permission has been obtained by a person under the FCRA for accepting and utilizing foreign contributions without government approval, the government has the power to prohibit such a person if the government believes that such a person has violated the provisions under the Act based on summary inquiry. An additional provision added by this Act is that even if a person has been allowed to receive foreign contributions earlier, the government has the power to restrict such a recipient from utilizing the unutilized foreign contribution. Such a measure can be utilized by the government if there are reasonable grounds for the government to believe that any activity in violation of the provisions under the Act has been undertaken by the recipient after conducting a summary inquiry. A change that has been done by the amendment in the earlier Act is that in the 2010 Act, a recipient could be restricted only if an actual violation of the provisions of the Act has been done. However, with the 2020 amendment, a recipient can now be restricted for preventive purposes also.

License renewal

Before the Amendment, all the people registered under the Act to whom certificates have been issued were required to renew their certificates within six months. However, with the amendment Act of 2020, certain guidelines were laid down where it was at the discretion of the government to renew the certificate on the conduction of an inquiry to ensure that the person who is applying for the renewal is not a fictitious person, is not prosecuted or convicted for causing communal tensions or for being involved in religion conversion-related activities and is not found guilty for misuse of funds.

Lowering the cap for utilizing foreign contribution for the purpose of administration

The Act permits a recipient to utilize funds for the purpose for which it has been received. A recipient is not allowed to use the funds for any other purpose than this. An amendment to Section 8 of the FCRA, 2010 has been made by the 2020 Act. Earlier the limit for utilizing the received funds for administrative purposes was 50% but now this cap has been reduced to 20%. This provision is aimed at discouraging the NGOs from utilizing funds for any other purposes than the purpose for which it has been received and encouraging them to spend the funds for achieving its required objective. 

Giving up certificates

With the amendment, now if anyone wants to give up their certificate, such a person can be authorized by the central government to do so. Such an initiation can be done by the government provided there are reasonable grounds for the government to believe that no violation of the provisions of the Act has been done by such a person and a prescribed government authority has been vested with the authority to manage the funds of such a person. 

Registration suspension

The term ‘Suspension’ here means that the funds cannot be received or utilized by a registered person. Section 13 of FCRA, 2010 was amended by the 2020 Act. Earlier the government had the authority to suspend the registration certificate of a person for up to 180 days on inquiry which has now been increased to a period of 360 days with the amendment. However, this provision faces criticism on the ground that if the registration cannot be canceled, it gives power to the legislature to keep the FCRA registration certificates under suspension.

Concerns of UNHRC with regards to FCRA

The amendment of 2020 to FCRA, 2010 has provided authority to the Indian legislature to restrict the utilization of foreign contributions. India has taken steps in order to restrict the funding from foreign sources received by the NGOs in India. Unconstrained powers have been granted to the Ministry of Home Affairs for disqualifying any NGO or association and for rejecting its renewal by this amendment.

Concerns were raised to this and to the activists being arrested in India by the United Nations High Commissioner for Human Rights, Michelle Bachelet. The Indian legislature was urged by the three experts of the United Nations Human Rights Council to repeal the FCRA, 2020 as it restricts the NGOs from having access to foreign contributions. The claim of the United Nations Human Rights Council is that FCRA, 2020 is not in line with the norms of the Human Rights Council. The stand of these experts was that without being exposed to excess restrictions on receiving foreign contributions, the defenders of human rights and civil society must be allowed to perform their important functions.

NGO funding and related controversies in India

The legislation worried the small as well as the large NGOs. The NGOs believed that they were being portrayed as wicked in the minds of the public by the legislation. In addition to this, the big organizations have to face strict conditions being imposed on the working expenditure and the transfer of funds were stopped from them to smaller organizations by the recent Amendments.

The registration of NGO Lawyers Collective was suspended by the government of India for six months. The founders who are also human rights lawyers, Indira Jaising and Anand Grover were alleged of utilizing the foreign contribution for other purposes than for which it was received and thus, violating the provisions under the FCRA. 

Although evidence was presented by the NGO for proving that all the spendings by it were done as per the norms of the Act, the suspension was still applied. The experts at the United Nations Human Rights Council claim that in order to silence the criticism of the policies of the government by Lawyers Collective, their registration was suspended, and thus, the Suspension was politically motivated. 

In September 2015, Sabrang Trust and Citizens for Justice and Peace, both headed by Teesta Setalvad, a human rights defender, were suspended by the government of India under the FCRA. It was claimed that the targeting of the lawyers collective’s founders was done by the government because they provided legal assistance to Teesta Setalvad.

In April 2015, the registration of Greenpeace India was also suspended by the government of the country for 6 months. The UNHRC has raised its concern earlier also on this to the government. 

Viewpoints of some notable people on recent amendments

Air of mistrust created around the NGOs

The executive director of Population Foundation of India, Poonam Muttreja addressed the issues created by the recent Amendments at a webinar where she said that an air of mistrust has been created around the NGOs. Since the amended legislation portrays NGOs as wicked to the public, it will hurt the commitment-oriented civil societies. 

The NGOs are not working for monetary compensation but they are working out of compassion. She also challenged the government authorities by raising the question of whether the government is feared by the NGOs because they raise voices and speak out on the most marginalized issues for which no data is available with the government. 

The fact that instead of identifying individual NGOs who are not complying with the statutory regulations, the legislation establishes all the NGOs to be of the same nature has also been pointed out by her. There have been instances in the past where criminal investigations have been conducted against the organizations who had misused the funds and thus, it would not be difficult to do so now. 

Issue of transparency in receiving funds for electoral bonds

It was lamented by Ingrid Srinath, the Director of the Centre for Social Impact and Philanthropy during the discussions of the Amendment Bill that although allegations were put on the NGOs for not disclosing or hiding its member’s identity, no evidence was given in order to prove so. She also questioned the targeting of only contributions from foreign sources and not the foreign direct investment despite the fact that the foreign direct investment is over fifteen times more than the foreign contributions. She also asserted that only around 4,000 organizations have received sub-grants among the 21,490 organizations that have licenses. If we consider the issue of administrative costs, only 1,803 organizations have been reported to have spent 20% of the foreign contributions. 

It was said by Nityanand Rai, the minister of state for a home that the intention of the Amendments is to bring in transparency and prevent the mis-utilization of funds from foreign sources. However, the issue is also regarding the Rs 6,000 crore coming through the electoral boards and even from abroad that are not visible at all, and the Rs 9,600 crore coming to PM-CARES Fund which is also been funded by foreign sources but remains exempted under FCRA as contended by him. 

The work of NGOs who work in remote areas will suffer

Harsh Jaitli, the chief executive officer of VANI which is an apex Indian body of voluntary development organizations has said that there are many NGOs that work in far-off and remote places that do not have access to any foreign funds. Therefore, various small and big organizations work hand-in-hand in order to ensure funding and growth and the new amendments would impact this, and such NGOs that work in remote places will suffer.

Whenever there are any floods or any other critical moments, for instance, the recent COVID-19 situation, a major role is played by the NGOs. In such situations, all the local organizations work along with the NGOs. Even if we look at the recent instances, the local organizations worked with the civil organizations for helping the migrant workers and in dealing with the situation created by the pandemic. The work of the NGOs was very much appreciated by the Prime Minister as well as the Niti Aayog. However, the recent amendments to FCRA have been made without any consultations from these NGOs.

The feeling of ‘Atma Nirbhar’ movement for women being hurt by the Amendments

The director of Madhya Pradesh-based Concept Society, Hemal Kamat has asserted that for over 15 years, her organization had been working with Adivasis as well as Dalit women. However, the recent Amendments have put the survival of NGOs in a position of danger. She called it ironic to say on one side that through the establishment of organizations, women must be made self-reliant or ‘Atma Nirbhar’ and on the other side make Amendments that are in contradiction with the self-reliance of women. As contended by her, there are a large number of people in these organizations who are working for a very small salary yet they are successful in bringing a big change to the lives of people and as the new Amendments reduce the limit of administrative costs from 50% to 20%, it would be very difficult to pay these people. 

NGOs in states flooded with calls from concerned workers

The impact that the recent amendments have created can be most felt by the small NGOs that run in the states. The grassroots workers who feared that the latest modifications would deprive them of their livelihood had flooded the small NGOs with calls. In the states like Jharkhand, Odisha, and Chattisgarh A.K Singh, the founder and managing director of LEADS Trust had been working closely with the small NGOs. He asserted that at the time of COVID-19 when the NGOs and the government authorities are trying hard for working together in order to improve the lives of the people, it is very hurtful to see an Amendment coming like this. He further explained that all the organizations are not competent to raise funds in an equal manner and therefore, the funds are being raised by the large organizations which are passed on to the small NGOs that work among tribals and other unreached or backward sections of the society for the purpose of connecting them to the works of development.

Indian government’s stand on the issue

The Indian legislature gave its stand by pointing out the fact that between the period of 2010 and 2019, the funds received from overseas sources have doubled in the country. However, the problem is that these funds are not being utilized for the purposes for which the permission has been granted or for which they have been registered. Thus, the government of India clarified its stand by asserting that the amendment to the FCRA, 2010 has been made for streamlining the inflow of foreign currency. 

The licenses of six NGOs were suspended by the Union Ministry of Home Affairs because the foreign contributions were being utilized by them for religious conversion-related purposes. Thus, the legislature in order to restrict the inflow of such uncontrolled foreign contributions in India and to restrict the utilization of these foreign contributions for unethical and illegal purposes proposed an amendment to the FCRA of 2010 as these things hamper the internal security of India. Therefore, the amount of transparency and accountability of foreign contributions has been increased by this amendment. 


The legislation seeks to regulate the acceptance, and utilization of funding from foreign sources by individuals, associations, and companies, and to keep a check that the funds are prevented from being transferred to any other person. In addition to this, the limit for the utilization of contribution from foreign sources for administrative expenses has been decreased from 50% to 20%. The legislation also empowers the cancellation of the FCRA certificates by extending the previous 180 days period to beyond 180 days. The provisions also require the license to be renewed every six months provided the applicant is not a fictitious person, has not been convicted for triggering communal tensions, and has not been found guilty for diversion of funds. Many believe that the Amendment would cause an obstruction in research and would hamper the work of the NGOs in the country. In addition to this, it will also impact jobs.

The amount of foreign contributions received by the NGO has increased. In addition to this, the number of NGOs in the country have also increased and because of this, a lot of instances have occurred where these funds were being utilized for purposes other than for which it was received. Thus, there was a need for the government to control and restrict such practices. 

The FCRA, 2020 is legislation that will help the government in ensuring that the funds that are received from foreign sources are utilized for genuine purposes only and to achieve the required objectives by NGOs in the country.


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