Governments, whether national or provincial, and across countries, have long re-alised that the "government alone" approach will not suffice if the delivery of goods and services is to be effective. Non-government actors are vital for success-fully rolling out government programmes and delivering essential services to grassroots and vulnerable communities where state infrastructure falls short. Act-ing as last-mile delivery agents, non-profit organisations, social enterprises and private entities bridge critical gaps across several key sectors to ensure that citizens are able to access the benefits and subsidies intended for them. Likewise, Busi-ness Correspondent Networks disburse pensions, wages and social security bene-fits, functions that understaffed rural banks find difficult to perform. They also help marginalised individuals navigate government portals, open bank accounts and apply for crucial identity documents. It is also common for enterprises to train and deploy community health workers, such as Accredited Social Health Activists and Anganwadi facilitators, to deliver maternal healthcare, nutritional supplements and immunisation reminders, supply medicines, operate mobile clin-ics and facilitate local health camps to reach tribal and remote populations.
All such organisations and groups cannot, on their own, find the wherewithal to fund their activities. The Central and State governments have many programmes in whose framework special provisions are available to promote and encourage the participation of NGOs in the delivery of goods and services. There are, in ad-dition, many other sources, such as donations from individuals and groups, crowdfunding and corporate social responsibility initiatives.
Funds made available by individuals and organisations in foreign countries un-doubtedly form a welcome addition to the available resources in developing countries. In the case of India, however, only about 7 to 10 per cent of the fund-ing available to NGOs comes from such sources. The question that arises, there-fore, is whether NGOs need to go to the trouble of reaching out to agencies and individuals abroad. The answer would appear to be in the negative, considering the insignificant share such contributions form in the overall scheme of things. It is, therefore, not without reason that excessive dependence on such foreign re-sources is viewed with suspicion and distrust by the authorities concerned.
Foreign funding in India is not merely an issue relating to the regulation of in-flows of funds. It is the danger of vested interests using that route to advance ob-jectives inconsistent with national policy or public interest that needs to be recog-nised and guarded against.
The fact remains, however, that no offer of help, no matter how small, deserves to be treated with indifference or contempt. Thus, to the extent that the proposed Bill promises to ease the receipt of foreign funding while holding out the threat of strict action where the objectives of organisations are questionable, it deserves to be welcomed.
The Foreign Contribution (Regulation) Amendment Bill, 2026, introduced in the Lok Sabha on March 25, 2026, proposes structural changes in the manner in which the Government of India regulates the affairs of foreign-funded non-governmental organisations (NGOs).
While the government says that the legislation is necessary to improve transpar-ency and safeguard national security, civil society groups and opposition parties argue that it creates an over-centralised framework that threatens the operations, and even the very survival of NGOs.
One of the important features of the Bill is that it establishes a Designated Author-ity to close legal gaps regarding how physical infrastructure created through for-eign funding is handled. By envisaging stricter checks on the utilisation of for-eign money, it aims to prevent foreign influence from dictating local narratives or fuelling anti-national activities and forced religious conversions. An independent appellate body, it is felt, would protect the integrity of the law while sparing gen-uine organisations from avoidable disruption. The newly launched FCRA 2.0 platform also offers a real opportunity to simplify compliance and move towards risk-based supervision. Fixed timelines for the receipt and utilisation of funds un-der the "prior permission" category replace open-ended frameworks, seeking to ensure that grants are utilised quickly and transparently. Law enforcement agen-cies and State governments will now need to obtain prior approval from the Cen-tral government before launching FCRA-related investigations, a move that will curb erratic or localised harassment of organisations. The proposed reduction in prison sentences indicates a softer approach towards penalties for non-compliance.
The Bill, however, also raises many concerns. For example, a highly controver-sial provision allows the State to seize, transfer or permanently sell the physical assets, such as buildings and equipment, of an NGO if its registration ceases pure-ly through administrative channels without prior judicial approval. Critics argue that this threatens constitutional rights to property. The Bill also provides that an organisation's FCRA status automatically lapses if its registration expires or its re-newal remains pending. Critics note that bureaucratic delays could paralyse func-tional NGOs and trigger immediate asset seizure without any proven misconduct. Because cessation triggers the vesting of assets with the government, an organisa-tion cannot simply opt out of, or voluntarily surrender, its FCRA licence without forfeiting the assets it built using foreign contributions in the past.
The government can also exempt organisations from the provisions of the Bill in the public interest. It, however, neither identifies any differentia that dis-tinguishes such organisations or persons from those to whom the law applies, nor establishes a rational nexus between such exemption and the object sought to be achieved. Critics fear that this provision may lead to discriminatory application.
Among the other provisions perceived as undesirable or unduly restrictive is the proposed limitation of foreign funds to heavily policed "reasonable activities", which could cut off overseas funding for groups involved in human rights advo-cacy, policy research, legal aid or constitutional awareness. The rules could also be weaponised to disproportionately target minority-run charitable bodies and churches.
Every sovereign nation has both the right and the responsibility to regulate for-eign capital flowing into organisations that shape public life. The United States, Australia and several European democracies have comparable regimes. The issue is not whether foreign funding should be regulated, but whether such regulation is proportionate, predictable and efficiently administered. While the general im-pression is that tight FCRA rules have hollowed out Indian development work, the numbers tell a different story. NITI Aayog's NGO Darpan portal lists roughly six lakh voluntary organisations, of which only about 14,500 hold active FCRA registration. Foreign contributions have themselves doubled over the decade, from about Rs 10,000 crore to around Rs 22,000 crore. The sector has clearly not been starved of money from abroad. One needs to appreciate the spirit that appears to inform the Government of In-dia's move. It is akin to what Mahatma Gandhi must have felt when he gave the clarion call for "Swadeshi" goods during the freedom movement; a call for the people of the country to embrace the concept of national self-reliance and trans-late into reality the economic and moral independence they expected from free-dom. It is, in other words, a determined effort to rid the country of foreign finan-cial influence and its pernicious impact on India's agenda, democratic processes and public discourse.
On the other hand, it also needs to be appreciated that not everything foreign is necessarily bad. Even the imperial powers that ruled India, such as the Mughals, the Portuguese, the French and the British, left behind positive legacies before they departed. The Mughals put in place an excellent land revenue system and unified many parts of the country under a single centralised administration, making India one of the richest economies of its time.
The French, in turn, left behind a unique cultural and architectural legacy, partic-ularly in Puducherry. The Portuguese introduced crops such as chillies, potatoes and tomatoes, modern printing technology, and a distinctive architectural style. Similarly, but on a much larger scale, the railways, the telegraph and postal ser-vices and the judicial and civil services are what the British left behind, as invalu-able and permanent assets, before they left. They also established the Survey of India and the India Meteorological Department, organisations that continue to play vital national roles.
I have the privilege and honour of being a Trustee of the prestigious Durgabai Deshmukh Andhra Mahila Sabha in Hyderabad. It is in the context of an ongo-ing discussion within the organisation on the desirability of seeking FCRA regis-tration that I thought it appropriate to share my views with readers.
(The writer was formerly
Chief Secretary, Government of Andhra Pradesh)