Indian envoy Kwatra takes FCRA defense to Washington

India’s ambassador to the United States has issued a detailed defense of proposed changes to the country’s foreign-funding law, responding to criticism that has spread from Indian civil-society groups to lawmakers in Washington ahead of the bill’s expected return to Parliament.

Vinay Mohan Kwatra said in a series of posts on X on Monday, 10 August, that there were “many misunderstandings in the media and in civil society” about the Foreign Contribution (Regulation) Amendment Bill, 2026, and set out what he described as five “myths” surrounding the legislation.

Kwatra said India was not seeking to cut off foreign assistance to civil society, that foreign contributions received by registered organizations had continued to grow, that provisions for vesting foreign-funded assets already exist under present law, and that the FCRA applies without distinction among religions or communities. He also pointed to foreign-influence and disclosure laws in the US, UK, Australia and Canada to argue that India was not alone in regulating financial flows from overseas.

There are many misunderstandings in the media and in civil society about the proposed Foreign Contribution (Regulation) Amendment Bill(FCRA), 2026.
Here is the Myth vs. Reality check.

— Amb Vinay Mohan Kwatra (@AmbVMKwatra) August 10, 2026

His intervention follows criticism of the bill from US lawmakers and comes days after the Ministry of External Affairs (MEA) said decisions on legislation governing foreign funding were a matter for the Indian Parliament.

MEA spokesperson Randhir Jaiswal said on 7 August that several countries, including the US, regulate flows of foreign funds.

The bill was introduced in the Lok Sabha on 25 March and seeks to amend the Foreign Contribution (Regulation) Act, 2010, which governs how eligible individuals and organizations receive and use contributions from foreign sources.

Much of the current debate centers on what happens to unused foreign contributions and foreign-funded assets when an organization loses its FCRA registration.

Under Section 15 of the existing Act, foreign contributions and assets created from those contributions already vest in a prescribed authority when an organization’s registration is canceled or surrendered. If the organization subsequently obtains registration, the authority is required to return the foreign contribution and the assets.

Kwatra highlighted that provision in rejecting claims that asset vesting was being introduced for the first time in 2026.

The proposed bill retains the principle but creates a more detailed framework around it. It establishes a Designated Authority and extends the vesting provisions to cases in which an FCRA certificate “ceases.”

Under the bill, a certificate would be deemed to have ceased if an organization does not apply for renewal, if renewal is refused or if the certificate is not renewed before it expires.

In those circumstances, foreign contributions and assets created from them would initially vest provisionally in the Designated Authority.

The authority could take possession of the assets and supervise their management and preservation. Where considered necessary in the public interest, it could also undertake the management of the organization’s activities for a prescribed period.

If the organization obtains a fresh FCRA certificate or has its registration renewed or restored within a period to be set by rules, the authority would return the unused foreign contribution and the provisionally vested assets.

If that does not happen within the prescribed period, the bill provides for the foreign contribution and assets to vest permanently in the Designated Authority. The government’s own July background paper describes permanent vesting in such circumstances as a new provision.

Permanently vested assets could be transferred to a central or state government ministry, department, agency or local authority. They could also be sold or otherwise disposed of, with sale proceeds and unused foreign contributions credited to the Consolidated Fund of India.

The bill also deals with assets financed from a combination of foreign and domestic money. Such an asset would initially vest in full with the Designated Authority, although the organization could seek the return of any “distinct or ascertainable” portion created or acquired from other sources.

Places of worship receive separate treatment. Where a permanently vested asset or part of an asset is a place of worship, the Designated Authority must maintain its religious character and entrust its management or operation to another person under conditions to be prescribed in rules.

Kwatra said in his posts that property connected with a place of worship would be transferred to another FCRA-registered association of the same faith to ensure continuity of worship. The bill itself says management is to be entrusted to “such person” and leaves the detailed mechanism to rules.

The proposed framework also provides avenues for challenging decisions taken by the Designated Authority. Its orders can be subject to revision and, in specified cases, appealed before a district judge or another designated judicial officer. The bill separately reduces the maximum imprisonment for violations of the FCRA from five years to one year.

PRS Legislative Research has identified a separate issue involving renewal decisions. Its analysis notes that neither the existing Act nor the bill provides an appeal mechanism when the central government refuses renewal of an FCRA certificate, or an opportunity for the organization to be heard before renewal is denied. Under the proposed amendments, refusal of renewal can lead to provisional vesting of foreign-funded assets.

Kwatra also challenged claims that the FCRA framework has reduced the overall flow of foreign money into India.

He said contributions to registered organizations had increased from about $1.2 billion in 2010-11 to $2.67 billion in 2024-25. The government has reported foreign contributions of ₹22,963 crore in 2024-25.

Kwatra said India has more than 3 million NGOs, of which about 14,450 currently hold FCRA registration. PRS recorded 14,449 active FCRA certificates as of 15 July. The government has said around 16,200 associations were actively registered during 2024-25, reflecting a different reporting period.

The FCRA does not impose a general ban on foreign donations. Eligible organizations can receive them after securing registration or prior permission and must use designated banking channels and file prescribed disclosures.

Certain categories, including political parties, election candidates, legislators, judges, public servants and specified people or entities connected with news and current-affairs media, are barred from accepting foreign contributions.

Separate FCRA rules notified on 22 June have already introduced additional requirements. These include identifying specific purposes and states or Union Territories of operation on registration certificates, more detailed reporting and a requirement that organizations seeking renewal demonstrate use of at least ₹10 lakh in foreign contributions over the preceding two financial years.

Kwatra also compared India’s approach with regulatory systems elsewhere.

He cited the US Foreign Agents Registration Act, or FARA, along with Australia’s Foreign Influence Transparency Scheme, Britain’s Foreign Influence Registration Scheme and Canadian legislation.

Those systems share a transparency objective but differ in scope. The US Justice Department describes FARA as requiring certain people acting as agents of foreign principals and undertaking specified activities to disclose those relationships and associated activities.

Australia’s scheme is intended to make foreign influence over government and politics more visible, while Britain’s political-influence tier applies to arrangements for political influence activity undertaken at the direction of a foreign power.

FCRA regulates the receipt and use of foreign contributions by covered Indian organizations rather than relying solely on an agency or direction test.

The debate has increasingly acquired a US dimension.

Republican representative Riley Moore of West Virginia criticized the proposed legislation last week, focusing in particular on its potential application to religious and charitable assets and warning that the issue could affect India-US relations.

India rejected his characterization and said the legislation was an internal matter.

The issue had surfaced earlier in Washington before secretary of state Marco Rubio traveled to India in May.

Republican representative Chris Smith of New Jersey urged Rubio ahead of the visit to raise the proposed FCRA amendments with Indian officials. Smith argued that the asset provisions could affect charities, schools, hospitals and religious institutions receiving foreign contributions.

Rubio began his India visit in Kolkata on 23 May and visited the Missionaries of Charity’s Mother House and Nirmala Shishu Bhawan before traveling to New Delhi. There has been no public confirmation that FCRA was discussed during his official meetings with the Indian government.

Concerns have also been raised within India. Home minister Amit Shah has held discussions with representatives of organizations that have sought changes to the legislation, while Mizoram Chief Minister Lalduhoma met Shah last week and raised concerns about its application.

Lalduhoma said Shah assured him that the proposed amendments would not have retrospective effect and told him that the bill was expected to be taken up in the Lok Sabha on 12 August.

The text nevertheless contains a transitional provision covering foreign contributions and assets that have already vested under the existing Section 15. Those would be treated as provisionally vested in the new Designated Authority once the amendment comes into force.

Congress has said it will oppose the legislation when it comes up for consideration, with general secretary K.C. Venugopal accusing the government of imposing excessive restrictions on NGOs.

The government says the changes are intended to resolve administrative and legal gaps in the present system. The bill’s statement of objects and reasons cites uncertainty over the management and disposal of foreign-funded assets after registration is canceled, surrendered or ceases, as well as problems involving investigations, penalties and the treatment of assets during suspension.