By Ashok Nilakantan Ayers
Ever since home minister Amit Shah tabled the Foreign Contribution Regulation ACT 2026 in parliament for discussion and eventual passage on August 12, it has invited criticism from opposition and evoked fears, especially among foreign missionaries, especially the Christian churches which receive large donations from churches in the USA and UK.
Question being asked is when you already have the Foreign Exchange Management ACT which replaced the dreaded Foreign Exchange Regulation ACT , what was the need for a 2nd legislation , why not make do with one — duplicity could create confusion and fears.
No. Certainly NOT. Government officials explain that where FEMA ends FERA starts. Let’s examine how. Let’s start with a simple example.
A Kerala schoolteacher’s remittance from her son in Dubai. A Delhi NGO’s tree-planting grant from a European foundation. A tribal-belt trust in the Northeast running a school on American church donations. Three wires, one border crossed — and in New Delhi’s eyes, three entirely different animals.
India is often accused of regulatory overkill for making foreign money in response to two masters: the Foreign Exchange Management Act (FEMA), which the Reserve Bank policies, and the Foreign Contribution (Regulation) Act (FCRA), which sits with the Ministry of Home Affairs.
Critics call it bureaucratic doubling-down — one more Indian file, one more Indian stamp. The sharper question, though, is the one Indian commentators rarely ask: does the West really manage with a single law, as is popularly assumed? It does not. It has simply been tidier about hiding the seam.
Look closely at any major democracy and the same architecture reappears: an ordinary financial-conduct regime governing how money crosses the border, sitting beside a separate, harder-edged national-security regime governing who is being directed by a foreign power and why.
The United States has banking and tax law for the first job and the 1938-vintage Foreign Agents Registration Act (FARA) for the second — a statute Washington has been enforcing with newfound zeal since 2025.
The United Kingdom has money-laundering and charity law for ordinary flows, and since October 2025 a Foreign Influence Registration Scheme under its National Security Act for anything done in Britain at a foreign power’s direction.
Australia has its banking rules plus a 2018 Foreign Influence Transparency Scheme. France folds foreign-funding disclosure for associations into its 2021 law against “separatism,” which forces any body receiving more than €10,000 from abroad to declare it and, if the sum crosses €153,000, submit to audit.
Canada passed its own Foreign Influence Transparency and Accountability Act in 2024. Even Brussels is now drafting a Union-wide directive, after a Eurobarometer survey found 81 percent of Europeans call covert foreign interference a serious problem.
So the real story is not that India insists on two laws while the West gets by on one. It is that every serious democracy runs the same two-track system — commerce on one rail, national security on the other — and India was, if anything, ahead of the curve, having separated the two as far back as 1976.
What distinguishes India is not the architecture but the intensity of political argument around it, because in India the second rail — FCRA — collides directly with the country’s most combustible fault line: religion.
Where FCRA gets personal: FEMA never asks what a donation is for. FCRA does, and nowhere does it ask more pointedly than in matters of faith.
The freshly passed FCRA Amendment Bill of 2026, now moving through Parliament alongside revised rules notified in June, tightens that scrutiny further. Registration certificates will now have to name the exact purpose and the state of operation from a fixed government schedule; NGOs must show real utilisation of funds to keep their registration alive; and — the line that will draw the most ink — the amendment explicitly bars the use of foreign contributions for proselytisation, a restriction the government frames as applying equally to every faith and consistent with FCRA’s long-standing position that foreign money should not be used to alter India’s social and demographic composition through conversion-driven activity.
That single clause sits atop a policy structure India has been building for years. Twelve of India’s states now enforce anti-conversion laws, ten of them passed under Bharatiya Janata Party governments, with Uttar Pradesh and Rajasthan recently toughening penalties into double-digit prison terms and, in Rajasthan’s case, provisions for property forfeiture.
The government’s argument is straightforward: economically vulnerable communities — tribal populations and Dalits in particular — are targets of inducement-driven conversion by missionaries and preachers backed by foreign money, and the state has a legitimate interest in shielding them from coercion dressed up as charity.
Civil liberties groups and religious-minority organisations dispute almost every part of that account. The US Commission on International Religious Freedom has argued that enforcement patterns suggest these laws are aimed less at genuine coercion and more at discouraging conversion away from Hinduism specifically.
In Uttar Pradesh alone, more than 800 cases and nearly 1,700 arrests were recorded between 2020 and mid-2024, yet convictions remain rare — a gap that critics say points to harassment rather than crime prevention. They also note that decennial census data has shown the religious composition of India’s population moving only gradually over decades, which sits uneasily with the political rhetoric of mass, engineered conversion.
The government, for its part, points out that FCRA-registered entities are under 1 percent of all Indian NGOs and that faith-based welfare work — building temples, gurdwaras, churches and mosques, funding religious education — remains fully eligible for foreign funding across every community; it is proselytisation using that money, not religious charity itself, that is now barred.
India is not alone in worrying about foreign-funded religion reshaping domestic society — it simply worries about a much larger slice of its population than Europe does.
Germany, France and Austria have spent the past several years closing mosques and cutting off funding streams from Turkey’s Diyanet and Gulf-linked charities, citing radicalisation risks; a 2023 Europol assessment found at least twenty European mosques had received funding later linked to extremist networks, and France alone shuttered 89 mosques between 2020 and 2023 on national-security grounds.
Berlin has moved to end reliance on Turkish state-trained imams altogether, training its own instead. The concern in the West, however, runs through a minority-within-a-minority — radicalisation among already-settled Muslim communities — rather than through anxiety about the wholesale religious rebalancing of the national population, which is the fear driving India’s domestic debate.
Scale, not principle, is what separates the two conversations: Europe worries about violent radicalisation at the margins; India worries, rightly or wrongly, about demographic arithmetic at the centre.
That is the real distinction worth drawing. FEMA and FERA-style laws exist everywhere because every state wants to know where money crosses its border. FCRA-style religious scrutiny exists most sharply in India because nowhere else does foreign-funded faith intersect so directly with a ruling party’s ideological project and a nation’s oldest, rawest anxiety — who, ultimately, India belongs to.
Whether the 2026 amendments strike the right balance between guarding against genuine foreign interference and constraining India’s minorities will be litigated in courtrooms, newsrooms and Parliament for years to come. But the underlying design — two rails, not one — is not India’s eccentricity. It is the world’s default, worn more visibly here than anywhere else. (IPA Service)
