Regulating foreign funds sovereign step; US has similar laws

India's Ambassador to the US Vinay Mohan Kwatra has said the amendments to the Foreign Contribution (Regulation) Act were aimed at bringing in more transparency and expected organisations to receive money through a laid-down process.
In a series of posts on X, Kwatra on Sunday, August 9, said regulating foreign financial flows in public and political spaces is a sovereign step driven by national security concerns and cited similar laws enacted by the US for this purpose.
"The US has had FARA (Foreign Agents Registration Act) since 1938 and FATCA (Foreign Account Tax Compliance Act) since 2010. Australia legislated in 2018, Canada in 2024. The UK's scheme came into force in July 2025. The EU is legislating now,” he said.
Kwatra’s post on X came days after a US lawmaker voiced concern over the FCRA amendments, claiming that it would allow the Indian government to take control of churches and charities.
He said when a registration is cancelled or surrendered, foreign contributions and the assets created from them already vest in a State Government authority under a provision that has been in force since 2010.
“What the 2026 Bill adds is a designated authority to safeguard those assets — and a way back. If the organisation restores its registration, all assets and unused funds are returned in full,” Kwatra said.
“Places of worship carry their own protection. Where a cancelled association has created property connected to a place of worship, that property goes to another FCRA-registered association of the same faith to ensure continuity of worship,” he said.
The envoy also dismissed apprehensions that the new law aimed at cutting off foreign aid to civil society.
“Tens of thousands of associations are registered under FCRA and routinely receive foreign funds for health, education, disaster relief, research and humanitarian work,” Kwatra said.
He said India has over three million NGOs, and only a bare fraction of these, 14,450, hold FCRA registration.
“Thus, the overwhelming majority of civil society organisations are entirely outside the Act,” Kwatra said.
He said India first enacted FCRA in 1976 and brought in a more modern framework through amendments in 2010.
Kwatra said the FCRA was further strengthened by amendments in 2016, 2018 and 2020.
“The 2026 Bill and Rules are the next step in the same direction: more transparency, better governance, clearer rules,” he said.
Kwatra asserted that regulating foreign financial flows in public and political spaces is a sovereign step driven by national security concerns.
“It is an accepted feature of modern governance in many democracies around the world,” he said.
Kwatra also dismissed suggestions that the FCRA amendments targeted a particular community.
"Nothing could be farther from it. The Act applies uniformly to all organisations regardless of religion, community or ideology. Faith-based welfare activities, including religious education, maintenance of places of worship, and charitable work by organisations of every faith, continue to be eligible for foreign funding,” he said.
The FCRA Bill, 2026 seeks to empower the government to create a "Designated Authority" to take over the management of foreign contributions and assets created using foreign contributions when an organisation's FCRA registration is cancelled, surrendered or ceases because it is not renewed.
The bill also states that in case of assets that are a place of worship, the Authority must ensure that its religious character is maintained.
(With inputs from PTI)