The government recently introduced a new bill in Parliament to regulate foreign funding of NGOs. The Foreign Contribution (Regulation) Amendment Bill, 2026, however, reignited the debate over the Central government assuming excessive power through legislation by fuelling concerns about narratives of a deep state and foreign hands destabilising the country’s peace and security.
The sweeping powers the bill grants to the Central government have triggered concerns among the Opposition and civil rights activists, who fear that once enacted, it could be used as a tool to silence organisations that raise uncomfortable questions for the government. These concerns are not without precedent. Last year, when Ladakh activist Sonam Wangchuk launched a movement for political autonomy in the region, the government cancelled the FCRA registration of his NGO and initiated a CBI probe into alleged financial mismanagement. Critics argue that the new bill, if enacted, could be used selectively against dissenting voices, opposition groups, and minority institutions.
The government, however, has maintained that the intent is to curb misuse of foreign funds. While introducing the bill, Minister of State for Home Affairs Nityanand Rai flagged concerns over the alleged misuse of foreign funding for religious conversions. “The Modi government will not tolerate any misutilisation of foreign funding and will take strong action against such elements,” he said in the Lok Sabha.
The proposed amendment
The amendment seeks to tighten the regulatory framework governing foreign funding of non-profit organisations by plugging what the government describes as operational and legal gaps in the existing Foreign Contribution (Regulation) Act, 2010. It introduces a significant shift in how foreign-funded entities are regulated by strengthening government control over their funds and assets. One of its key provisions is the concept of deemed cessation of registration, under which an organisation’s FCRA registration will automatically lapse if it fails to apply for renewal, is denied renewal, or does not secure renewal before expiry.
A key and contentious feature of the bill is the creation of a Designated Authority, notified by the Central government, which will take provisional control of foreign contributions and assets in cases of cancellation, surrender or cessation of registration. This control extends even to assets that are only partly funded through foreign contributions. The Authority is empowered to supervise, manage, and maintain these assets.
The bill lays down a two-stage mechanism for asset control. Initially, assets and funds are vested provisionally and may be returned if the organisation’s registration is restored or renewed. However, if the entity fails to regain registration within a prescribed period, or ceases to exist, the assets and unutilised foreign contributions will vest permanently with the Authority.
Such assets may then be used for public purposes. The Authority can transfer them to government departments or agencies, or dispose of them through sale. The proceeds, along with any unutilised foreign contribution, will be credited to the Consolidated Fund of India.
The bill also imposes obligations on organisations and their functionaries whose assets are vested. They must provide complete access to accounts and records, cannot transfer assets without approval, and must continue operations under the supervision and conditions set by the Authority.
To provide a legal remedy, the bill introduces an appeal mechanism, allowing aggrieved persons to approach a district judge within 90 days against orders of the Designated Authority.
Another significant change is the expansion of the category of entities prohibited from receiving foreign contributions. While existing restrictions continue for political and media-related entities, the bill broadens this to cover any person engaged in such activities.
On enforcement, the bill reduces the maximum imprisonment for violations from five years to one year, indicating a move towards lighter criminal penalties. At the same time, it mandates prior approval of the Central government before initiating any investigation, thereby increasing executive control.
It also empowers the Central government to exempt certain persons or entities from provisions related to vesting of assets if deemed necessary in the public interest, expanding its discretionary powers.
Comparison with existing Act
The government describes the amendment as an “improvement” over the Foreign Contribution (Regulation) Act, 2010. Under the 2010 Act, registration to receive foreign contributions was granted for five years and could be renewed, cancelled, or surrendered through a defined process. The 2026 bill introduces a stricter framework through deemed cessation, where registration lapses automatically if renewal is not applied for, denied, or not obtained in time.
In terms of asset management, the 2010 law provided a broad framework for handling assets created out of foreign contributions. The 2026 bill replaces this with a more structured and centralised system through the Designated Authority.
A key structural shift is the introduction of a two-stage vesting mechanism. While the 2010 Act did not clearly distinguish between temporary and permanent control of assets, the bill formalises this distinction, creating a clearer but stricter pathway for asset takeover.
The bill also clarifies the end-use of such assets. Unlike the 2010 Act, which did not explicitly define how permanently vested assets would be utilised, the 2026 proposal mandates their use for public purposes or their transfer or liquidation, with proceeds credited to the Consolidated Fund of India.
Another notable change lies in the obligations imposed on affected entities. While the 2010 framework focused on general compliance, the new bill requires organisations to provide full access to records, refrain from transferring assets, and operate under supervision — effectively reducing their autonomy.
On the legal side, the bill introduces a clearer appellate mechanism by allowing appeals to a district judge within 90 days. It also expands the category of entities barred from receiving foreign contributions.
In enforcement, the bill reflects a mixed approach — reducing criminal penalties while increasing executive control by requiring prior government approval for investigations.
According to the Statement of Objects and Reasons, the amendments aim to address operational and legal gaps, particularly in managing foreign contributions and assets in cases where registration is cancelled, surrendered, or ceases.
The criticism
The bill has drawn sharp criticism from Opposition leaders and civil society groups, who describe it as draconian and constitutionally suspect. A key concern is the wide discretionary powers granted to the executive, with critics arguing that Parliament is left to enact a skeletal framework while substantive decisions are delegated to the government through rules.
Congress leader Manish Tewari argued that the bill enables broad executive control over property, including provisional and permanent vesting of assets in a Designated Authority with powers of management, transfer and disposal. This, he says, raises concerns under Article 300A, which requires that deprivation of property be just, fair, and backed by adequate safeguards — conditions he argues are not sufficiently embedded in the bill.
Activists pointed out that even minor or technical violations could trigger cancellation or non-renewal of registration, potentially leading to valuable assets — such as schools, hospitals, or infrastructure — coming under state control. For organisations that combine domestic and foreign funding, the risk is seen as disproportionate, since even a small foreign contribution could put entire assets at stake.
Concerns have also been raised about the disposal of assets. Provisions preventing original functionaries from re-acquiring assets are seen as limiting fair market participation and potentially enabling preferential outcomes. On enforcement, the requirement of prior government approval for investigations is viewed as concentrating power with the executive. While it may act as a safeguard against arbitrary action, critics argue it could also enable selective enforcement.
The bill has been criticised largely for conferring excessive discretionary power on the government. Terms such as public interest, along with broad rule-making powers, are seen as giving the executive significant leeway to shape implementation without detailed statutory safeguards.
With the Kerala elections around the corner, some Opposition members have even hinted that the new bill could be used against Kerala churches, their schools and hospitals.