INTRODUCTION
On 23rd June 2026, the Ministry of Home Affairs issued a comprehensive set of amendments in the compliance, registration and utilisation regime of association receiving foreign contribution in India under the Foreign Contribution (Regulation) Act, 2010 (FCRA). The amendments mandate that the first time NGOs and other registered associations seek and spend foreign money it must explicitly specify its purpose and geographic location. The change is widely interpreted as a continuation of the Centre’s drive towards greater transparency and accountability for funds raised by civil society organisations from international sources following the interest expressed by various countries including the United States, towards India’s new FCRA rules.
BACKGROUND
The Foreign Contributions Acceptance Registration Act, 2010 (amended in 2020) is the legislation that governs the accepting and utilization of foreign funds by people, associations and companies in India. It has set itself the goal of not letting foreign capital negatively impact the national sovereignty, politics and social landscape. Over the years, the government has used the law to cancel the registration of hundreds of NGOs, including Amnesty International India and Greenpeace India, activists and human rights organisations say, to stifle dissent.
The amendments of 2020, which were challenged before the Supreme Court, had already brought about a lot of restrictions, such as prohibiting the sub-granting of foreign money to other NGOs, the mandatory use of an SBI New Delhi branch account and lower limits on administrative expenses. The amendments for 2026 build upon this framework, adding a layer of purpose-specific and geography-specific compliance obligations, a higher level of utilisation standard, greater disclosure obligations, and amended penalties for compoundable offences.
KEY POINTS
- For the first time the government has come up with a classification of activities, divided into five broad heads, for which NGOs can receive foreign funds. This creates a clearer registration process than the previous one, where the reason for the registration and where it is to take place had to be announced at the start of the registration and should be documented throughout the registration process.
- Associations need to state their purpose and operational state/UT when they are registered or before they get permission. These details have to be provided within one year of existing FCRA-registered entities using Form FC-6F.
- The Rules define five areas of activity that are allowed: Religious, Social, Economic, Cultural and Educational. Some religious activities are allowed but religious education and other religious activities are not allowed to involve proselytization.
- This is extended to directors, partners, trustees, Kartas of HUFs and members of the governing body of associations. In general, such organizations with key functionaries who are foreign nationals (excluding the PIOs) will not be allowed to register or get foreign permission.
- Twice, organisations will get installments only after using 75% of the previous installment and upon fulfilling the verification process, as per strict Fund Utilisation Norms. There is now a new application, Form FC-3BB, to be completed by applicators.
- This definition of ‘reasonable activity’ is with reference to the expenditure of not less than ₹10 lakh in the previous two financial years in the approved purpose by the association. Not achieving this may have an impact on registration renewal or cause the registration to be cancelled.
- Enhanced Disclosure Obligations: Organisations are required to disclose social media accounts, governance information, use data and identification of ultimate donors when there is a transfer through an intermediary. Activity reports are also required to be submitted annually and entities can not make news or current affairs.
- Multi-State and Multi-Purpose Registrations have an extra fee for the one purpose in one state/UT registration, on top of the regular registration fee. Additional fees of ₹300/- per additional state/UT and additional fees for each additional purpose are applicable.
- New Compounding Penalty: If the administrative cost is more than 20% then, the penalty amount will be ₹1 lakh or 5% of the above 20% amount. Penalty for speculative use of foreign contribution is 30% of the amount invested and/or ₹1 lakh (whichever is higher) of the foreign contribution along with recovery of any return earned from the foreign contribution.
RECENT DEVELOPMENTS
The notification is coming at a time when India is attracting scrutiny from around the world on its foreign funding regime. The U.S. government has raised issues on the impact of FCRA on civil society organizations and the overall enabling environment for international non-governmental organizations (NGOs) in India through diplomatic channels. These worries are especially strong in regard to the faith-based organisations and development-sector NGOs that have a strong American donor base.
The constitutional validity of the amendments to the FCRA had been taken up to the Supreme Court in the country in 2020.In the country, the contentious amendments to the FCRA had been taken all the way to the Supreme Court in 2020. A three-judge bench in 2022 also upheld the basic structure of the amendments made in 2020 such as the ban on sub-granting and the mandatory SBI account requirement, but held that opening accounts at the SBI New Delhi main branch is an unreasonable restriction. The 2026 changes (which are in the context of the Supreme Court’s support of the purpose-and-geography restrictions) will likely be challenged again by civil society groups who consider the purpose-and-geography restrictions as another tool of administrative control.It is likely that the proselytisation exclusion will be of special interest. The Centre’s concept that proselytisation is different to permissible religious activity, has been codified and lends regulatory bite to the policy and gives it a clearer definition.
CONCLUSION
The Foreign Contribution (Regulation) Amendment Rules, 2026 are the most comprehensive changes in India’s foreign funding compliances in recent years. The Centre has shifted from a comprehensive regulatory approach to a highly granular approach that is activity and place specific, through introducing purpose specific registration, geography-based operations, utilisation benchmarks and increased disclosure requirements.
The next immediate hurdle for the NGO sector is compliance – the FCRA registered associations have one year to submit FC-6F intimations and make their registrations compliant with the new structure. Otherwise it could be cancelled. The amendments introduce a new chapter in litigation on the border of constitutional rights, specifically freedom of speech, association and religion, and the legitimate interest of the State in regulating foreign influence for the legal community. But in the future, the courts will be called upon to determine where that balance is.
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WRITTEN BY: ARNAV NAIK
