Centre to amend the Foreign Contribution (Regulation) Act

The Union government is likely to amend the Foreign Contribution (Regulation) Act in the ongoing session of Parliament session. One of the key changes proposed is the appointment of a “designated authority” to take over, manage or dispose of assets created out of foreign funds by an NGO or association, which has had its FCRA registration suspended, cancelled, or not renewed.

Another proposed amendment is expanding the definition of “key functionary” of an NGO beyond an “office bearer/director” to include directors; partners; trustees; the karta (head) of a Hindu Undivided Family; office‑bearers or members of the governing body or managing committee of a society, trust, trade union or association; and any other person who has control over or responsibility for the management or affairs of such an organisation.

The amendment also proposes to make key functionaries liable for offences under the FCRA, unless they can provide evidence of lack of knowledge, or due diligence. 

Registration under the FCRA is mandatory for a non-government organisation to receive foreign funds. Till now, the 2010 parent Act only had the provision to regulate the flow of foreign funds, and not the statutory framework to manage the assets created out of such funds. 

The Foreign Contribution (Regulation) Amendment Bill, 2026 also proposes to amend Section 43 of the parent Act, which will require any law enforcement agency or State government to seek prior approval of the Central government for initiation of investigation into FCRA-related complaints.

The Statement of Objects and Reasons of the Bill circulated among members of Lok Sabha by Union Home Minister Amit Shah said that, at present, approximately 16,000 associations are registered under the FCRA and they receive around ₹22,000 crore annually.

It said that the FCRA, 2010 regulates the acceptance and utilisation of foreign contribution and foreign hospitality to ensure that such inflows do not adversely affect national interest, public order, or national security. 

The Act came into force on May 1, 2011 and has been amended in the years 2016, 2018, and 2020. “Over the period, certain operational and legal gaps have been identified, particularly in relation to the management of foreign contribution and assets created therefrom in cases where registration is cancelled, surrendered or otherwise ceases,” the statement said. 

Section 15 of the Act provides for vesting of assets, but the absence of a comprehensive framework for supervision, management and disposal of such assets has led to administrative uncertainty and scope for misuse, it said. 

“Further, multiplicity of investigations, inconsistency in penalties, absence of timelines for utilisation, lack of express provision for cessation of registration, and ambiguity regarding treatment of assets during suspension have resulted in implementation challenges,” the statement further said.

The Bill also proposes timelines for the receipt and utilisation of foreign contributions under prior permission, automatic cessation of certificates upon expiry or non‑renewal, clearer rules on asset handling during suspension, and rationalised penalties. 

The Bill proposes to reduce the maximum imprisonment for FCRA offences from five years to one year. It proposes fixed timelines for the utilisation of foreign funds received under the “prior permission” category (one-time receipt of funds), unlike the open-ended provision under the 2010 Act.