Foreign Contribution (Regulation) Act 2010

Also called: FCRA · Topic: Civil Society, Pressure Groups, NGOs and Self-help Groups · NCERT: Beyond NCERT

Meaning

The Foreign Contribution (Regulation) Act, 2010 (FCRA) is the law that controls who in India may accept money, goods or securities from a foreign source, and how they must use them. A foreign source includes a foreign government, company, trust or citizen. Some people and bodies can never take foreign money. These include election candidates, MPs and MLAs, political parties, judges, government servants, public servants and news-media owners or editors. Every other association needs a registration or a prior permission from the Ministry of Home Affairs (MHA).

It matters because foreign money can shape Indian politics, policy and the media. FCRA is the main tool the State uses to control the funding of NGOs (non-governmental organisations, the voluntary groups that work for social causes) and other civil-society groups.

Explanation

Who can never take foreign money

• Section 3 (complete bar):
• election candidates
• legislators (MPs and MLAs)
• political parties and their office-bearers
• judges
• government servants, and employees of government-controlled corporations

• owners, editors and publishers of newspapers and news-media companies, including those that make news for TV and digital media

• Section 3, amended in 2020: the list now also includes any "public servant", as defined in Section 21 of the Indian Penal Code [1].

• Section 5: organisations of a political nature, as notified by the Central Government.

Two ways for everyone else to get foreign money

• FCRA registration:
• It is a certificate from the MHA.
• It lets an association receive foreign money for any of its approved purposes.

• It is valid for five years and can be renewed.

• Prior permission:

• It is a one-time approval for a fixed amount, from one named donor, for one stated project.
• It is meant for groups that are not registered.

Rules once the money comes in

• Banking:
• All foreign money must come into one designated FCRA account.
• Since 2020, this account must be at the SBI New Delhi Main Branch. The NGO may open a second account in any scheduled bank to keep and spend the money [1][5].

• Foreign money cannot be mixed with money raised in India.

• Administrative expenses (s.8):

• Running costs such as staff and audits can take up to 20% of the money. Before 2020 the limit was 50%.

• At least 80% must go to the purpose for which the money was given [1][5].

• No sub-granting (s.7):

• Sub-granting means passing foreign money on to another NGO.

• Since 2020, the money cannot be transferred to any other person [1].

• Identification (s.12A): all office-bearers, directors and key functionaries must give their Aadhaar number. Foreigners give a passport or OCI card [1].

• Reporting: the association files an annual return (Form FC-4). It shows what the association received and how it spent the money.

Penalties and limits

• Suspension (s.13):
• The government can suspend a registration for 180 days.

• It can extend this by up to 180 more days, so a suspension can last up to 360 days [1].

• Cancellation (s.14): after a cancellation, the association cannot apply again for three years.

• Surrender (s.14A): an NGO can give up its certificate on its own, with government permission [1].
• Renewal check: the government may hold an inquiry before renewal. It checks that the NGO is genuine and has not misused funds [1].
• Punishment (s.35): a person who breaks the Act can be jailed for up to five years.
• Relatives abroad (Rules, 1 July 2022):
• Money from relatives abroad needs no report to the government up to ₹10 lakh a year. The earlier limit was ₹1 lakh.
• Where a report is needed, the time to file it went up from 30 days to three months [4].

In the Constitution and practice

• How the law developed:
• FCRA 1976 was passed during the Emergency (1975–77). The fear was that foreign money could shape Indian politics, elections and the media.
• A 1984 amendment made registration compulsory before an association could receive foreign money.
• FCRA 2010 replaced the 1976 Act. It came into force in May 2011.

• The MHA runs the law through its Foreigners Division (FCRA wing). The Finance Ministry does not run it.

• Finance Acts 2016 and 2018:

• These amendments were retrospective, which means they also apply to past years.
• They changed the meaning of "foreign source" for Indian companies that have foreign shareholding.

• As a result, political parties could keep donations they had already taken from such companies.

• FC(R) Amendment Act 2020:

• The Bill was introduced in the Lok Sabha on 20 September 2020.
• The Lok Sabha passed it on 21 September and the Rajya Sabha on 23 September 2020 [1].

• It added the sub-grant ban, the 20% cap, the SBI account rule, Aadhaar identification and the "public servant" bar.

• Noel Harper v. Union of India (8 April 2022):

• Bench: Justices A.M. Khanwilkar, Dinesh Maheshwari and C.T. Ravikumar.
• No fundamental right to receive foreign contributions: receiving foreign money is not part of Article 19(1)(c) (the freedom to form associations) or Article 19(1)(g) (the freedom to practise any profession or business).
• Foreign money can shape national policy and politics, so Parliament may regulate it strictly or even ban it completely.
• The sub-grant ban, the 20% cap and the SBI account rule are all valid. They help the government trace the money.

• Reading down s.12A: "reading down" means a court gives a law a narrower meaning so that it stays constitutional. Here, the Court allowed Indian office-bearers to use an Indian passport in place of Aadhaar.

• Link to the Constitution:

• Art. 19(1)(c) protects the freedom to form associations.
• Art. 19(4) allows reasonable restrictions on this freedom. The grounds include the sovereignty and integrity of India, public order and morality.

• FCRA controls how associations are funded. It does not stop people from forming them.

• Enforcement record:

• Greenpeace India (2015): its registration was suspended and its accounts were frozen.
• Amnesty International India (September 2020): its bank accounts were frozen and it stopped working in India.
• MHA data (July 2026): about 20,000 registrations were cancelled in the past decade. About 15,000 more lapsed. These are "deemed ceased" because the NGO did not apply for renewal or renewal was refused.

• 2024-25: about 16,200 active associations received about ₹22,963 crore in foreign money.

• FCRA Amendment Rules (22 June 2026):

• Each NGO must choose its work from an approved list of 105 activities. The list falls under five heads: cultural, economic, educational, religious and social. Each purpose costs an extra ₹300 [3].
• Each NGO must name the states and UTs where it will work. Each extra state or UT costs ₹300, and any change needs fresh government approval [3].
• "Reasonable activity" test for renewal: the NGO must have used at least ₹10 lakh of foreign money over the previous two financial years [3].
• Foreign nationals (other than persons of Indian origin) cannot be key functionaries without a government exception [3].

• The NGO must list its social media accounts and report its activities and funds used in the previous three years [3].

• FC(R) Amendment Bill 2026 (not yet law):

• It was introduced in the Lok Sabha on 25 March 2026 and referred to a Joint Parliamentary Committee (JPC) on 12 August 2026 [2].
• Vesting of assets: a new Designated Authority will take control of foreign money and assets when an NGO stops holding a certificate. "Vesting" means ownership passes to this government authority [2].
  • Vesting is first provisional. It becomes permanent if the certificate is not renewed, restored or granted fresh. If the certificate comes back, the unspent money and assets are returned [2].
  • Assets built partly with foreign money also vest. The NGO may claim the part it paid for with Indian money [2].
  • If the asset is a place of worship, the Authority must keep its religious character [2].
• Orders on vesting can be challenged before a district judge.
• The maximum jail term falls from five years to one year [2].
• The Central Government must give prior approval before any FCRA offence can be investigated. This stops state agencies from opening FCRA cases on their own [2].
• Directors, trustees and members of the governing body are presumed responsible for an offence. They escape only if they prove they did not know of it or took due care [2].

Don't confuse with

• FCRA registration vs prior permission: registration covers all approved purposes for five years and can be renewed. Prior permission covers one amount, from one donor, for one project.
• Section 3 vs Section 5: s.3 names fixed groups who are always barred, such as candidates, judges, editors and public servants. s.5 bars organisations of a political nature only when the Central Government notifies them.
• Suspension (s.13) vs cancellation (s.14) vs surrender (s.14A): suspension is temporary (up to 360 days). After cancellation, the NGO cannot apply again for three years. Surrender is the NGO's own choice, made with government permission.
• Right to form an association vs right to receive foreign money: the first is a fundamental right under Art. 19(1)(c). Noel Harper (2022) held that the second is not a fundamental right.

Prelims Hooks

• The first FCRA was passed in 1976, during the Emergency. The current law is FCRA 2010, in force from May 2011, and is run by the MHA.
• 2020 amendment: administrative expenses cut from 50% to 20%, a ban on sub-granting, a compulsory account at the SBI New Delhi Main Branch, and suspension of up to 360 days [1].
• Trap: political parties fall under the s.3 bar. "Organisations of a political nature" fall under s.5. "Public servant" was added to s.3 only in 2020.
• Noel Harper v. Union of India (2022): there is no fundamental right to receive foreign contributions. An Indian passport may be used in place of Aadhaar.
• 2022 Rules: money from relatives abroad needs no report up to ₹10 lakh a year. Where a report is needed, the time limit is 3 months [4].
• 2026 changes: the Rules set 105 activities and a "reasonable activity" renewal test of ₹10 lakh over two years [3]. The Bill cuts the jail term from 5 years to 1 year and is now with a JPC [2].

Mains Points

• Regulation vs freedom of association:
• The State has a real interest in sovereignty, transparency and FATF Recommendation 8. The FATF (Financial Action Task Force) is a global body that fights money laundering and terror financing. Recommendation 8 asks countries to stop non-profits from being misused for terror financing.
• Other democracies have similar laws: the US FARA (1938), Australia's Foreign Influence Transparency Scheme, the UK's Foreign Influence Registration Scheme and Canada's foreign influence registry.

• But Art. 19(4) allows only reasonable restrictions. The government has wide discretion, can refuse renewal without a hearing, and there is no appeal against non-renewal [2]. These raise due-process concerns (due process is the requirement of a fair procedure before the State takes away a right).

• Shrinking space for civil society:

• The sub-grant ban cut off the main channel through which foreign money reached small grassroots NGOs and groups that support SHGs (self-help groups).
• The 20% cap, the SBI-only account and the 2026 limits on purposes and states [3] make compliance costly.

• Critics, including UN Special Rapporteurs, warn of a chilling effect: NGOs avoid advocacy and dissent because they fear losing their licence.

• 2026 package and reform ideas:

• Some changes soften the law: the jail term falls to one year, and the Centre must approve investigations, which stops harassment by state agencies [2].
• Other changes tighten control: assets will vest in a Designated Authority [2].
• Reform ideas:
  • a time-bound renewal process
  • an independent appellate tribunal
  • a hearing before renewal is refused
  • checks matched to each NGO's level of risk, as FATF advises, in place of the same rules for every NGO

Related concepts

• Foreign Contribution (Regulation) Amendment Act 2020
• Noel Harper case

Read more

• Regulating foreign funding: the FCRA regime