New Delhi: With the introduction of the Foreign Contribution (Regulation) Amendment Bill, 2026 in Lok Sabha Wednesday, the Centre has moved to tighten control over foreign-funded organisations, by proposing a “designated authority” for management and disposal of foreign funds and assets created by an NGO or any other association or organisation whose registration is cancelled, surrendered or ceases under the law.
Introducing the bill, Union Minister of State for Home Nityanand Rai asserted that the Modi government “will not tolerate” any misuse of foreign funds and will take strong action against such ‘elements’.
The Foreign Contribution (Regulation) Act (FCRA), 2010 regulates the acceptance and utilisation of foreign contributions or foreign hospitality by certain individuals or associations or companies. The law prohibits such foreign contributions for any activities “detrimental to national interest”. Those with a definite cultural, economic, educational, religious or social programme can receive foreign contributions after obtaining permission or getting registered with the central government.
On the proposed “designated authority”, the Bill says that over a period of time, certain “operational and legal gaps have been identified, particularly in relation to the management of foreign contribution and assets created in cases where registration is cancelled, surrendered or otherwise ceases”.
While the current law provides for management and vesting of assets created out of foreign contribution to an authority whose registration is cancelled or surrendered, the Bill says that the absence of a comprehensive framework for supervision, management and disposal of such assets has led to “administrative uncertainty and scope for misuse”.
While the law does not expressly mention whether it’s retrospective or prospective, Supreme Court lawyer Prasanna S., who has dealt with FCRA cases, says there is “nothing to suggest it won’t apply to those whose certificate has already been cancelled”.
But the Opposition has criticised the Bill. Congress leader Manish Tewari alleged that it gives “wide and unguided executive control over property”; some other Opposition MPs said the Bill was “draconian” and “dangerous”.
In response, Nityanand Rai said that what was “indeed dangerous” were people misusing foreign contributions for personal gain or forced religious conversion.
Supreme Court lawyer Nipun Saxena told ThePrint that the provisions of the Bill “give unfettered, unguided and untrampled discretionary power to the administrator, to do as it deems fit with the property”.
What are the powers of this designated authority and what other changes does the new law bring? ThePrint explains.
The ‘designated authority’
“Under Section 16A, a full mechanism is put in place for the government to effectively step in and take over not just the management but also the properties that have been created out of any FCRA contribution or receipt. This is somewhat curious because this becomes an expropriating provision, that you are, in effect, expropriating property that doesn’t quite belong to the government,” he says.
“It belongs to a donor who has given a grant for a specific purpose to an organisation and that organisation has failed to observe certain things so you cancel the licence. So, if anything, the government can only become a trustee so that whatever is the property can be repatriated to the rightful donors,” Prasanna added.
He pointed out that there have been a spate of cancellations and refusals to renew FCRA licences over the last 4-5 years, and the appeals or petitions remain pending for several years.
‘Assets can be transferred to govt’
Section 16A says that upon vesting of the assets to the “designated authority”, it shall take possession of the assets, either directly or through an administrator.
However, Saxena points out that while section 2(a) says that an administrator will be appointed by the Centre, it does not define the requisite qualifications for such appointment, “essentially making any lackey of the government of the day wield tremendous power”.
If the organisation fails to get a fresh certificate or get its certificate renewed or restored within a specified period, the foreign funds and assets will become permanently vested in the designated authority.
Further, Section 16A(6) allows the “designated authority” to order transfer of assets permanently vested in it to “any ministry, department, authority or agency of the central government or of a state government or any local authority”. It also allows the authority to dispose of such assets through sale or any other appropriate process, and credit the sale proceeds together with any unutilised foreign contribution to the Consolidated Fund of India.
“Where most depositors, executants or trustees dedicate their life earnings and savings into a trust, it would be a shame to see that the properties are being sold off to the departments of government. This is simply against the formative principles of Indian Trust Act, 1881 or any other Public Trusts Act which prescribes a mechanism and requisite judicial oversight before such drastic steps are undertaken,” Saxena said.
An automatic vesting
Among other things, the proposed Section 14B says that such a certificate would be considered expired if it is “not renewed before its expiry”.
Saxena says that this provision grants a “pocket veto” that can be “exercised at any stage to terminate the validity of an NGO due to deliberate executive inaction, notwithstanding whether the NGO is otherwise compliant in all respects.”
“As is all too well known a certificate issued to the NGO under the FCRA takes its own sweet time to arrive, and therefore there are long queues to get this certificate renewed. What proposed section 14B does is curtail the validity in even those cases where the application for renewal has been made in a timely manner, but the same has not been approved,” he told ThePrint.
In such cases, there will be an automatic vesting of the assets or monies held in the account of that NGO.
The proposed Section 16A also says that an asset shall vest in the “designated authority whether created or acquired partly from foreign contribution and partly from other sources”. However, the provision also permits the organisation to file an application before the designated authority to return any “distinct or discernable portion” of the asset created from “other sources”.
“This provision thus literally brings all assets of the NGO within the broad sweep of the administrator. Constitutionally speaking, it does disservice to the original intent of the statute which was otherwise restricted to controlling/regulating the “foreign contribution” but now goes a step beyond to claim a proprietary interest in all assets whether or not the source of its creation is foreign contribution or domestic sources,” Saxena says.
However, Dharminder Singh Kaleka, adviser for strategy and external relations at Closed Door Policy Consulting India, says that the “phenomenon of foreign involvement through various agencies is a global reality that necessitates robust disclosure norms, similar to those seen in many advanced economies”.
The Bill, he therefore asserts, is a “necessary first step in professionalising the receipt of foreign capital and ensuring it aligns with our national developmental trajectory rather than exogenous agendas”.
However, he adds that as the country moves towards implementation, “we must maintain a delicate balance: It is imperative that increased oversight does not inadvertently lead to the disruption of legitimate democratic exercises or the vibrant civil society discourse that is the hallmark of Indian democracy.”
Punishment reduced
Additionally, the Bill reduces the maximum penalty for violations under Section 35, which deals with punishment for contravention of any provision of the Act, from 5 years to 1 year imprisonment. The provision provides for punishment for anyone who accepts or assists any person, political party or organisation in accepting any foreign contribution or any currency or security from a foreign source, in contravention of any provision of the Act.
Kaleka says that this rationalisation of penalties “signals a sophisticated shift from a purely punitive approach to a compliance-oriented regime”.
The Bill also says that no investigation shall be initiated for any offence punishable under the FCRA except with the prior approval of the central government.
Kaleka views this as a welcome step too. “By requiring central approval before initiating criminal investigations, the Bill provides a necessary shield for legitimate organisations against administrative overreach, fostering a more predictable environment for the development sector,” he told ThePrint.
A wider net
The bill casts a wider net when it comes to “key functionaries” of companies.
Key functionaries include directors of a company, partners in a firm, a trustee of a trust, a karta of a Hindu undivided family, an office bearer, member of the governing body, managing committee or other controlling authorities of a society, trust, trade union or association of individuals.
Section 12(4)(e) of the FCRA says that for grant of registration, the applicant must ensure that none of its “directors or office bearers” have been convicted or are currently under prosecution for any offence. The amendment replaces “director or office bearers” with “key functionaries”, effectively casting a wider net.
(Edited by Viny Mishra)
Also read: Entities receiving foreign funds must utilise them within 4 years, says home ministry