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Foreign Contribution (Regulation) Amendment Rules, 2023

Published: 28th Sep, 2023

Context

The Ministry of Home Affairs (MHA) has issued a gazetted notification, amending the Foreign Contribution Regulation Act (FCRA) rules after mandating NGOs with FCRA licence to submit details of movable and immovable assets created out of foreign contributions.

Background

  • The FCRA was established during the Emergency in 1976 amid apprehensions that foreign forces were meddling with India's affairs by injecting money into the nation through independent groups.
  • In 2022, the MHA revised foreign fundraising laws, providing several exemptions such as;
    • Allowing families to transfer additional funds under the FCRA.
    • Granting organizations extra time to notify the government about the opening of bank accounts in order to use funds that were acquired through "registration" or "prior permission"

About the Amendment:

  • The new regulations state that individuals who receive foreign contributions from relatives abroad and do not notify the government within 90 days will not face prosecution. This includes members of legislatures, political parties, election candidates, judges, government employees, journalists, and media outlets, among others, who are all prohibited from receiving foreign contributions.

What is an NGO?

A Non-Governmental Organisation (NGO) is a non-profitable charitable organization.

In India, NGOs formed as trusts or societies are overseen by the state governments, while those formed under Section 8 of the Companies Act are subject to the Companies Act, 2013.

How foreign funding is being regulated in India?

  • It is necessary to register with the FCRA in order to receive foreign funds.
  • The License is granted by the Union home ministry grants FCRA licenses for five years.
  • FCRA license is valid for five years, and NGOs are expected to seek renewal within six months of the registration expiring.
  • The government can also cancel the FCRA registration of any NGO if it finds that the NGO is in violation of the Act, if it has not participated in any legitimate activity in its chosen sector for the betterment of society for two years in a row, or has gone defunct.
  • Once an NGO's registration is terminated, it is ineligible to re-register for 3 years.

Criteria to seek FCRA registration:

  • The FCRA requires every individual or non-governmental organization wishing to get foreign donations to be:
    • registered under the Act
    • To open a bank account for the receipt of foreign payments in the State Bank of India, Delhi.
    • to use the funds solely for the purpose for which they were obtained, as provided in the Act.
  • FCRA registrations are given to persons or groups with specific economic, cultural, religious, educational, and social programs.
  • Exceptions:
    • According to the FCRA, the applicant must not be forged and must not have been charged or guilty of engaging in activities aiming at conversion from one religious faith to another using inducement or compulsion, either directly or indirectly.
    • The candidate should not have been charged with or accused of causing communal tension or conflicts.
    • Furthermore, no one should be involved or likely to be involved in the spread of sedition.
    • The Act forbids the receipt of foreign contributions by election candidates, reporters, newspaper and broadcasting firms, lawyers and government employees, members of legislature & political parties or their office-bearers, and political organizations.

Why Foreign Contributions are regulated?

  • National Security: Foreign funding can be exploited to support actions that threaten a nation's safety and stability.
    • Governments aim to keep foreign entities from influencing domestic issues in ways that might harm their interests.
  • Sovereignty and Independence: Excess foreign influence can undermine a country's capacity for making decisions in its best interests.
    • Governments want to preserve control over their policies and activities while avoiding excessive external pressure.
  • Transparency and Accountability: Governments may check how foreign donations are used and guarantee that they are not stolen or diverted to unlawful or criminal activities by monitoring and controlling them.
  • Preventing Money Laundering and Terrorism Financing: Regulations help in detecting and preventing these illegal activities by imposing strict reporting requirements and due diligence measures on organizations receiving foreign funds.
  • Protection of Domestic Interests: Regulations are frequently introduced to safeguard domestic businesses and industries against unfair competition or exploitation by foreign companies.
  • Political Independence: Rules are intended to guarantee that domestic political activities are free of excessive foreign influence, hence protecting the integrity of democratic processes.
  • Preventing Subversion of Values: Foreign donations may be subject to conditions, such as the donor promoting certain beliefs or ideals.
  • Compliance with International Obligations: Some nations are obligated by international law to restrict foreign contributions as part of their responsibilities to global anti-money laundering, anti-corruption, and counterterrorism funding activities.

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