Constitutional Critique Of Foreign Contribution (Regulation) Amendment Bill, 2026
The government of India, in a move to further tighten administrative control over non-profit organizations, charitable trusts, and other non-governmental institutions, introduced the Foreign Contribution (Regulation) Amendment Bill, 2026, which vests the government with the power to strip these non-governmental organizations of their assets if they fail to comply with FCRA registration requirements. The Foreign Contribution (Regulation) Act, 2010, was enacted to ensure that foreign contributions to certain individuals or associations are not utilized in a manner prejudicial to the national interests and connected matters. Recently, the 2020 amendment imposed stricter reforms, including a fixed 25% limit on the use of foreign contributions for administrative expenses, down from the previous 50%. The 2026 Bill, in a similar spirit, tightened the executive's control on institutions receiving foreign contributions by allowing the government to seize and permanently acquire their assets.
Chapter IIIA replaced section 15 of the Foreign Contributions Act, 2010, under which section 14B calls for cessation of the certificate of the organization if i) no application for renewal was made, ii) the government rejected the renewal application, and iii) the certificate is not renewed before its expiry. The foreign contributions and assets will be vested with the designated authority if the organization fails to comply with section 14, 14A, or 14B.
Of particular significance is the fact that the Bill allows the designated authority to be vested with assets that may have been acquired from sources other than foreign contributions. The return of these assets, upon an application by the person, is also contingent upon the subjective satisfaction of the designated authority, leaving considerable room for executive discretion. The designated authority, if it acquires the asset permanently, can also, upon an order, transfer the asset to any ministry or remit the sales proceeds directly to the consolidated fund of India. Additionally, the bill empowers the authority to fully undertake the management of the activities of the person whose assets are provisionally vested in it, if it considers it necessary or expedient to do so in the public interest. This creates significant ambiguity as to when and how the authority can entirely take over the management of the person.
The amendment thereby creates a disproportionate deterrent: even an administrative delay in certificate renewal empowers the designated authority to seize an organization's assets, threatening its very survival.
It is a popular phrase in law that procedure is the handmaiden of justice and not its mistress.[1] Administrative procedures should not eclipse the substantive rights of an individual. While the scope and object of the Foreign Contribution Act is to keep a check and ensure that foreign contributions are not used in a way detrimental to the state, the mere failure to renew a registration certificate doesn't constitute a valid justification to acquire its assets, nor can it in any way threaten the security of the state.
The 2020 amendment to the FCRA already increased the burden on such organisations by completely banning sub-granting to smaller grassroots organisations.[2] A large source of domestic funding for NGOs is from companies through corporate social responsibility,[3] and states such as Arunachal Pradesh and Mizoram, which already receive very little domestic funding of this kind, were already hit hard by the 2020 amendment.[4] The 2026 Bill, if it comes into force, threatens the very survival of the organisations by acquiring their assets without any justification over a simple procedural default.
In Noel Harper v Union of India, the Supreme Court has stated that receiving foreign donations is not a fundamental right of NGOs.[5] The present challenge is not to the State's power to regulate foreign contributions either. Rather, it concerns the collateral consequences imposed on the organisation as well as the arbitrariness of the amendment itself. It is argued by the author that it infringes upon the right to form an association enshrined under Article 19(1)(c) of the Constitution.[6]
The recent Bill significantly affects the right to form associations, as it creates obstructions that have not been clearly defined, upon the functioning of civil societies. Although foreign contribution itself may not constitute a fundamental right, a statutory mechanism that affects the survival of an association through asset acquisition affects the enjoyment of Article 19(1)(c). An association may technically continue without foreign contribution as well; however, the acquisition of its assets may render its functioning practically impossible, thereby impairing the effective exercise of Article 19(1)(c).
Even though the government in Noel Harper v UOI has rightly argued that it is necessary to regulate foreign donations made to such organisations to ensure their proper utilization and to prevent their misuse, the Bill vests the government with significant power to acquire foreign contributions simply if there happens to be an administrative pendency in renewing their certificate. Even more controversial is the fact that the bill allows the designated authority to acquire even those assets that have been partly obtained from sources other than foreign contributions.[7] While preventing misuse of foreign contributions constitutes a legitimate public purpose, permanent acquisition of assets unrelated to foreign contributions bears no rational nexus with the statutory objective of regulating foreign funding.
This brings us to Article 300A of the Constitution of India, which states that no person shall be deprived of his property save by authority of law.[8] It has been held by the Supreme Court that deprivation of property under Article 300-A must be for a public purpose or in the public interest.[9] Further, no compensation or nil compensation has to be justified by the state on judicially justiciable standards.[10]
In the case of FCRA, the deprivation occurs as a result of a procedural infirmity, and although the bill allows the designated authority to supervise and manage the assets, it also grants it the power to transfer those assets to various ministries or to hand over the sale proceeds to the consolidated fund of India merely because the organization failed to renew its certificate. Also, the bill remains silent on any form of compensation that can be granted upon acquiring their assets. The crux of the issue is that the bill fails to provide any justification for what it endorses; moreover, the failure to renew its certificate doesn't constitute grounds for misuse of foreign contributions or assets acquired through them. The confiscation of their assets doesn't have a rational nexus with the object of the statute itself.
Equality and non-arbitrariness are essential elements of Article 14 of the Constitution, which has a brooding omnipresence over it.[11] A legislation can violate Article 14 if it is capricious, irrational, or without any adequate determining principle.[12] The bill permits permanent assets acquisition if a renewal application is not filed, is rejected, or remains pending. These situations do not necessarily involve any misuse of foreign contributions or a threat to the security of the state. While the objective of the FCRA is to prevent misuse of foreign contributions, the provision permits permanent deprivation of assets even where the underlying failure is merely procedural, such as a delay in renewal of registration. Moreover, it provides excessive discretion to the designated authority in deciding whether the assets should be returned or not. It is clear that the deterrence mechanism is far disproportional to the wrong done, even if it can be labelled as a wrong, and clearly stands irrational with the purpose of the legislation. The provision also fails the classical test of reasonable classification under Article 14. While organisations with expired or cancelled FCRA registrations are placed in a separate category, the classification bears no rational nexus with the legislative objective of preventing misuse of foreign contributions, as expiry of registration may occur purely due to procedural non-compliance without any allegation of misuse.
Ultimately, the FCRA Bill risks transforming administrative regulation into an instrument of unchecked state power. The state must prioritize clear and fair procedures that distinguish between legitimate national security concerns and simple administrative hurdles faced by such civil societies. The state is not wrong to protect against misuse of foreign contributions; a distinction must be made as to what constitutes an actual misuse of such assets or whether it acts as a threat to the national security of the state or not. The state has to tread the fine path of ensuring national security while making sure constitutional mandates are not grossly disregarded.
State Of Punjab v Shamlal Murari (1976) 1 SCC 719. ↑
Foreign Contribution (Regulation) Amendment Act (2020), s 4. ↑
CSIP 'Estimating Philanthropic Capital in India report' (2019). ↑
Ministry of Corporate Affairs, 'National CSR Portal' <https://www.csr.gov.in/content/csr/global/master/home/home.html> accessed 14 June 2026. ↑
Noel Harper v Union Of India (2022) INSC 411. ↑
The Constitution of India (1950) Art. 19(1)(c). ↑
The Constitution of India (1950) Art. 300-A. ↑
Kt Plantation v State Of Karnataka (2011) 9 SCC 1. ↑
Ibid. ↑
Maneka Gandhi v Union Of India (1978) INSC 16. ↑
Shayara Bano v Union Of India (2017) INSC 785. ↑
Author is a third-year Law student at National Law Institute University, Bhopal. Views are personal.