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Highlights of the Bill 

  • The Foreign Contribution (Regulation) Bill, 2006 replaces the Foreign Contribution (Regulation) Act, 1976 (FCRA).  The Bill seeks to regulate the acceptance and utilization of all foreign funds through donations, gifts or grants.
  • The 1976 Act lists a number of organisations and individuals that are prohibited from accepting foreign contribution.  The Bill adds organisations of a “political nature” and electronic media organisations to the list.
  • The Bill requires all persons with a “definite cultural, economic, educational, religious or social programme” to register under FCRA to accept foreign contribution.  The central government may deny, suspend or cancel certification under certain conditions.
  • Organisations must renew FCRA certification every five years.  Both the application and the renewal carry a fee.
  • The Bill allows the central government to conduct separate audits for FCRA certified organisations and grants it the power of search and seizure.

Key Issues and Analysis

  • Though the stated objective of the Bill is to strengthen internal security, it addresses only the voluntary sector and only foreign funding.  This constitutes less than one per cent of gross inflow of foreign funds into India. 
  • Many of the objectives of the Bill are met by other laws in force such as the Unlawful Activities Prevention Act, 1967, the Prevention of Money Laundering Act, 2002, the Foreign Exchange Management Act, 1999, and the Income Tax Act, 1961. 
  • The new Bill prohibits all organisations of a “political nature” from receiving any foreign contribution.  It gives the central government powers to classify any organisation in this category but does not provide any guidelines to define organisations of a “political nature.”
  • The FCRA registration process under the Bill confers a number of discretionary powers to the authorised officer.
  • There are a number of terms in the Bill including, “foreign source,” “foreign hospitality,” and “speculative business” that either lack clarity or are not defined.

Read the complete analysis here