Foreign Contribution (Regulation) Act, 2010 and the FCR Rules

Foreign Contribution (Regulation) Act, 2010 is passed by the Parliament of India and its 42nd Act of 2010. This can be called a consolidating act whose scope is to regulate the acceptance and utilisation of foreign contribution or foreign hospitality by certain individuals or associations or companies and to prohibit acceptance and utilisation of foreign contribution or foreign hospitality for any activities detrimental to the national interest and for matters connected therewith or incidental thereto. This act was designed to correct shortfalls in the predecessor act of 1976.

Purpose of the earlier FCRA

The FCRA was first enacted during the Emergency era (1976). The official rationale was to prohibit the flow of foreign funds to political parties, candidates contesting elections to any public office, journalists, cartoonists, editors, owners, printers and publishers of registered newspapers and individuals in the service of the State or any of its official agencies and academics. Organisations identified as being of ‘political nature’ specifically identified by the Central Government through a Gazette notification could receive foreign contribution only with prior permission of the Government. However, a system was laid down for associations to receive foreign contribution upon registration with the Government or through prior permission for- undertaking activities related to a definite cultural, economic, educational, religious or social programme. The registration was one-time only and was valid until the Government suspended or cancelled it through due procedure laid down in this law. Acceptance of foreign hospitality in violation of the provisions of this this law and receiving foreign contribution in violation of FCRA provisions were made punishable offences some of which invited a prison term of up to five years.

Rationale behind and the objectives of FCRA 2010

According to the Statement of Objects and Reasons attached to the FCR Bill when it was introduced in Parliament by the UPA Government in 2006 (and enacted in September 2010), the new law which repealed the 1976 law was intended to bring about large scale changes because:

  1. a) Internal security scenario had changed (what had changed is not specified).
  2. b) Influence of voluntary organisations had increased.
  3. c) Use of communication and information technology had spread.
  4. d) There was a quantum leap in the amount of foreign contribution received and
  5. e) There was large scale growth in the number of registered organisations (under FCRA


So Parliament was informed that the new law was being brought to – regulate the acceptance, utilization and accounting of foreign contribution and acceptance of foreign hospitality by a person or association. The main objectives of the law are said to be (quoted from the Bill itself):

(i) Consolidate the law to regulate, acceptance and utilisation of foreign contribution or foreign hospitality and prohibit the same for any activities detrimental to the national interests.

(ii) Prohibit organisations of political nature, not being political parties from receiving foreign contribution.

(iii) Bring associations engaged in production or broadcast of audio news or audio visual news or current affairs through any electronic mode under the purview of the Bill.

(iv)Prohibit the use of foreign contribution for any speculative business (no such restriction in FCRA 1976).

(v) Cap administrative expenses at fifty per cent. of the receipt of foreign contribution (no such limit in FCRA 1976).

(vi) Exclude foreign funds received from relatives living abroad.

(vii) Make provision for intimating grounds for refusal of registration or prior permission under the Bill.

(viii) Provide arrangement for sharing of information on receipt of foreign remittances by the concerned agencies to strengthen monitoring.

(ix) Make registration to be valid for five years with a provision for renewal thereof (as opposed to permanent registration under the FCRA 1976), and also to provide for cancellation or suspension of registration.

(x) Make provision for compounding of certain offences.