Foreign Contribution Regulation Act (amendment), 2020


On September 20, the govt introduced the Foreign Contribution (Regulation) Amendment Bill, 2020 within the Lok Sabha, and it had been passed within the Lower House on September 21. The FCRA regulates the acceptance and utilization of foreign funds by individuals, associations and corporations. A number of the terms they need wont to describe it include “draconian” and “cumbersome”. Several provisions to the FCRA laws are amended. No employee can now receive foreign contributions. Once received, the foreign contributions can’t be transferred to the other person or entity and are to be employed by the first recipient only. Aadhar are going to be mandatory for all officials of the recipient organization. The foreign contributions are often spent on administrative purposes, but the limit is down from 50 per cent to twenty per cent now. Permissions granted for receiving foreign funds might not be automatically renewed and actually the govt can now investigate the aim and therefore the functioning of the recipient organization. Predictably, these changes have caused furore. Civil society activists, many of them beneficiaries of the FCRA regime, have dubbed these changes against civil society and an effort to curb dissent. The supporters of the changes wear the opposite hand celebrated this move, mostly linking it to reduced proselytism going forward. Religious institutions are a serious beneficiary of the FCRA contributions over the years. But there’s another angle to the FCRA changes and it’s not been discussed within the media in any detail.

In 2017, India drew flak during a United Nations Human Rights Council ‘peer review’ for the controls placed within the FCRA law, first promulgated in 2010 under the Manmohan Singh government. little question the present 2020 amendments will cause even louder opposition in international forums within the coming years. In the previous couple of years, the govt has canceled FCRA licenses of quite 19,000 NGOs. Will the new norms cause fewer renewals of FCRA approvals? Time will tell. it’ll be interesting to watch the extent and extent of corporate activism once the 2020 amendments to the FCRA law start getting enforced.

Role played by not-for-profits/ NGO sector in India

Ever since independence, the NGOs have played an important role in India. they need reached bent the marginalize communities and much off areas in India in multiple ways. whenever a crisis has hit India, be it a health crisis, an depression or maybe a natural disaster, the NGOs are on the forefront of relief efforts. In fact, during the continued COVID-19 pandemic, the relief work done by the NGOs was lauded by none aside from the Prime Minister of India, Narendra Modi.However, despite the apparent benefits of this sector, it’s been on the scanner for successive governments in India.

As per the present Government, the annual inflow of foreign contribution has increased over the last 10 years and lots of recipients of foreign contribution have diverted funds for purposes aside from those mandated by their respective FCRA registrations/permissions and therefore the certificates of registration of quite 19,000 recipient organization, including NGOs are canceled. the present Government has been criticized for the cancellation of such registrations/ permissions on the idea that the cancellation may be a coloured move.However, this is often not the primary Government to possess acted against the NGOs. In 2012, the then UPA government had come down heavily on NGOs protesting against the Kudankulum atomic power project. It dismissed the NGO activism as being motivated by foreign countries which weren’t supportive of developing nations like India eager to increase its nuclear capabilities. At that point also, registrations of NGOs voicing environmental and health concerns were canceled. Even the present change in FCRA comes within the backdrop of cancellation of FCRA registrations of 4 (four) Christian NGOs3 working in India earlier this month.

Key changes to the FCRA introduced by the Bill

  • Mandatory opening of FCRA checking account in depository financial institution of India, Delhi

Under the prevailing Section 17 of FCRA, The foreign contribution recipient is permitted to receive foreign contribution in an FCRA account opened in any of the scheduled banks.The objective of the amendment appears to be to centralize the inflow of foreign contribution into one bank making it easier for the govt to watch and track the funds received under FCRA. However, this might also create logistical difficulties and hurdles and increase costs for NGOs spread across India, many of whom are based in remote areas.

  • Prohibition on transfer of foreign contribution

The Bill substitutes Section 7 of FCRA to ban persons authorized under FCRA to receive foreign contributions from transferring such foreign contributions to a person.The existing Section 7 of FCRA permits transfer of foreign contributions to others registered under FCRA or who have obtained prior permissions under FCRA for receiving foreign contributions. Also, under the present rules4 foreign contribution recipient can, with the prior approval of the govt, transfer a neighborhood of such foreign contribution to the other one that doesn’t have a registration or permission under FCRA.

  • Prohibition on “public servant” from receiving foreign contribution

It adds “public servant” as defined in Section 21 of the Indian legal code, 1860 to the present list. Section 3 of FCRA already prohibited judges, Government servants and employees of state owned or controlled corporations or bodies from receiving foreign contribution. The addition of “public servant” within the list will, amongst others, also prohibit from receiving foreign contributions the persons within the service or pay of the govt or remunerated by fees or commission for the performance of any public duty by the govt.

  • Increase within the maximum limit for the amount of suspension

The Bill amends Section 13 of FCRA to offer the govt the facility to suspend the registration certificate (which means foreign contribution can’t be received/ utilised) of an individual for up to 360 days (which currently is 180 days) pending an inquiry for cancellation of FCRA registration.


 There might be little disagreement with the Government’s stated object of the Bill to strengthen compliance mechanism, enhance transparency and accountability and facilitate genuine NGOs. However, it’s not clear how the Bill will achieve that object. for instance, one among the Bill’s object is stated to be to affect non-compliances. One such non-compliance cited by the govt is non-filing of annual returns and non-maintenance of proper accounts. However, none of the amendments seem to deal with this concern. On the opposite hand, as discussed above, several of the amendment seem to possess no reference to the Bill’s objects.The NGO sector is already heavily regulated and international donors find it difficult to form grants in India. Going forward, this may become more cumbersome due to the amendments. within the current times when foreign funds are most needed for Covid 19 related relief activities, these changes could convince be counter-productive.

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