Editorial: FCRA Bill needs closer scrutiny

It is a sovereign right of any nation to frame rules to regulate the flow of foreign funding. There can be no two opinions about the need to prevent the misuse of foreign contributions by NGOs. If protection of national security interests is the only motive behind the NDA government introducing the Foreign Contribution (Regulation) Amendment Bill, 2026, in Parliament, then there should be no reason to oppose the move. However, the real intentions of the government are suspect. There has been an intense backlash against the amendment with opposition parties, civil society organisations, NGOs and church bodies raising serious objections and demanding its withdrawal. After much ruckus in Parliament, the government has now agreed to refer the Bill to a Joint Parliamentary Committee (JPC) for closer examination. This is a welcome development and hopefully puts an end to the raging controversy amid allegations of harassment of the NGOs, particularly the through excessive regulation and bureaucratic control. India has over three million NGOs, and only a small fraction of them—around 14,450—hold FCRA registration. Several organisations routinely receive foreign funds for health, education, disaster relief, research and humanitarian work. The Centre has justified bringing the amendments on the ground that they would ensure more transparency, better governance, and clearer rules. The amendment Bill seeks to empower the government to create a “Designated Authority” to take over the management of foreign contributions and assets created using foreign contributions when an organisation’s FCRA registration is cancelled or surrendered and ultimately sell these properties while crediting the proceeds directly into the Consolidated Fund of India, even if an asset was only partly funded through foreign contributions.

The critics of the Bill have voiced concern that its asset-vesting rules could be used to penalise past investments. Many church bodies have also expressed their fears in meetings with Union Home Minister Amit Shah over the past few days. No doubt the misuse of foreign funds is a well-documented problem and the Financial Action Task Force , the Paris-based global watchdog, did flag real gaps in the non-profit oversight in India. However, the real way forward, as recommended by the FATF itself, is targeted, risk-based scrutiny, not blanket vesting powers. Through aggressive enforcement, the government has already imposed complex compliance burdens, such as banning sub-granting to grassroots organisations, slashing allowable administrative outlays and mandating a single bank branch in New Delhi for all The resulting regulatory squeeze has triggered an 87% drop in foreign funding, forcing thousands of community-based organisations to shut down, while an impending legislative push to allow the state seizure of cancelled NGO assets threatens to permanently cripple the sector. The Centre must define “proselytisation” in precise and clear terms instead of leaving it to local discretion and put in place a process of genuine judicial review before any asset is touched.