Foreign Contribution Regulation Act

• 18 Oct 2023

For Prelims: Foreign Contribution Regulation Act, Emergency in 1976 ,

For Mains: FCRA Act and its Significance, Foreign Contribution (Regulation) Amendment Act, 2020

Source: TH

Why in News?

Recent data from the Ministry of Home Affairs has revealed a concerning trend related to the registration of non-governmental organizations (NGOs) under the Foreign Contribution (Regulation) Act (FCRA), 2010 in India.

• The data suggests that NGOs are not accurately depicting their operational areas in their FCRA registrations and are involved in activities that deviate from their stated objectives.

What is the Foreign Contribution Regulation Act?

• About:
  • The FCRA was enacted in 1976 during the Emergency period due to concerns about foreign interference in India's affairs through financial support to independent organizations.
  • FCRA was designed to regulate foreign donations to individuals and associations, ensuring that they operate in a manner consistent with the values of a sovereign democratic republic.
• Amendments to FCRA:
  • 2010 Amendment:
    • Enacted to consolidate the law to regulate the acceptance and utilization of foreign contribution by certain individuals or associations and to prohibit acceptance and utilization of foreign contribution for any activities detrimental to the national interest.
  • 2020 Amendment:
    • Prohibiting the transfer of foreign contribution to any other person or organization.
    • Reducing the limit of usage of foreign contribution for administrative expenses from 50% to 20%.
• FCRA Registration:
  • Registration under the FCRA is essential for receiving foreign donations in India.
    • It's granted to individuals or associations engaged in various areas of work, including cultural, economic, educational, religious, or social programs, among others.
    • The FCRA regulates foreign contributions in these defined areas to ensure transparency and compliance with the law.
  • Entities can register under multiple categories based on their programs, allowing for diverse activities.
  • Applicants need to open a bank account for the receipt of the foreign funds at a specified branch of State Bank of India in New Delhi.
• Prohibitions of Activities Under FCRA Registration:
  • The applicant must not represent fictitious entities.
  • The applicant should not have been involved in religious conversion activities, either directly or indirectly.
  • The applicant should not have a history of prosecutions related to communal tension or disharmony.
  • The applicant must not be engaged in activities related to sedition.
  • The FCRA prohibits candidates, journalists, media companies, judges, government servants, politicians, and political organizations from receiving foreign funds.
• Validity and Renewal:
  • FCRA registration is valid for five years, and NGOs are required to apply for renewal within six months of the registration's expiry.
  • The government has the authority to cancel an NGO's FCRA registration for various reasons, including violations of the Act or a lack of reasonable activity in their chosen field for two consecutive years.
    • Once canceled, an NGO is ineligible for re-registration for three years.
• FCRA 2022 Rules:
  • In July 2022, the MHA introduced changes to FCRA rules. These changes included increasing the number of compoundable offences from 7 to 12.
  • The rules also raised the limit for contributions from relatives abroad that do not require government intimation from Rs 1 lakh to Rs 10 lakh and extended the time limit for intimation of the opening of bank accounts.

What are the Concerns of NGOs Regarding the FCRA?

• Strict Compliance:
  • The FCRA registration process demands extensive documentation and involves strict compliance, which can pose challenges for NGOs.
  • The FCRA's interpretive ambiguity can be exploited by authorities to target and restrict NGOs.
• Administrative Delays:
  • Lengthy administrative procedures for FCRA registration and renewal delay NGOs' operations and funding access.
• Lack of Transparency:
  • Some NGOs have been criticized for lacking transparency in their utilization of foreign funds received under the FCRA.
    • Concerns often arise when the specific purposes and beneficiaries of these funds are not clearly disclosed.
• Uneven Access to Funding:
  • The complex FCRA registration process poses challenges for organizations, with high denial rates affecting their ability to receive foreign contributions.
• Potential for Political Influence:
  • Some have raised concerns about political influence in the FCRA registration and regulation process, which may impact the approval or denial of FCRA registrations.

Way Forward

• Strengthen the oversight mechanisms to prevent any potential misuse of foreign contributions.
• Simplify and expedite the FCRA registration process to promote greater access to funding for legitimate NGOs.
• Ensure that the FCRA registration and regulation processes are free from political influence and are based on objective criteria.
• NGOs should be encouraged to provide clear and detailed reports on the utilization of foreign funds, ensuring that purposes and beneficiaries are explicitly disclosed.