From Regulation To Expropriation: Draconian Provisions Of FCRA Amendment Bill, 2026

The preamble in Foreign Contribution (Regulation) Act of 2010 says that this Act is to regulate acceptance and utilisation of foreign contribution by individuals and associations. This Act provides reasonable mechanism to supervise and regulate foreign contributions to coming to India through individuals and associations. As per this Act, no person or association can accept foreign contribution unless such person obtains a certificate of registration from the central government. Thus only those associations who have got a registration certificate (FCRA certificate) can accept foreign contribution. This certificate is issued for a period of five years and should be applied for renewal six months before its expiry. There are lot of religious, charitable and educational institutions established and operated with the help of foreign contribution by various organisations. Nobody can deny the role of such institutions in serving the educational, health and other basic needs of Indian citizens, particularly the poor and marginalised classes. Still there is nothing wrong with the state to regulate the activities with the foreign contributions. But the new amendment bill introduced in the parliament is intended to make this regulatory mechanism to expropriating mechanism. The threats against the charitable institutions under this new bill are very similar to the threat against wakf properties under the recent wakf amendment Act.

The Foreign Contribution (Regulation) Amendment Bill, 2026, introduced in the Lok Sabha, purports to address certain "operational and legal gaps" concerning the management of foreign contributions and assets held by non-governmental organisations (NGOs) whose registrations are cancelled, surrendered, or have ceased to be valid. The Statement of Objects and Reasons in the Bill suggests a benign legislative intent, namely to create a comprehensive framework for the supervision and disposal of such assets. However, a meticulous examination of its provisions reveals a far more alarming agenda. The Bill does not merely plug gaps; it fundamentally alters the character of the Foreign Contribution (Regulation) Act, 2010, transforming it from a regulatory statute into a confiscatory one, vesting the Central Government with unprecedented and constitutionally suspect powers over the assets and existence of civil society organisations.

The cornerstone of this legislative overhaul is the introduction of a new Chapter IIIA, which establishes a draconian regime for the vesting of assets in a "Designated authority". This framework, far from being a procedural clarification, amounts to a mechanism for the expropriation of private assets without the safeguards of due process, judicial oversight, or adequate compensation, thereby striking at the very heart of the rule of law and the fundamental rights guaranteed by the Constitution of India.

The most pernicious provision is the new Section 16A, which mandates that upon the cancellation, surrender, or cessation of an FCRA certificate, all foreign contributions and assets created therefrom shall "provisionally vest" in the Designated authority. This vesting is automatic and instantaneous, requiring no judicial determination or adjudicatory process. The mere administrative act of cancellation triggers a complete loss of control over assets. This is a disproportionate consequence for what could be minor procedural infractions leading to cancellation. Section 14 delineates reasons for cancellation of FCRA certificate. Certificate can be cancelled for any of the five reasons mentioned in this Section, which are (i) certificate was obtained with incorrect statement in the application (ii) violation of terms of certificate (iii) in the opinion of central government the certificate of any association is to be cancelled in the public interest (iv) violation of any provisions of the Act and (v) if the association has not been engaged in any activity for the benefit of society in its chosen field for two consecutive years. Cancellation of certificate for any of these reasons will attract Section 16A and assets of concerned association will vest with the designated authority.

Section 16A(5) provides that if the organisation fails to have its certificate restored within a prescribed period, these assets shall "permanently vest" in the Designated authority. Subsequently, under Section 16 A (6), these assets can be transferred to any government department or sold, with the proceeds being credited to the Consolidated Fund of India. This is nothing short of expropriation. It allows the central government to seize the assets of a private entity, built over years of charitable work, based on an administrative decision. Such a provision appears to be in direct conflict with the spirit of Article 300A of the Constitution, which mandates that no person shall be deprived of his property save by authority of law. A law that permits such deprivation without a fair, just, and reasonable procedure is itself arbitrary and liable to be challenged.

Foreign individuals or other entities offers contribution to any particular organisation operating in India with a specific object in mind, such as for the benefit of tribes or like marginalised classes, environmental protection, health awareness, promoting education and scientific temperament, etc. Indian organisations are serving all these area with the help of foreign contributions and the same provides huge benefits to Indian community at large. Appropriating such contributions offered to a charitable organisation by a foreign citizen or entity to the Consolidated Fund on flimsy allegations against the receiving organisation would hurt the intention of those contributors. The newly introduced provisions make Indian organisations vulnerable to such draconian legal provisions and keep contributions received by them and their assets under constant threat of expropriation by government. In such a situation the foreign contributors will desist offering contribution to NGOs in India.

As per Section 16A, the assets of association will be vested with designated authority of central government not only on cancellation of FCRA certificate but also if the association voluntarily surrender the certificate and if the certificate is ceased to be valid under Section 14B. Section 14B says that the certificate will be ceased to be valid if the association does not submit application for renewal or the central government rejects the application for renewal or the certificate is not renewed before its expiry. The combined effect of Section 16A and Section 14B makes this Act a draconian one and it poses serious threats to all religious and charitable institutions. If an association voluntarily decides to surrender its FCRA certificate for some reason or it decides not to renew the certificate on its expiry, then the assets of such association which was acquired earlier using foreign contribution received under a valid certificate will be vested with the designated authority of central government. If the central government rejects the application for renewal then also the assets acquired during validity of the certificate using foreign contribution can be vested with the authority. Moreover, if the central government keeps the renewal application of any association pending without taking any decision and it expires on completing five year then also the assets of such association will be vested with the authority.

As per the data available in the portal of ministry of Home Affairs, about 15,000 organisations have valid FCRA at present and registration of about 22,000 organisations has been cancelled and registration of about 15,000 organisations has ceased to be valid as not renewed by the central government. Applications for renewal submitted by thousands of NGOs have been rejected by central government without citing any reason. Applications submitted by various reputed organisations have been rejected by the central government with one line reason that “field inquiry has revealed adverse inputs against the association.” One of the well-known institutions from Kerala recently got their application for renewal rejected with this reason. When they applied under Right to Information Act seeking details of the alleged adverse inputs the reply from ministry was that it cannot be disclosed due to national security reasons. The central government can reject the application for renewal citing such arbitrary reasons or keep pending without taking any decision and then assets of such association can be vested with the government authority under Section 16B.

The Bill creates a super-regulator in the form of the "Designated authority," armed with sweeping powers that obliterate the autonomy of civil society organisations. Section 16 A (3) empowers this authority not only to take possession of assets but also to "undertake the management of activities of the person" whose assets are vested. This is an extraordinary and dangerous overreach. It allows the executive to effectively take over the operations of an NGO, directing its activities and utilising its resources. This provision fundamentally undermines the right to form associations under Article 19(1)(c) of the Constitution, as an association managed by the government is no longer an independent, private body.

The arbitrariness is further compounded by Section 16A(2), which stipulates that an asset created partly from foreign contribution and partly from other sources shall vest wholly in the Designated authority. The burden is then shifted onto the organisation to apply for the return of the "distinct or ascertainable portion" created from domestic sources. This provision presumes guilt and imposes an onerous, and often impossible, evidentiary burden on the organisation, effectively allowing the State to seize assets that are not even within the purview of the FCRA.

The Bill systematically dismantles judicial oversight and established legal safeguards. While Section 16K provides for an appeal to the District Judge against an order of the Designated authority, this is a remedy of limited efficacy. The appeal lies against a specific order, but the initial act of vesting under Section 16A is automatic upon cancellation or cessation, not a reviewable order in itself. The core act of dispossession thus occurs outside the immediate scope of this appellate. Appeal can be filed only against the subsequent actions of management or disposal taken by the designated authority.

The Foreign Contribution (Regulation) Amendment Bill, 2026, read as a whole, is not a fine-tuning of the law but a radical restructuring aimed at establishing absolute executive control over the financial and operational existence of NGOs. The constant threat of complete asset seizure for any contravention will cast a profound chilling effect over the entire non-profit sector. It will deter organisations from undertaking work that is critical of government policies or operates in sensitive areas such as human rights, environmental protection, and accountability.

While the State has a legitimate interest in regulating the inflow of foreign funds to protect national interest, the measures proposed in this Bill are disproportionate, arbitrary, and destructive. They weaponise the regulatory framework to facilitate the potential silencing of dissent and the dismantling of independent civil society. In its current form, the Bill represents a grave threat to democratic principles, the rule of law, and the fundamental freedoms that are the bedrock of the Indian Republic. It must be re-evaluated and substantially amended to align with constitutional morality and the principles of justice, equity, and good conscience.

Author is an Advocate practicing at Supreme Court of India. Views are personal.