The process of renewing registrations under the Foreign Contribution (Regulation) Act, 2010 (“FCRA”), has been subject to heightened regulatory scrutiny, as the Ministry of Home Affairs focuses on stricter compliance and oversight. While aimed at enhancing transparency and accountability in the receipt and utilisation of foreign contributions, recent trends reveal recurring practical challenges, from procedural delays and unclear transitional guidance to discretionary refusals and non-speaking rejection orders. Some High Courts and the Supreme Court have also weighted in recently on this matter, highlighting the need for a balanced regulatory approach that safeguards national interest while facilitating FCRA registered entities to operate with continuity and confidence within a structured and reasonable compliance framework.
Introduction
The Foreign Contribution (Regulation) Act, 2010 (“FCRA”), is the principal legislation governing the receipt and utilisation of foreign contributions in India. An entity [FCRA registered entity (“entity/ies”)] may receive such contributions only if it has obtained registration or prior permission under the FCRA[i]. Once granted, such registration is valid for five years and must be renewed thereafter[ii]. However, such renewal is not automatic and is subject to regulatory scrutiny and may be refused under Sections 12(4)[iii], 14[iv] and 16[v] of FCRA, on grounds of making false statements in applications, engaging in activities detrimental to national interest, or violating any of the provisions of the FCRA and are thus of wider import. While the scrutiny process at the time of renewal is aimed at higher accountability and ensuring proper regulation over inflow of foreign contributions, in recent years, the process of renewal of FCRA registration has become a recurring challenge with several entities facing rejection on procedural or technical grounds.
This blog examines the practical issues surrounding the renewal of FCRA registrations and the approach adopted by the Ministry of Home Affairs (“MHA”) in recent years. It further discusses some of the recent guidance provided by the judiciary in this regard, and the broader implications for both the entities receiving foreign contributions and the regulators administering the FCRA framework.
Key Issues in FCRA Renewals and their Implications
Renewal Delays and Compliance Transitions under the FCRA
Stakeholders have been dealing with extended timelines in processing renewals under the FCRA for a while now. Under Section 16 of FCRA, renewal applications are required to be processed ordinarily within 90 days from the date of receipt of the application and where such a renewal does not take place within the stipulated period, reasons must be assigned to the applicant. However, in practice, entities often experience delays, extending over several months, without any outcome of the renewal applications being communicated to them[vi]. Such administrative delays, without clear timelines or reasoning, not only create uncertainty for entities dependent on foreign contributions, but also run counter to the statutory expectation of time-bound processing.
Frequent compliance transition is another major challenge. For instance, the 2020 amendment[vii] to Section 7[viii] introduced a prohibition on transfer of foreign contributions to any other person, where according to judicial precedents[ix], such transfer means giving away of foreign contribution to any other person without retaining any control over it. Prior to this amendment, such transfers were permissible between registered entities, and even to unregistered persons, with Central Government approval. The sudden shift in the law required immediate adjustments. However, some related entities inadvertently continued their long-standing practice of transferring foreign contributions among themselves for a few months post the amendment. While such transactions were often bona fide and duly routed through banking channels, there was a lack of transitional guidance after this amendment. While transferring foreign contributions was prohibited, the fact that entities could utilise[x] this foreign contribution to avail services for furthering their objectives or outsourcing performance of some approved project-related activities, was not expressly mentioned or clarified in the amendments or any subsequent regulatory communication. Even absence of grace periods during such transition exposed entities to compliance risks despite no evidence of misuse or misappropriation of foreign contribution.
Scope of discretion in granting renewals
Under the FCRA, renewal of registration is not a vested right and remains subject to the MHA’s discretion[xi]. While this discretion serves as a safeguard, its exercise has at times raised concerns. Entities have reported instances of renewals being denied through blanket refusals or without assigning any clear and specific reasoning[xii]. They have claimed that such an approach creates unpredictability and can have wide-ranging consequences for entities engaged in areas of public interest.
While the discretion vested in the MHA to grant or refuse renewals is a necessary safeguard, such discretion must be exercised in a reasonable and consistent manner. From the perspective of entities, compliance ought to be integrated into their continuous governance framework, instead of being considered only at renewal time. For regulators, applying discretion consistently and with clear reasoning will not only strengthen the credibility of the process, but also help avoid excessive administrative actions or directives.
Proportionality and the Need for Transparency
The method of communicating rejection orders on renewal applications is equally important. In several instances, entities have received non-speaking orders that neither specify the precise violation nor provide them an opportunity to respond.[xiii] This lack of clarity leaves applicants uncertain about the basis of rejection and prevents them from taking corrective measures. The proviso to Section 12(5)[xiv] of the FCRA permits withholding of reasons only under limited exceptional circumstances, involving national security or public interest, but is seen to be applied more broadly, including in cases of technical non-compliance.
In this context, it is important for regulators to adopt a proportionate approach, distinguishing between material contraventions that require stringent action and inadvertent or minor lapses that can be regularised without resorting to denial of renewal. Such regulation of foreign contributions while maintaining flexibility will in turn encourage compliance, while avoiding unnecessary disruption of funding and growth of such entities, thereby furthering the FCRA objectives.
Moreover, decisions that affect an entity’s continued operations must be well-reasoned and communicated transparently, with specific grounds being cited. For entities, this provides greater predictability and the ability to understand and rectify compliance gaps, rather than face abrupt operational uncertainty, while for regulators it reinforces the trust in the framework and reduces the scope for administrative hurdles.
Judicial Perspective on Renewal of Registrations under FCRA
The concerns around delays, discretionary refusals, and procedural lapses in FCRA renewals were recently discussed in Sharma Centre for Heritage Education v. Union of India[xv]. The case arose from the rejection of renewal applications of two charitable trusts engaged in education and welfare activities. Their renewal applications were pending for about eight months before being denied due to alleged violations of Section 7 of the FCRA, as amended in 2020.
The Madras High Court, while examining the matter, emphasised that regulatory powers must be exercised with fairness and consistency. It held that outright denial of renewal cannot be made on procedural or technical grounds alone, especially where the activities of the entities are bona fide and properly accounted for. Moreover, the Court also emphasised that rejection orders must specify reasons and inform applicants of the concerned non-compliances.
Recently, the Supreme Court upheld[xvi] the Madras High Court’s decision, reinforcing the principle that compliance requirements under FCRA must be strictly followed, but enforcement should remain transparent and proportionate. The judgment highlights that the FCRA framework’s credibility depends on safeguarding national interest, without undermining the continuity of legitimate social activities.
Conclusion and Way Forward
Recent trends suggest that the MHA is placing greater emphasis on stricter oversight and monitoring compliance rigorously under the FCRA, particularly while granting renewals. The amendments to the FCRA and subsequent MHA’s actions are aimed at strengthening compliance. In practice, however, they seem to have created operational challenges for certain entities, especially the smaller ones that rely on foreign contributions received by other entities in India to sustain their work. These entities face the risk of complete closure even if found in inadvertent breach of the frequently evolving compliance requirements. Therefore, such entities are advised to closely track the regulatory amendments, monitor flow of foreign contributions, ensure regular reporting and documentation of their transactions, strengthen internal compliance mechanisms, and avoid any mismanagement or unapproved use of foreign contributions.
At the same time, judicial interpretation of issues surrounding FCRA registration renewals, serves as a reminder that regulatory action must remain transparent, reasoned and proportionate, to ensure that procedural lapses do not bring genuine charitable activities in the country to a standstill. Such an approach will help support the objective of the FCRA regime and enable entities to pursue their social objectives without unnecessary disruptions. Moreover, issuance of clearer guidelines or clarifications on the statutory amendments and provision of transitional or grace periods in relation to frequent compliance related amendments would significantly benefit entities and related stakeholders. This would be key to striking a balance between safeguarding regulatory objectives and facilitating the work of bona fide entities. MHA’s recent direction, urging entities to submit renewal applications at least four months before registration expiry to ensure timely evaluation, is a positive step in this direction[xvii].
For further information, please contact:
Sreetama Sen, Partner, Cyril Amarchand Mangaldas
sreetama.sen@cyrilshroff.com
[i] Foreign Contribution (Regulation) Act, 2010, Section 11.
[ii] Foreign Contribution (Regulation) Act, 2010, Section 11.
[iii] Foreign Contribution (Regulation) Act, 2010, Section 12(4).
[iv] Foreign Contribution (Regulation) Act, 2010, Section 14.
[v] Foreign Contribution (Regulation) Act, 2010, Section 16.
[vi] Supreme Court pulls up Centre for denying FCRA renewal, Hindustan Times, dated September 20, 2025)(Available at: Supreme Court pulls up Centre for denying FCRA renewal).
[vii] Foreign Contribution (Regulation) Amendment Act, 2020.
[viii] Foreign Contribution (Regulation) Act, 2010, Section 7.
[ix] Noel Harper v. Union of India, (2023) 3 SCC 544
[x] Noel Harper v. Union of India, (2023) 3 SCC 544, Para 109.
[xi] Foreign Contribution (Regulation) Act, 2010, Section 16(3).
[xii] Indian Social Action Forum v. Union of India, W.P.(C) 10199/2016 & CM APPL. 37992/2021.
[xiii] Sharma Centre for Heritage Education v. Director, FCRA Wing, Ministry of Home Affairs, 2025 SCC OnLine Mad 3005.
[xiv] Foreign Contribution (Regulation) Act, 2010, Section 12(5).
[xv] Sharma Centre for Heritage Education v. Director, FCRA Wing, Ministry of Home Affairs, 2025 SCC OnLine Mad 3005.
[xvi] Union of India v. M/S Sharma Centre for Heritage Education Etc., SLP(C) No. 26284-26285/2025.
[xvii] Notice No. F. No. II/21022/23(22)/2020-FCRA-II, dated September 30, 2025, issued by Ministry of Home Affairs (Available at: Notice dated September 30, 2025).
