What Do The New FCRA Rules Mean For NGOs In India?

India is set to overhaul the way it regulates foreign funding for non-governmental organisations. The Foreign Contribution (Regulation) Amendment Bill, 2026, introduced in the Lok Sabha on March 25, 2026, proposes sweeping changes to how NGOs receive and use foreign donations.

The government says the goal is to tighten financial oversight and improve how foreign-funded assets are managed, but legal and policy experts say some provisions could affect how NGOs function even after they stop receiving money from abroad.

What Is FCRA?

The FCRA Act, 2010 governs how individuals, associations, trusts, societies and companies in India can receive and use foreign contributions. The law is meant to ensure that foreign funds are not used for activities seen as harmful to national interest.

Organisations that wish to receive foreign donations must either get an FCRA registration certificate, which is valid for five years and can be renewed, or seek prior permission from the government for a specific contribution meant for a specific purpose.

According to the Ministry of Home Affairs, 13,520 organisations received foreign contributions worth ₹55,741 crore between 2019 and 2022. As of July 15, 2026, there were 14,449 active FCRA registrations, while 22,498 had been cancelled and 15,212 had expired.

Why The Rules Were Tightened

One major concern was the practice of sub-granting, where large foreign-funded NGOs passed on donations to smaller organisations, creating funding chains that were hard to track, according to media reports citing government sources. The amended law now stops organisations from transferring foreign contributions to any other entity, even one with valid FCRA registration.

The government has also centralised how these funds come in. All foreign donations must now go into a single designated account at the State Bank of India's New Delhi Main Branch, instead of being routed through thousands of bank branches, allowing what officials call real-time monitoring.

The cap on administrative spending has also been cut, from 50% of foreign contributions to 20%, so more money goes towards actual charitable work rather than salaries and overheads. Other changes include mandatory Aadhaar identification for office-bearers, a bar on public servants receiving foreign funds, and an extension of the suspension period for FCRA registrations under inquiry from 180 to 360 days.

The broader aim is to protect national security by preventing foreign donor agencies from shaping domestic political or social debates through civil society groups, pointing to past instances where foreign funds were allegedly used in campaigns against infrastructure projects like coal mines, ports and nuclear plants, as per reports.

Some organisations have already faced action, including the Centre for Policy Research, whose FCRA registration was cancelled in 2024, Oxfam India, whose licence was not renewed in 2021 and Amnesty International India, whose bank accounts were frozen in 2020. All three have disputed the allegations against them.

Government Can Now Take Over Assets

While Parliament is yet to pass the Bill, the Ministry of Home Affairs notified new Rules on June 22, 2026, which thousands of organisations have already started following. The Bill itself goes a step further than these Rules by creating a new authority to take charge of assets built with foreign money.

The Bill sets up a Designated Authority to supervise, manage and dispose of foreign contributions and assets belonging to organisations whose FCRA registration has ceased, whether through cancellation, surrender or non-renewal. The Authority will hold these assets temporarily while an organisation tries to get fresh registration or renew its certificate. If that does not happen in time, the assets permanently vest with the Authority. For places of worship, the Bill says their religious character must be preserved even while under the Authority's management.

This marks a major shift from the current law, under which assets built from foreign funds vest with the government only if an organisation surrenders its registration or has it cancelled. The new Bill adds non-renewal to this list, meaning organisations that simply forget or fail to renew their FCRA registration could also lose control of such assets. Once the vesting becomes permanent, the Authority can transfer these assets to government departments or agencies, or sell them, with the proceeds going to the Consolidated Fund of India.

On the other hand, the Bill lowers the maximum jail term for violating the Act from five years to one year, while keeping fines in place. It also requires prior approval from the central government before any investigation can begin. It further defines "key functionaries," such as directors, trustees and office bearers, who must report to the government if their organisation becomes defunct, or risk having its foreign-funded assets vest permanently with the Authority.

The new asset-vesting rules could hit NGOs that no longer take foreign money but still run on domestic funds, as per a report by the Fortune. For example, if a hospital was built years ago using foreign grants but is now funded entirely through Indian donations, failing to renew its FCRA registration could still mean losing the hospital to the Designated Authority. This effectively applies retrospective consequences to assets long absorbed into public service work, the report added.

Reports also cited a "lock-in" problem. Organisations that want to stop receiving foreign funds cannot simply walk away from the FCRA framework without risking their existing assets, and may feel forced to keep renewing their registration indefinitely just to hold on to what they have built. This is made harder by the new Rules, which set fresh renewal conditions, including minimum spending requirements for foreign funds.

Assets built using a mix of Indian and foreign money could also become a grey area. While organisations can apply to recover the portion funded domestically, separating out foreign and Indian contributions in something like a shared hospital wing or school building may be difficult in practice.

There is also an inconsistency in how the law treats different organisations. Those that receive money under the prior permission route, meant for one-off projects, do not need ongoing registration, so their assets would not automatically vest with the Authority if they later switch to domestic funds. But organisations with regular FCRA registration could lose similar assets simply by not renewing, a gap experts describe as unequal treatment.

Perhaps the biggest legal concern is the lack of an appeal option. Existing FCRA law lets organisations challenge the cancellation or rejection of registration before a high court, but the Bill provides no such route if renewal is denied, nor does it require a hearing before rejecting a renewal application.

Christian Institutions, Smaller Charities Flag Concerns

Christian organisations are expected to be among the worst hit, since churches, schools, hospitals and charitable trusts across India have long relied on support from overseas missionary societies, as per reports. Supporters say these institutions have served communities for generations regardless of religion or caste.

Smaller charities and grassroots groups, which often lack dedicated legal teams, may also struggle to meet the same compliance standards as larger institutions, according to the reports. The Rules' ban on using foreign funds for "proselytisation," a term left undefined, has added to the uncertainty, with observers warning that everyday activities like catechism classes could be interpreted differently by different authorities.

Home Minister Amit Shah has assured the Catholic Bishops' Conference of India that the amendments are religion-neutral, will not target Christian institutions specifically, and will not apply retrospectively. The government maintains that receiving foreign funds is a statutory privilege and not a fundamental right, a position it says the Supreme Court has upheld before.

Political Opposition To The Bill

The Congress party held a demonstration in Aizawl on Tuesday against the proposed Bill. State Congress leader Lalnunmawia Chuaungo alleged it would make it harder for organisations to get certification or seek legal remedy if rejected, and said it would hurt churches and NGOs running hospitals and welfare programmes in Mizoram. Congress's Mizoram in-charge Chella Kumar accused the Centre of targeting NGOs and minority communities, and the state unit passed resolutions demanding the Bill's withdrawal.

Trinamool Congress MP Derek O'Brien has written to Prime Minister Narendra Modi seeking an all-party meeting before the Bill or any delimitation legislation is introduced. Calling the Bill "draconian," he said it could affect over 54,000 educational institutions run by the Christian community.

As Parliament prepares to take up the amendments in the Monsoon Session, questions around transparency, national security and religious freedom are expected to remain central to the debate.