The Foreign Contribution (Regulation) Act (FCRA)

Syllabus: UPSC Prelims
Source: Indian Express

Context

The Ministry of Home Affairs (MHA) recently cancelled the FCRA license of climate activist Sonam Wangchuk’s NGO after protests in Leh, citing that his remarks had “incited” violence. This has once again brought the Foreign Contribution (Regulation) Act (FCRA) into focus.

What is the FCRA?

• Definition: The Foreign Contribution (Regulation) Act, 2010 is a law that regulates the acceptance and use of foreign donations by individuals and organisations in India.
• Historical Background: First introduced in 1976 during the Emergency to prevent foreign influence in Indian politics and public life.
• Aim:
  • Ensure foreign donations are used only for their stated purpose.
  • Ensure organisations operate in line with India’s sovereignty, democracy, and national interests.
• Nodal Authority: Ministry of Home Affairs (MHA) registers, monitors, and enforces the Act.

Key Features of FCRA

1. Mandatory Registration
   • NGOs/individuals must register with the MHA to receive foreign funds.
   • Registration valid for 5 years; renewal required within 6 months of expiry.
2. Banking Rule
   • Foreign funds can only be received in a designated bank account at State Bank of India, New Delhi.
3. Ban on Transfer
   • Registered NGOs cannot transfer foreign contributions to unregistered entities.
4. Barred Categories (Prohibited Recipients)
   Certain groups cannot receive foreign contributions:
   • Election candidates
   • Journalists/media houses
   • Judges and government servants
   • Members of legislature
   • Political parties and their office-bearers
   • Organisations of a political nature
5. Exemption for Relatives (2022 Amendment)
   • Contributions from relatives abroad raised from ₹1 lakh to ₹10 lakh without mandatory intimation.
   • Non-reporting within 90 days attracts only a 5% monetary penalty, not prosecution.
6. Cancellation of License
   • MHA can cancel registration in cases of:
     • False information during registration
     • No activity for two consecutive years
     • Misuse of foreign funds
     • If deemed necessary in “public interest.”

Conclusion

The Foreign Contribution (Regulation) Act acts as a safeguard against foreign influence while allowing legitimate funding for social, developmental, and charitable work. However, its frequent use in cancelling NGO licenses has sparked debates over whether it strikes the right balance between national security and civil society freedoms.