InDepth | The Big Debate: It’s Time to Strengthen the FCRA

The Government’s decision to refer the Foreign Contribution (Regulation) Amendment Bill to a joint parliamentary committee for detailed consideration has, for now, eased the growing confrontation between the government and the Opposition. But while the government may be willing to subject the proposed changes to further parliamentary scrutiny, it remains committed to pursuing the amendments to the Act within a reasonable timeframe.

After coming to power, the Narendra Modi-led government continued to tighten the Foreign Contribution (Regulation) Act—FCRA—framework, the first being the amendments made in 2020, which introduced stringent controls over the receipt and utilisation of foreign funds, including the mandatory routing of contributions through a designated State Bank of India account, reduction of permissible ceiling for administrative expenditure from 50 to 20 per cent, prohibition on the transfer of foreign contribution to other associations, and enhanced identification requirements for office-bearers and key functionaries. The amendments also introduced a mechanism for voluntary surrender of FCRA registration and extended the period for which a registration could remain suspended.

However, the 2020 amendment and subsequent implementation raised further issues which the government wants to deal with now. The proposed amendments have become necessary because the existing statutory framework leaves critical gaps that generate administrative uncertainty and create scope for misuse. While the Act regulates the receipt of foreign contribution during the currency of a valid registration, it provides no comprehensive mechanism for the supervision, management and orderly disposal of foreign contributions and the substantial assets created from them once registration is cancelled, surrendered or simply expires.

The most significant reform proposed is the creation of a designated authority and the introduction of a new Chapter IIIA dealing with the vesting, supervision, management and disposal of foreign contributions and related assets. When a certificate is cancelled, surrendered, or ceases because renewal is not applied for, is refused, or is not completed before expiry, the relevant foreign contributions and assets vest provisionally in the designated authority. Provisional vesting permits full restoration if registration is subsequently secured within the prescribed period. Permanent vesting follows only if restoration does not occur. The assets may then be transferred to a government agency or sold, with proceeds credited to the Consolidated Fund of India.  Importantly, places of worship retain their religious character, and orders of the designated authority are subject to statutory revision and appeal. This replaces an incomplete statutory provision with a workable, accountable process. It ensures that resources built with foreign money continue to serve public purposes rather than remaining unmanaged or susceptible to diversion once the organisation no longer holds valid permission.

The FCRA portal indicates that as of July 15, 2026, there are 14,449 active FCRA registrations, 22,498 cancelled and 15,212 deemed as expired, leaving assets valued in thousands of crores of rupees in prolonged legal limbo. The absence of clear timelines for utilisation under the prior-permission route, the lack of an express provision for cessation of registration, multiplicity of investigations and inconsistency in penalties have further compounded implementation challenges.  It is clear that without a structured designated authority, purpose-specific and geography-specific authorisation, minimum-activity thresholds and clearer personal accountability of key functionaries, foreign funds coming into India risk remaining untraceable or being diverted from their declared public purposes. The proposed amendments therefore address these deficiencies in a governance-focused manner, ensuring that foreign contributions continue to serve legitimate objectives.

Other Considerations

The government’s resolve to tighten the regulatory framework governing foreign contributions stems from repeated instances in which such funds have been assessed as having been diverted or utilised in ways prejudicial to India’s interests. In 2012, then Prime Minister Manmohan Singh observed that certain foreign-funded organisations were behind prolonged protests that delayed the commissioning of the strategically important Kudankulam nuclear power project, noting that they did not fully appreciate the country’s developmental and energy imperatives. Subsequent official inquiries led to action against organisations alleged to have diverted foreign contributions from declared social purposes towards the agitation.

A 2014 Intelligence Bureau assessment identified concerted efforts by select foreign-funded groups to obstruct nuclear, coal, mining and other developmental projects. Later cancellations and investigations involving various organisations cited grounds including activities prejudicial to the economic interests of the state, support for litigation and protests against developmental projects and utilisation of foreign funds beyond the purposes for which registration was granted. These demonstrated that inadequately monitored foreign funding can be channelled into campaigns capable of delaying critical infrastructure, influencing domestic policy debates, or creating pressure against crucial projects. The proposed amendments therefore seek to ensure that foreign contributions stick to legitimate, declared public purposes.

Western Countries

Foreign-agent and foreign-influence laws in several democracies are intended to enhance transparency around activities undertaken on behalf of foreign governments or foreign principals and, in appropriate circumstances, to address the risk of foreign interference in domestic processes. In the US, the Foreign Agents Registration Act requires persons falling within its scope to register and make prescribed disclosures about their activities and relationships with foreign principals. Similar frameworks operate in Australia, Canada and the United Kingdom; exemptions and regulatory mechanisms differ.

The proposed FCRA amendments should accordingly be seen as part of India’s regulatory framework for ensuring lawful utilisation of foreign funds. The objective is not merely to regulate the receipt of foreign contributions, but also to prevent their diversion or misuse in ways that may adversely affect national security, public order or other interests protected by law. India is a sovereign nation and has the right to frame and amend its laws in the national interest. Foreign powers have no locus to object to this. The amendments are fully subject to judicial review within India. Any aggrieved person in India is free to challenge their constitutional validity before the Supreme Court, which alone has the authority to examine and decide upon their legality.

(Views expressed are personal)

Sumit Nagpal is Founder & Dir. of Spread Law Foundation & a Media & Intellectual Property Law expert