Why in news?
The Ministry of Home Affairs revoked the FCRA licence of an NGO associated with activist Sonam Wangchuk in September 2025. The incident reignited debate on the Foreign Contribution (Regulation) Act (FCRA) and its implications for civil society organisations.
Historical context
The FCRA was first enacted in 1976 to prevent foreign interference in domestic politics. A new version was passed in 2010, and amendments in 2020 tightened controls on foreign donations. The Act aims to ensure that funds from abroad do not undermine national security or public interest.
Main provisions
- Registration or prior permission: Associations must register under the Act or obtain prior approval from the Ministry of Home Affairs before receiving foreign funds.
- Designated bank account: All foreign contributions must be received in a specified State Bank of India branch in New Delhi. Transfers to other accounts are regulated.
- Prohibited recipients: Election candidates, political parties, judges, government servants and certain journalists cannot accept foreign contributions.
- Utilisation and reporting: Organisations must use funds only for declared charitable objectives and cannot transfer money to unregistered entities. Annual returns are mandatory.
- Administrative expense limit: Amendments in 2020 reduced the cap on administrative expenses from 50 percent to 20 percent, requiring more funds to be spent on programme activities.
- Identity and transparency: Office‑bearers must provide Aadhaar as identification. Changes in key personnel or address must be reported promptly.
- Rule changes of 2022: Individuals can receive up to â‚ą10 lakh from relatives abroad without prior notice, and the time to inform authorities has been extended to three months.
Grounds for cancellation
The Ministry can suspend or cancel registration if an organisation submits false information, uses funds for personal gain, or acts against national interests. Once cancelled, the entity is barred from receiving foreign contributions for three years.
Significance and debates
- Supporters’ argument: Regulation is necessary to prevent money laundering, terror financing and undue foreign influence over politics and public discourse.
- Critics’ concerns: Compliance burdens, reduced administrative expense limits and discretionary cancellations may stifle genuine charitable work and suppress dissent.
- Balanced approach: Transparent rules, efficient processing and fair enforcement can uphold national security while enabling civil society to thrive.