What is the FCRA?

• The Foreign Contribution Regulation Act (FCRA) regulates foreign donations and ensures that such contributions do not adversely affect internal security. 
• It was first enacted in 1976 and was amended in 2010 when a slew of new measures were adopted to regulate foreign donations. 
• The Foreign Contribution (Regulation) Act, 2010 came into force on May 1, 2011 and has been amended twice. 

About FCRA 2010

• The Foreign Contribution (Regulation) Act, (FCRA), 2010 and rules framed under it regulate foreign contribution provided by certain individuals or associations to NGOs and others within India.
• The objective is to prevent use of foreign contribution or foreign hospitality for any activity detrimental to the national interest.

Applicability

• The FCRA is applicable to all associations, groups and NGOs which intend to receive foreign donations.
•  It is mandatory for all such NGOs to register themselves under the FCRA. 

Validity

• The registration is initially valid for five years and it can be renewed subsequently if they comply with all norms. 

Purposes

• Registered associations can receive foreign contributions for social, educational, religious, economic and cultural purposes. 

Preconditions

• Filing of annual returns, on the lines of Income Tax, is compulsory. 
• The new rules notified by MHA in 2015, requires NGOs to give an undertaking that the acceptance of foreign funds is not likely to prejudicially affect the sovereignty and integrity of India or impact friendly relations with any foreign state and does not disrupt communal harmony. 
• Also all such NGOs would have to operate accounts in either nationalised or private banks which have core banking facilities to allow security agencies access on a real time basis.

Who cannot receive foreign donations?

• Members of the legislature and political parties, government officials, judges and media persons are prohibited from receiving any foreign contribution. 
• However, in 2017 the Ministry of Home Affairs (MHA), amended the FCRA law paving the way for political parties to receive funds from the Indian subsidiary of a foreign company or a foreign company in which an Indian holds 50% or more shares.

Procedure

• Foreign contributions can be received by applying for prior permission. 
• It is granted for receipt of a specific amount from a specific donor for carrying out specific activities or projects. 
• But the association should be registered under statutes such as the Societies Registration Act, 1860, the Indian Trusts Act, 1882, or Section 25 of the Companies Act, 1956. 

When is a registration suspended or cancelled?

• The MHA on inspection of accounts and on receiving any adverse input against the functioning of an association can suspend the FCRA registration initially for 180 days. 
• Until a decision is taken, the association cannot receive any fresh donation and cannot utilise more than 25% of the amount available in the designated bank account without permission of the MHA. 
• The MHA can cancel the registration of an organisation which will not be eligible for registration or grant of ‘prior permission’ for three years from the date of cancellation.

Why in the news?

• The Parliament recently passed a bill to amend the Foreign Contribution (Regulation) Act, 2010.

Key provisions of FCRA Amendment Bill, 2020

• The bill proposes to make Aadhaar a mandatory identification document for all the office-bearers, directors and other key functionaries of an NGO or an association eligible to receive foreign donations.
• The Bill proposes to include “public servant” and “corporation owned or controlled by the government” among the list of entities who are not eligible to receive foreign donations.
• The Bill proposes that not more than 20% (present limit is 50%) of the total foreign funds received could be utilised for administrative expenses. 

Need for amendment

• To enhance transparency and accountability in the receipt and utilisation of foreign contributions and
• To facilitate the genuine non-governmental organisations or associations who are working for the welfare of society.

Criticism of the bill

Impairs NGO functioning

• It adds governmental oversight, additional regulations and certification processes, and operational requirements, while simultaneously reducing the limit of administrative expenditure that can be allocated to foreign contributions to 20% from the previous 50% which would impair their effective functioning.

Incompatible with International obligations

• The International Commission of Jurists has said the new law was incompatible with international obligations and India’s own constitutional provisions on rights and would hamper the work of civil society.

Way forward

• Seamless sharing of ideas and resources across national boundaries is essential to the functioning of a global community, and should not be discouraged unless there is reason to believe the funds are being used to aid illegal activities.

References:

1. https://www.thehindu.com/opinion/editorial/the-foreign-hand-the-hindu-editorial-on-fcra-amendments/article32689241.ece 
2. https://www.thehindu.com/news/national/parliament-proceedings-government-tables-bill-to-amend-foreign-contribution-regulation-act/article32652630.ece 
3. https://www.thehindu.com/news/national/the-hindu-explains-what-is-foreign-contribution-regulation-act-and-how-does-it-control-donations/article32590504.ece 
4. https://www.thehindu.com/news/national/icj-says-fcra-bill-incompatible-with-international-law/article32685688.ece