India’s proposed overhaul of how NGOs receive foreign funding has drawn sharp criticism from US lawmakers, European diplomats, opposition parties and global Christian organisations, turning the domestic legislation into a diplomatic concern. At the centre of the row is the Foreign Contribution (Regulation) Amendment Bill, 2026 (FCRA). Under the new framework, the government gains greater control over assets built with foreign funds if an organisation loses, surrenders or fails to renew its FCRA registration.
The bill, introduced in the Lok Sabha in March, has acquired a diplomatic dimension, with Western governments and lawmakers asking India to reconsider parts of the legislation. The government maintains the bill is necessary to protect national security, provide clearer rules for managing foreign-funded assets, and prevent foreign money being used to influence India’s internal affairs. The Lok Sabha has since referred the bill to a Joint Parliamentary Committee for further scrutiny.The bill does not forbid foreign funding outright.
The government says over 16,000 FCRA-registered associations in India received nearly INR 22,963 crore (US$2,406.84 million) in foreign contributions in 2024-25, and argues that organisations accepting overseas money must remain accountable to Indian law, with funding not used to influence the country’s internal affairs.
What the bill actually changes
The most significant, and contested, provision creates a 'Designated Authority'. Under the bill, foreign contributions and any assets built from them – schools, hospitals, shelters, libraries – could be provisionally vested in this authority the moment an organisation’s registration is cancelled, surrendered, or simply lapses without renewal. If the organisation fails to restore its registration within a prescribed period, the authority can manage, dispose of, or permanently transfer those assets to a 'Consolidated Fund' – without prior judicial adjudication. Critics believe that this creates a perverse incentive: an organisation could keep an asset only by continuing to receive foreign funds indefinitely, seemingly contrary to the law’s own stated aim of regulating foreign dependence rather than entrenching it.
Moreover, such a clause also gives the government unprecedented power to indiscriminately cancel an organisation’s FCRA license if it is critical of its policies and politics. A second, more politically charged clause – introduced via the accompanying FCRA Amendment Rules, notified in June – bars organisations engaged in “proselytisation” from FCRA eligibility altogether, a provision critics call the bill’s most divisive.
Separately, the bill reduces the maximum prison term for violations from five years to one, while adding a requirement that any investigation into an offence first needs central government’s approval – a change some read as tightening political control over enforcement even as penalties soften.The International Center for Not-for-Profit Law has warned that transferring funds or assets without prior judicial adjudication raises concerns over due process and property rights. It has also noted that India has cited the Financial Action Task Force (FATF) to justify tighter regulation, even though the FATF's own 2024 evaluation recommended a narrower, risk-based approach targeting only organisations demonstrably at risk of financing terrorism – alongside more consultation with the nonprofit sector, not less.
A pattern under the Modi government
The proposed law follows years of FCRA cancellations and restrictions that have affected organisations including Greenpeace, Amnesty International and Oxfam. According to an Indian magazine The Caravan, nearly 22,000 NGOs have lost their FCRA licence over the last decade under the Narendra Modi government, with the impact falling disproportionately on rights-based groups, minority-run organisations and prominent critics of the government – a figure that dwarfs cancellations under previous administrations and has made India’s FCRA regime one of the most aggressively enforced foreign-funding laws among major democracies.US Congressman Riley Moore, criticising the legislation, has said it could enable the government to take control of churches and religious charities, warning the issue could affect India-US relations and calling it a clear attack on Christians.
Concern is high among Christian organisations since churches and charities often run schools, hospitals and welfare institutions that have received foreign funding at some point. Groups such as International Christian Concern have gone further, warning that the bill could restrict the ability of Christian organisations specifically to operate freely in India, and note the expanded liability provisions could also personally expose directors and trustees. The bill also arrives against a broader backdrop of scrutiny of the Modi government’s record on religious minorities. Human Rights Watch’s World Report 2026 said the government had vilified religious minorities and “normalised violence against religious minorities, marginalised groups, and critics through discriminatory policies, hate speech, and politically motivated prosecutions”. The US Commission on International Religious Freedom’s 2026 report similarly found that conditions had deteriorated in 2025 and recommended, for the seventh consecutive year, that India be designated a “country of particular concern”. Similarly, the United Christian Forum, a Christian advocacy group, recorded more than 700 incidents of violence against Christians in the first eleven months of 2025 alone.
Although the Indian government has consistently rejected these findings, such a perception has impacted the legislation. It has drawn scrutiny from Amnesty International and three UN Special Rapporteurs, while an opposition-run Indian province Kerala’s state assembly has passed a resolution demanding its withdrawal – pushback that watchdogs frame not just as a religious-freedom concern but a broader warning sign for civil society, press freedom and dissent in India. Many other organisations have argued the bill could eventually affect assets accumulated over decades. The Indian government, however, has strongly disputed this, stating the new rules apply equally to all faith-based organisations. It has rejected the US criticism, calling the FCRA a sovereign matter and describing outside criticism as interference in its internal affairs. The government argues that Western nations, too, regulate foreign funding over concerns about domestic influence, and that it is therefore unfair to single out India.
What’s at stake
The central question is whether the government’s push ahead with the bill – and its consequential decisions – could put the physical assets of charities and NGOs at risk. For international donors, the concern is that if the rules become unpredictable, the loss of registration could threaten not just funding but the physical infrastructure built over decades, complicating long-term humanitarian planning in India.
The debate, ultimately, comes down to who controls the institutions that external donations helped build, and how those institutions should be safeguarded if an organisation loses the right to receive funds from abroad.