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FCRA Amendment Bill 2020- Key Developments

Varun Hariharan

| Updated: Sep 29, 2020 | Category: FCRA

FCRA Amendment

The Government of India brought out the Foreign Contribution (Regulation) Act 1976 with a view of opening the doors to foreign funding of public sector institutions, political parties, educational institutions and other Non-Governmental Organizations. There were a lot of critics on this bill, and the parliament paved the way to get an amendment for this bill. This article is going to analyze the recent developments of the FCRA Amendment.

Key Features of the Foreign Contribution (Regulation) Act 1976

The following are the key features of the Foreign Contribution (Regulation) Act 1976:

  • This act was developed to encourage foreign funding and hospitality, which focussed on the development of key areas which affected national interest and integrity of the country.
  • Hospitality was also permitted under this for public sector institutions, political institutions, Non-Governmental Organizations and educational institutions.
  • Importance was given to the development of key areas under this act.
  • In 1984, this act was amended to cover further foreign contributions, and some form of contributions was also permitted to be allowed for judiciaries.
  • Under the 1984 amendment associations which were granted funding were allowed to be given a license of registration under this system.

Why was the Foreign Contribution (Regulation) Act 1976 Amended?

This was amended to improve the security as well as the national interests of the country. With a view of increasing the amount of information technology and the use of IT infrastructure, these amendments were allowed to be granted. Moreover, with the increase in the amount of technology used by the country, there was a significant growth of foreign contribution to the development of different sectors. However, with the 1986 amendment, there were specific discrepancies in the law which had to be addressed.

What Led to the FCRA Amendment Bill 2020?

The government, to highlight specific issues in the FCRA amendment, brought out the bill in September 2020. Before this bill, the Foreign Contribution Regulation Bill, 2006 was passed. With a view of increasing the amount of transparency in the sector, this bill was introduced.

The following are the key features of the 2006 bill:

  • The government of India brought out this bill with a view of increasing the amount of acceptance and utilization of foreign contributions in India.
  • Under this bill, the term hospitality was also included in the meaning of foreign contribution.
  • Accounting of foreign contributions was also a key feature of the 2006 bill.
  • This bill was amended further to bring about the Foreign Contribution (Regulation) Act, 2010.
  • This act was brought about to replace the current issues which were faced by the predecessor 1976 regulation.               
  • This 2006 bill was brought out to increase the amount of foreign contribution in different sectors which affected the national interests of the country.
  • Apart from this, the FCRA amendment also brought about banning foreign contribution to political organizations. Banning foreign contributions to political organizations did not include political parties under this bill.
  • Under this bill, any form of company or entity which is engaged in the area of broadcasting information or any other form of electronic media were also included. This would consist of companies that product information, such as current affairs and news broadcast. Hence the FCRA amendment bill 2006 brought out different benefits for broadcasting and other forms of news companies.
  • Under this FCRA amendment bill, 2006 foreign contributions were banned from being utilized by any organization or organization involved in the areas of speculative activities.
  • Any form of administrative expenses under this bill is capped to 50% for the amount of foreign expenditure or hospitality expenses received by the organization.
  • This bill also excluded any amount of funds which were received from relatives abroad.
  • Apart from this, the bill brought out a systematic procedure where foreign contribution would be allowed and also refused. Through this procedure, if a foreign contribution for a particular Non-Government Organisation is refused the grounds for rejecting the contribution would also be stated by the government.
  • Monitoring compliance was one of the key factors of this amendment.  As a part of this, the government brought out the initiative of information sharing based on the amount of foreign contribution received by the entity. This would benefit the amount of monitoring activities carried out by an organisation.
  • This bill paved the way for companies and entities (including Non-Governmental Organizations) to register themselves officially for five years. After this period, organizations were allowed to renew their license for five more consecutive years. Hence, this bill brought out certainty for licensing organizations that received foreign contributions from abroad.
  • The FCRA amendment bill also paved the way for compounding offences related to receiving foreign contribution and hospitality.

Therefore, there were significant benefits brought about through the FCRA amendment bill. However, it is crucial to understand as to why the FCRA Act 2010 was further amended in the year 2020. In order to understand this, it is crucial to know what issues were faced during the regime of the FCRA act.

Issues of Foreign Contribution under FCRA Act 2010

There were many discrepancies and issues faced after the FCRA Act was passed. Hence the government decided to bring out an FCRA amendment which addressed all the issues.

Some of the controversies which were brought into the light are:

Non Registration of Educational Institutions- Some prominent educational institutions such as JNU, Delhi and IIT have not registered correctly with authority. Apart from this, these institutes do not have a proper account to maintain any form of FCRA currency account. This issue was addressed by the Parliament of India and have brought some reform through the FCRA amendment.

Greenpeace India Foundation- One of the prominent International NGO’s Greenpeace had breached the provisions of the FCRA.  Due to this, the Indian government blocked licenses for further foreign contribution to Greenpeace. Greenpeace has been charged with blocking future environmental activities in India. Furthermore, different activists from Greenpeace brought out protests against carrying out development activities which involve nuclear power, thermal power, coal and aluminium mining. Licenses were blocked in response to these activities which affected the provisions of the FCRA act. Apart from this, the main objective of this act could not be fulfilled. This act was brought out with the main intention to develop a national interest in specific areas. NGO’s and other activists were against the development of national interests of the country.

Due to the spur of events, the Indian government cancelled further license to Greenpeace India for development. One of the main reasons cited by the government in cancelling the license was the obstruction of development activities in India. This went against the principles of developing different sectors in India. This controversy was also considered by the government in bringing the FCRA amendment.

Closure of Compassion International- Another prominent American Non-Governmental Organisation had to shut down operations in India as the government rejected further foreign contribution to the development of this NGO.

Some of the reasons cited by the government are the NGO, promoted activities such as:

  • Donating Money to unregistered NGO’s in the country.
  • Apart from this, the Indian NGO’s funded by this organization were practising and encouraging religious conversions.

These reasons in the eyes of the Government were valid to be considered for rejecting foreign contribution in India. Many countries, especially in the EU (European Union), considered this movement of the Indian Government as derogatory for the development of further activities. All these reasons led the Government to bring out the FCRA amendment in 2020.

Key Provisions of the FCRA Amendment Bill 2020

In September 2020, the Ministry of Home and Affairs[1] (MHA) brought out a major amendment to the FCRA act. This FCRA amendment bill was an eye changer to foreign contribution received in the country. Advocates hailed the development brought about by the bill. However, many NGO’s in the country raised issues related to the bill.

The following are the essential features of this bill:

  • Foreign Contribution, which is provided to a particular entity, should only be utilized by the specific entity. This amount cannot be transferred or routed to another entity.
  • The amount of administrative expenses which is spent on foreign contribution is capped to 20%. This value is lesser than the previous amount, which stood at 50%.
  • Renewing of further foreign contributions will not happen automatically.
  • This bill was introduced to bring more transparency between the ‘giver’ and ‘receiver’ of any form of foreign contribution.
  • No public servant can receive any form of foreign contribution. Hence the government did away with the 1986 amendment which allowed foreign contribution for public servants, which included members of the judiciary.
  • The recipient organization has to mandatorily register itself with Aadhaar. An Aadhaar number and card is required to be held by the recipient.

What did the developments of the FCRA amendment cause?

  • Supporters

While many legislators hailed the FCRA amendment bill, many were against the bill. Many international NGO’s claimed that the bill was passed as a retaliatory measure against them. Due to the events which unfolded after Greenpeace, many NGO’s were targeted by the Government for receiving funds for carrying out activities which did not support the development of National interests of the country.

The supporters of the FCRA amendment claimed that passage of this bill would prevent activities such as donating to Indian NGO’s which encouraged religious conversion. Advocates of this bill said that this major reform would increase the number of development activities in the country.

Other supporters said that this bill overall improved the transparency for foreign funds which were received by the country.

  • Critics

There were many criticisms caused by this bill. These were mainly brought by different associations which supported NGOs. Some claim that this bill targeted activities of NGO’s which were funded internationally.

However, this bill was brought out to improve transparency for all institutions that receive some form of foreign currency. The FCRA amendment was not brought out to target international NGO’s but to improve the standards of monitoring of foreign contribution receiving in the country.

Conclusion


The Government brought out the Foreign Contribution (Regulation) Act, 1976. There were several discrepancies in this act which forced the government to bring out an amendment in 1986. The 1986 amendment allowed government servants to receive foreign contribution. However, the government brought out the FCRA amendment 2006 bill, which paved the way to increase the number of benefits on foreign contribution.  However, there were several controversies as a result of this bill and the FCRA act of 2010.
To address this government brought out the FCRA amendment 2020, which focussed on increasing the amount of governance and transparency when receiving foreign contribution. This bill is a major development in the amount of foreign contribution which can be received by an individual.

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Varun Hariharan

Varun Hariharan has completed the Legal Practice Course from BPP Law School, Manchester. He has a Masters in Commercial and Corporate Law from the Queen Mary University of London and LLB Honours from Bangor University, UK. He specialises in law related to corporate, artificial intelligence and technology law.

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