Foreign Contribution Regulation amendment Act (FCRA), 2020

Introduced: Lok Sabha (20th Sept 2020)

Passed: Lok Sabha (21st Sept 2020)

Passed: Rajya Sabha (23rd Sept 2020)

Present status: Received assent of the President on 28th Sept 2020 & converted to Act.

Background of Foreign Contribution Regulation Act (FCRA) 

  • The Foreign Contribution Regulation Act (FCRA) was first brought in by the Indira Gandhi government during the Emergency in 1976.
  • Its aim was to protect the ‘sovereignty’ of India from ‘foreign hands’ at a time when global powers were engaged in a cold war.
  • The law prohibited political parties, electoral candidates and even cartoonists from accepting foreign contributions.
  • In 2010, the government made the renewal of registrations mandatory every five years and placed a 50% limit on administrative expenses.

About Foreign Contribution Regulation (Amendment)Act, 2020

Ministry: Finance

Aim: The Act amended the Foreign Contribution (Regulation) Act, 2010. 

Key provisions of Foreign Contribution Regulation (Amendment)Act, 2020

  1. Prohibition to accept foreign contribution: These include: election candidates, editor or publisher of a newspaper, judges, government servants, members of any legislature, and political parties.
  2. Transfer of foreign contribution:
    1. Under the Act, foreign contribution cannot be transferred to any other person unless such person is also registered to accept foreign contribution.
    2. FCRA registered organisations are barred from transferring foreign donations to smaller non-profits (a practice known as sub-granting) who often find it difficult to access donors on their own.
  3. Aadhaar for registration: The Act states that a person may accept foreign contribution if they have obtained a certificate of registration from central government or obtained prior permission from the government to accept foreign contribution. The bill makes Aadhaar mandatory for registration.
  4. Restriction in utilisation of foreign contribution: The Bill gives government powers to stop utilisation of foreign funds by an organisation through a “summary enquiry”.
  5. Reduction in use of foreign contribution for administrative purposes: The bill decreases administrative expenses through foreign funds by an organisation to 20% from 50% earlier.
  6. More power to government: FCRA registration can be suspended now after a summary enquiry and the period of suspension can extend up to a year (from 180 days earlier).
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