Successive FCRA amendments have tightened the regulation of foreign-funded civil society. Discuss what this means for India's development sector.

The Foreign Contribution (Regulation) Act, 2010 governs how NGOs accept and use foreign funds. Its amendments have moved from regulating how money flows to controlling the assets that money creates. This brings accountability, but it also strains the sector's capacity.

How regulation has tightened

• 2020 amendment: the cap on administrative expenses was cut from 50% to 20%. Funds can now be received only in an SBI, New Delhi account. Sub-granting to other organisations was banned, and Aadhaar became mandatory for office-bearers [1].
• 2026 Rules: renewal now requires spending at least ₹10 lakh of foreign contribution over the previous two financial years [2].
• 2026 Bill: a Designated Authority would take over the assets of an organisation whose certificate is cancelled, surrendered or has ceased. Proceeds would go to the Consolidated Fund of India [3].

Positive implications

• Transparency: a single receipt channel and audited accounts make funds traceable [1].
• Security: the law guards against foreign money being used for communal tension or diverted to other ends [1].
• Public purpose kept: foreign-funded assets cannot quietly become private property. Places of worship keep their religious character [3].

Concerns for the development sector

• Grassroots reach shrinks: the sub-grant ban breaks the link between large donors and small rural partners [1].
• Capacity is hollowed out: a 20% overhead cap leaves little money for staff, research or monitoring [1].
• The sector is contracting: there are 14,449 active certificates, against 22,498 cancelled and 15,212 expired [3].
• Self-reliance is penalised: NGOs that need less foreign money can fail the spending rule and then lose their assets [2][3].
• Due process is weak: renewal can be refused without a hearing or an appeal [3]. UN experts have warned that FCRA can be used to silence civil society [4].
• Services are disrupted: schools and clinics may pass to the state, which may not be ready to run them [3].

Overall, the FCRA amendments have made foreign-funded civil society more accountable, but they have also reduced its reach. A balanced approach would add a hearing and an appeal before assets vest, vest only the foreign-funded share of mixed assets, and recalibrate the spending threshold for small NGOs. That would protect security while preserving the freedom of association under Article 19(1)(c), and it would keep NGOs working towards SDG 17 partnerships for development.