The Foreign Contribution (Regulation) Act

Source: IE

Context: The Ministry of Home Affairs (MHA) cancelled the FCRA license of climate activist Sonam Wangchuk’s NGO, shortly after a violent protest in Leh that the MHA claimed his statements “incited.”

About The Foreign Contribution (Regulation) Act (FCRA):

What It Is?

• Definition: The Foreign Contribution (Regulation) Act, 2010 (FCRA) is a comprehensive law enacted to regulate the acceptance and utilisation of foreign donations by individuals and associations in India.

• Historical Context: First enacted in 1976 during the Emergency, it aimed to prevent foreign powers from interfering in India’s internal affairs, a concern articulated in Parliament as early as 1969.

• Primary Aim: To ensure that foreign donations are utilised for the intended purpose and that the recipient organisations function consistently with the values of a sovereign democratic republic.

• Governing Institution: The Union Ministry of Home Affairs (MHA) is the nodal ministry responsible for the registration, monitoring, and enforcement of the FCRA.

Key Features:

• Mandatory Registration: Requires every person or NGO receiving foreign funds to be registered under the Act and obtain a valid license, which is valid for five years. Renewal is mandatory within six months of expiry.

• Banking Mandate: Stipulates that foreign funds must be received only in a designated bank account, specifically at the State Bank of India (SBI), New Delhi.

• Prohibition of Transfer: Bars NGOs from transferring foreign funds to any other unregistered person or NGO, ensuring direct utilisation by the recipient.

• Barred Recipients (Foreign Contribution ‘Prohibited’): Explicitly prohibits the receipt of foreign funds by individuals and entities deemed sensitive to national policy, including: Candidates for elections Journalists/Media companies Judges and Government servants Members of the Legislature Political parties or their office-bearers Organisations of a political nature

• Candidates for elections

• Journalists/Media companies

• Judges and Government servants

• Members of the Legislature

• Political parties or their office-bearers

• Organisations of a political nature

• Exemption for Relatives (2022 Rule Change): Relaxed the requirement for government intimation for contributions received from relatives abroad, raising the limit from ₹1 lakh to ₹10 lakh. Non-intimation within 90 days results only in a monetary penalty (5% of the contribution), not prosecution.

• Cancellation Grounds: Empowers the MHA to cancel registration based on violations like false statements, non-activity for two consecutive years, misutilisation of funds, or when deemed necessary in the “public interest.”