From Indira to Modi: How India's Foreign Funding Law Has Tightened Over Five Decades
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MHA amends FCRA 2026: bars foreign nationals as NGO key functionaries, mandates predefined activity lists, and bans proselytisation.
By Pranjal Gupta
New Delhi, June 23: The Ministry of Home Affairs (MHA) on Tuesday introduced amendments to the Foreign Contribution Regulations Act (FCRA) 2010, which generally bars foreign nationals to be "key functionaries" (meaning top leaders, board members, directors, or key decision-makers) of any Indian association or NGO that wants to register to receive foreign money. However, the ministry provided an exemption for such entities.
The central government can clear an association to receive foreign money, but only after it passes a dedicated, formal executive order bypassing the restriction for that specific group.
The Centre has also broadened the definition of "key functionary in relation to a person other than an individual" to cover a wide range of roles including company directors, partners in firms, trustees, the 'Karta' of a Hindu Undivided Family, and any person who has control over the management of the association.
Faith-Based Activities Allowed, But No Proselytisation
Apart from this, the NGOs will have to choose from predefined list of purposes and their area of operation under the new rulings. The associations can choose from a range of faith-based activities that the government allows. This explicitly exclude proselytisation (conversion of religion). All associations registered before 2026 will have to disclose their specific purposes and states they want to keep in their registration.
The penalty for defraying foreign contributions beyond 20 per cent of the contributions received for administrative expenses, in contravention of section 8 of the Act, will be Rs 1 lakh or 5 per cent of the amount spent beyond the limit, whichever is higher, the notification said.
Introduced by Indira, Repealed by Manmohan
The law was first enacted in 1976 by Prime Minister Indira Gandhi during the Emergency, as the then-government was anxious of foreign intelligence agencies (like the CIA or the KGB) secretly funding political parties, trade unions, and journalists to destabilise India from within.
In 2010, the focus was shifted from politicians to NGOs as the Indian economy was opened up. the Manmohan Singh-led UPA government repealed the 1976 Act and shifted targets from politicians to NGOs.
In recent years, the Centre eased compliance for individuals by raising the threshold for money sent by relatives abroad from Rs 1 lakh to Rs 10 lakh before government notification is required. NGOs were also given more breathing room — the deadline to report internal changes like a new bank account, name change, or change in trustees was extended from 15 days to 45 days.
All Money Must Land in SBI Account
At the same time, the Centre tightened its grip on how foreign money actually enters India. All foreign donations to NGOs must now land exclusively in a designated FCRA account at the State Bank of India's New Delhi Main Branch — and nowhere else. This single-funnel rule gives the government one central choke point to monitor, freeze, or flag every rupee of foreign contribution coming into the country.
