According to the government’s legislative programme for the monsoon session of Parliament, the Foreign Contribution (Regulation) Amendment Bill, 2026, has been listed for consideration. Although the Bill was included in the legislative agenda during the previous session, its consideration was postponed following widespread protests, particularly from Christian organisations and non-governmental organisations (NGO). At the time, the government made it clear that it remained committed to passing the Bill. Nevertheless, some interpreted the postponement as a sign that the government intended to defer it indefinitely or even drop it altogether. Those expectations have now been dispelled.

The politics of foreign contributions

In India, foreign contribution has always been a controversial issue. Normally, foreign contributions are allowed to support humanitarian relief and sectors such as health care, education, and environmental protection.

However, the inflow of foreign funds is regulated in all countries that permit such contributions. In India, there was no statutory framework governing foreign contributions before 1976, when the government of Indira Gandhi enacted the Foreign Contribution (Regulation) Act (FCRA) for the first time. The Act established a regulatory framework to control the acceptance and utilisation of foreign contributions and foreign hospitality. In fact, the government of the day feared, whether real or perceived, the destabilisation of India’s democratic system by foreign forces inimical to India’s interests. The Emergency regime was quite paranoid about the inflow of foreign money through multiple channels, including NGOs operating in the country.

The most interesting aspect of the brouhaha often raised over foreign contributions in India is that such contributions were never prohibited in general; they were always permitted to come into India. Of course, their acceptance and utilisation came under regulation, which became progressively stricter with every amendment. In 2010, the existing law was replaced by the Foreign Contribution (Regulation) Act, 2010. As in the 1976 Act, the primary focus of regulation under the 2010 Act was the legislature and political parties. The government’s concern was the possibility of a large-scale infusion of foreign money into politics. This concern was adequately addressed in the 2010 Act, wherein provisions were made to prohibit the receipt of any form of foreign contribution by candidates for election, media personnel, public servants, judges, government employees, members of the legislature, political parties and their office-bearers, as well as organisations of a political nature.

The Act also provided for the vesting of assets created out of foreign contributions in a prescribed authority under certain circumstances and situations. It was also laid down that any person or organisation engaged in definite cultural, economic, educational, religious, or social programmes must obtain a certificate of registration, without which no foreign contribution could be received. One point that deserves mention in the context of these laws is that, although they were regulatory in nature, they were not unduly harsh on the recipients. Foreign funds were allowed to flow into the country for a variety of humanitarian purposes, under the prescribed regulatory framework.

Sledgehammer effect

But when we look at the present Bill, it gives us a different picture. It in fact has a sledgehammer effect on NGOs and religious and cultural organisations.

The Act of 2010 contains provisions for the registration of applicants and the grant of certificates to receive foreign contributions. There are different conditions under which such a certificate is issued. One of these conditions is that the applicant has not been prosecuted, convicted, or found to have indulged in activities aimed at religious conversion through inducement or force, either directly or indirectly, from one faith to another. Another condition is that the applicant has not been prosecuted or convicted for creating communal tension, disharmony, or similar disturbances. Under the Bill of 2026, if such a certificate is cancelled, the foreign contribution received by the applicant, along with all assets created out of that foreign contribution, shall vest in a designated authority.

Section 16A(2) makes it clear that even if an asset has been created only partly out of foreign contributions, the whole asset shall vest in the designated authority. Initially, such vesting shall be provisional. However, if the applicant fails to obtain a fresh certificate or to have the certificate renewed or restored within the prescribed time frame, the foreign contribution and the assets created from it shall vest permanently in the designated authority. The authority may then transfer such assets to any ministry, department, or agency of the central government, a State government, or a local authority. It may also dispose of the assets through sale, auction, or any other prescribed method, and credit the sale proceeds, together with any unutilised foreign contribution, to the Consolidated Fund of India.

Thus, the cancellation of a certificate becomes a crucial factor in completely ruining an organisation that functions primarily on the strength of foreign contributions. It is, therefore, instructive to examine the circumstances under which a certificate authorising the receipt of foreign contributions can be cancelled by the government.

Clause (1)(c) of Section 14 of the Foreign Contribution (Regulation) Act, 2010, provides that a certificate may be cancelled if, in the opinion of the central government, it is necessary, in the public interest, to do so. The consequence of such cancellation is that the organisation loses its authority to receive foreign contributions, its assets created out of such contributions may be taken over, and its activities may effectively come to a halt. This provision confers unfettered powers on the government to cancel a certificate at any time. The term “public interest” is vague. As the government is the custodian of public interest, it can readily justify its actions on that ground. Cancellation of the certificate would result in the vesting of the foreign contribution and the assets created out of it in the designated authority. Depending on the nature of the organisation, such assets could even include places of worship.

Cancellation of a certificate may also result if an individual or organisation is prosecuted in connection with a case alleging religious conversion through force or inducement. Experience suggests that it is very easy for a person determined to have the certificate of a religious organisation cancelled to file a complaint in a police station or in a court alleging forcible religious conversion. Consequently, this provision has immense potential for misuse, particularly against minority religious groups.

A rather unusual provision in this Bill is that if a person surrenders a certificate of registration, the entire foreign contribution remaining with the person, along with all the assets created out of such contribution, will vest in the designated authority. It is difficult to understand the rationale behind this provision. A person or organisation that has availed of foreign contributions and created assets from them may, after some time, decide that it no longer requires any further foreign contributions and may therefore surrender its certificate. However, under Clause 16A(1)(b) of the Bill, all the assets created out of the foreign contribution, together with any unutilised portion of such contribution, shall vest in the authority.

Exemption clause

Finally, Clause 16L exempts any organisation, class of organisations, or person from the operation of this Bill if the government considers such an exemption to be in the public interest. Although the purpose of this clause appears to be obvious, the concern is that it may be vulnerable to challenge under Article 14 of the Constitution, which guarantees equality before the law. The clause neither identifies any intelligible differentia that distinguishes the favoured class of organisations or persons from those to whom the law applies in its entirety, nor establishes a rational nexus between such differential treatment and the object sought to be achieved by the legislation. The exemption of individuals or organisations is left entirely to the government’s opinion that such action is expedient in the public interest. It is clear from the overall scheme of these amendments that the state seeks to eliminate organisations active in the educational, cultural, environmental, and charitable sectors on account of certain deep-seated prejudices.

P.D.T. Achary is former Secretary General, Lok Sabha

Published - July 30, 2026 12:16 am IST