The Foreign Contribution (Regulation) Amendment Bill, 2026, has been referred to the 31-member Joint Parliament Committee for fine reading, following pushback from the Opposition and several other circles. To be sure, the Bill introduces a tighter framework for supervision, management, and disposal of foreign contributions and assets of an organisation that ceases to have an FCRA certificate.
Raising concerns among stakeholders, the government can, practically at its own sweet will, decide not to renew an organisation’s FCRA certificate, which will then automatically cause it to lose all assets created from foreign funds.
A designated authority will take over the assets, with the promise that the funds accruing to the Consolidated Fund of India will be used for a similar public purpose. To allay the concerns of entities undertaking religious activities, an assurance is given that if an attached asset is a place of worship, its religious character will be preserved.
Yet, the provisions have been interpreted in many quarters as intention to target minority institutions. Moreover, the current Act and the Bill do not give the entities concerned an opportunity to be heard or appeal against the cancellation of FCRA certificates. The Bill additionally provides that certificate cessation shall lead to asset vesting.
Critics say this provision reinforces the “draconian” nature the Act acquired after the two sets of amendments in 2010 and 2020. Several stringent clauses not contained in the original 1976 legislation are already part of the Act.
FCRA licence renewal was largely routine and easy until recent years; in practical terms, a licence once granted remained valid for life. Indeed, this led to large-scale misuse of the facility. Not all units receiving foreign contributions are above board. Hence, the requirement to renew the licence every five years was introduced in 2020.
Uncertainty about renewal chances has also interrupted the flow of funds into legitimate entities and often disrupted their activities. There is no denying that the non-governmental organisation (NGO) sector in India has undertaken a tremendous amount of good work in various sectors, including education and health. At last count, 14,450 units held FCRA certificates, with annual funds inflow to these being about Rs 15,000 crore.
The government has the power to reserve the right to suspend/cancel FCRA licences on serious grounds like conviction in charges of fomenting communal tension, religious conversion attempts, or gross misuse of funds. However, the allegation of rising instances of selective targeting of institutions may not be entirely baseless.
Apart from an intent to closely regulate the entities receiving foreign contributions, and their activities, the review of FCRA is also aimed at curbing their wasteful spending and fund diversions. This is, however, a goal other economic laws can achieve. The government would do well to desist from micromanaging the NGO/civil society organisation activities through measures like capping the administrative expenditure at 20%.
Burdening these units with a complex web of compliance requirements is unreasonable and would impede their very functioning. If the FCRA licence of an NGO is not renewed on time, that itself will block the fund flows to them, and hamper ongoing work. That is sort of a double-edged sword.
The government needs to win the trust of all stakeholders by reaching out to them, and proactively discouraging arbitrary administrative actions. Lack of an appeal mechanism against abrogation of licences and asset vesting is clearly untenable and might not stand judicial scrutiny.