Foreign funding regulation of NGOs is often projected as a national-security necessity but critiqued as shrinking civil-society space. Analyse with reference to the FCRA amendments of 2020 and 2026.

The Foreign Contribution (Regulation) Act, 2010 is administered by the Ministry of Home Affairs, not a charities or finance regulator — signalling that foreign money to civil society is treated as a sovereignty question. The 2020 and 2026 amendments deepen this framing, sharpening the tension between fiscal accountability and Article 19(1)(c) freedom of association.

The security-and-accountability rationale

• Regulation seeks an auditable trail of inflows: the 2020 Act capped administrative expenditure at 20% (from 50%) and routed all receipts through a single FCRA account at SBI, New Delhi [1].
• The 2026 Bill's stated object is to make use of foreign contribution more transparent and accountable, creating a Designated Authority for assets of entities that lose certification [2][3].
• Safeguards exist: vesting is provisional, assets and unused funds return in full if registration is restored, and permanent vesting diverts assets to public purposes (schools to the Education Department) [3].

The shrinking-space critique

• The 2020 ban on sub-granting severed the intermediary model that financed small grassroots organisations, while the 20% cap squeezed staff and compliance costs [1].
• Under the 2026 Bill, assets vest on cancellation, surrender or mere non-renewal — including property only partly created from foreign funds [2].
• Crucially, neither Act nor Bill guarantees a reasonable opportunity to be heard before renewal is denied, unlike cancellation [2] — an administrative lapse triggers property consequences without adjudication.
• Organisations thus cannot exit the framework without losing assets, creating perpetual dependence on executive renewal [2].

Analytically, the security rationale convincingly supports disclosure, banking discipline and audit, but not pre-adjudicative vesting of property, which fails the test of proportionality. Reconciling both demands is feasible: a statutory hearing and time-bound renewal decisions, an appellate remedy against non-renewal, and ring-fencing of domestically funded assets. Referral of the Bill to a Joint Parliamentary Committee offers exactly that corrective window — making accountability and associational freedom complementary rather than competing constitutional goods.