The Supreme Court of India has upheld the 2020 amendments in Foreign Contribution (Regulation) Act.


What did the court observe?

  • The verdict noted that many NGOs, which received the funds, did not utilise the foreign funds for the purposes for which they were registered.
  • It further noted that there had been cases of successive transfers and creation of a layered trail of money. This makes it difficult to trace the flow and final utilisation.
  • Hence, the court observed that this amendment had been necessitated to safeguard the sovereignty and integrity of the country, and public order.
  • The court noticed that the inflow of foreign contribution had almost doubled between the years 2010 and 2019. It further said that many of the registered associations had failed to comply with basic statutory 130 formalities. This resulted in cancellation of certificates of registration of more than 19,000 organisations.


About FCRA –

  • Government of India enacted the Foreign Contribution (Regulation) Act (FCRA) in the year 1976 with an objective of regulating the acceptance and utilisation of foreign contribution.
  • The legislation aims to regulate the acceptance and utilisation of foreign contribution or foreign hospitality by certain individuals or associations or companies.
  • It aims to prohibit funding for any activities detrimental to the national interest and for matters connected therewith.
  • The act was majorly modified in 2010 with several amendments because many NGOs were found using illegal use of foreign funding.


Amendments in 2020

  • Earlier, as per the FCRA 2010, only applicants such as directors who sought permission to receive foreign funds were required to make such a declaration. Now, every member of an NGO must, under oath, through an affidavit, declare that they have never been involved in diverting foreign funds or “sedition” or “advocating violent means”.
  • It has been made mandatory for office bearers and key functionaries and members to certify that they have not been “prosecuted or convicted” for conversion” from one faith to another and for creating “communal tension and disharmony”.
  • The Centre has amended in 2020 the Foreign Contribution (Regulation) Act and made Aadhaar a mandatory identification document for all the office-bearers, directors and other key functionaries of an NGO or an association eligible to receive foreign donations.
  • The “public servant” and “corporation owned or controlled by the government” are among the list of entities who are not eligible to receive foreign donations.
  • It also says that not more than 20% of the total foreign funds received could be defrayed for administrative expenses. Earlier the limit was 50%.