By Natoo Banerjee
With annual inflow of foreign contributions to NGOs, private trusts and religious bodies in India officially estimated at a staggering Rs.23,000 crore, there is reason for the government to establish tighter administrative oversight, governance, and transparency over foreign donations. It is suspected that some Indian non-governmental organizations, political entities, charities, and religious bodies may also have been receiving unaccounted and unregulated foreign funds. Political parties are legally barred from receiving any foreign contributions. Unchecked overseas funds risk being subverted for activities disruptive to sovereignty, public order, or security. Complex re-routing and sub-granting of international donations through layered money trails make final utilization difficult to trace.
Undisclosed foreign funding is a major concern in Western democracies as well, prompting strict legal bans. Surprisingly, the United States, which is highly critical about India’s proposed FCRA amendment, itself follows a federal law that completely prohibits foreign nationals from directly or indirectly contributing to any federal, state, or local election, though vulnerabilities persist through digital platforms and indirect spending. The US Foreign Agents Registration Act (FARA), managed by the Department of Justice, requires individuals and groups acting on behalf of foreign principals—including foreign governments and political parties—to disclose political consulting, lobbying, and financial disbursements. Yet, there are loopholes. Watchdogs and policymakers note risks from “dark money,” shell companies, and online donation platforms vulnerable to foreign-backed straw donors.
US lawmakers have criticised India’s proposed Foreign Contribution (Regulation) Amendment Bill, 2026, warning it could strain bilateral ties. Critics claim the bill allows excessive state control and asset takeovers of Christian institutions and charities, raising religious freedom concerns. US lawmakers argue that creating a “Designated Authority” to manage assets of non-renewal or cancelled licenses lets the state take over churches and religious charities. The US concerns over the impact on India’s civil society focus on potential disruptions to faith-based schools, hospitals, and welfare networks. The US has warned that the new legislation could become a point of contention in US-India relations.
India has defended the law as a standard measure for transparency, financial governance, and national security. New Delhi has emphasized that the rules apply uniformly across all faiths and ideologies, and noted that provisions exist to preserve the religious character of places of worship or transfer assets to similar trusts of the same faith. The Designated Authority is meant to safeguard assets, which are fully returned if an organization restores its registration. In fact, democracies across the world, including the US, the United Kingdom, Australia, and Canada, implement strict legal frameworks to regulate foreign funding. These rules ensure transparency, prevent foreign political interference, and protect national security by monitoring how overseas money flows into domestic non-governmental organizations (NGOs) and political entities.
The purpose of the Foreign Contribution (Regulation) Amendment Bill, 2026, and its accompanying rules is to establish tighter administrative oversight, governance, and transparency over foreign donations. It creates a Designated Authority to provisionally or permanently manage and dispose of assets of NGOs whose licenses are cancelled, surrendered, or ceased due to non-renewal. The bill is designed to address the backdoor flow of overseas funds into civil society and political ecosystems. The framework targets loopholes where non-profit and advocacy groups use foreign-funded assets after license expiration. The proposed designated government authority can take custody of assets created via foreign funds if an organization’s FCRA license is cancelled or not renewed. Key operators of compliant entities face direct personal accountability for statutory breaches rather than hiding behind organizational structures. Entities can no longer let licenses expire while continuing to utilize pre-existing foreign-funded infrastructure.
Indian NGOs are not convinced. Indian non-governmental organizations and critics remain unconvinced by official assurances as it will enable unwarranted state asset seizures and deepen government control over civil society. NGOs are concerned over the possible operational chokehold by the government using strict caps on administrative overhead (limited to 20 percent) and minimum spending thresholds place heavy burdens on small, grassroots groups. Civil society groups may not be entirely wrong to argue that the law acts as a political tool to penalize organizations that do not align with the ruling party’s ideology. Key functionaries face direct, personal accountability and strict identification requirements like Aadhaar submissions for all directors. The government maintains that tracking foreign money protects national sovereignty, public order, and democratic integrity without banning legitimate charity. Notably, the framework draws a sharp legal line against utilizing foreign contributions for unauthorized political objectives or religious conversion activities.
However, it may not be easy for the government to go ahead with the FCRA amendment bill and make it a law especially after the latest show of outrage in Delhi’s Jantar Mantar by Ladak’s climate activist Sonam Wangchuk, holding a 26-day hunger strike that led to the government’s written assurance on his demands. The Cockroach Janata Party’s massive demonstration voicing strong opposition to India’s proposed FCRA amendment bill aligning with broader civil society and opposition criticism against tighter controls on foreign funding and asset regulations for non-profits seemed to have unnerved the government. The Cockroach party, which emerged following public discourse surrounding judicial remarks, has staged protests and faced scrutiny over its own mobilization and funding sources, positioning itself against the sweeping regulatory changes proposed in the new bill.
Insulated by its strength in Parliament, the 12-year-old Narendra Modi government tasted the first ever major janta (public) jolt on the issue of foreign funding of NGOs. It had underestimated the strength of India’s NGOs and their beneficiaries before tinkering with the FCRA rules. The country has over three million registered NGOs and non-profits overall, though active numbers vary significantly by registry type. Over half-a-million organizations maintain active identification on official portals like the NITI Aayog NGO Darpan platform. A much smaller subset holds active FCRA clearances. India’s nonprofit sector – roughly one for every 500 people — provides direct employment to around 16 million people, deploying funds of over Rs.11 trillion. The government did not seem to have a proper communication plan to deal with the select group of powerful, highly vocal nonprofit organisations or NGOs, using foreign funds. It clearly failed to handle the sensitive matter with care. The result is that Lok Sabha had to refer the controversial FCRA amendment bill to a joint parliamentary committee (JPC) amid opposition protests calling the legislation a BJP design to target minorities. The bill may be as good as ‘dead’ although few will deny that private foreign funding makes democracies vulnerable by injecting opaque money into open societies to distort public policy, polarize electorates, and degrade trust in core institutions without resorting to open conflict. (IPA Service)
