The Ministry of Home Affairs, Government of India ("MHA") has issued a notification on April 7, 2025 ("April 7 Notification") introducing prescribed timelines for the receipt and utilisation of foreign contribution pursuant to applications for prior permission under the Foreign Contribution (Regulation) Act, 2010 ("FCRA").
The FCRA inter alia regulates foreign contributions in India, including by way of prohibiting the acceptance and utilisation by Indian entities of foreign contributions without either the prior permission of the MHA for the foreign contribution in question or prior registration of the Indian entity in question with the MHA.
Prior to the April 7 Notification, there were no specified time limits governing the receipt or utilisation of foreign contributions by an Indian entity which had been received under a prior permission issued by the MHA for such foreign contribution. By virtue of the April 7 Notification, going forward, any foreign contributions received by an Indian entity under the prior permission route would now be subject to the following timelines:
- Receipt – Foreign contributions must be received by the Indian entity in question within three years from the date of the applicable prior permission issued by the MHA.
- Utilisation – Foreign contributions must be utilised within four years from the date of the applicable prior permission issued by the MHA.
These timelines will also apply to any prior permissions granted by the MHA prior to April 7, 2025. Accordingly, recipients of such prior permissions must ensure that foreign contributions are received and utilised within three years and four years, respectively, from the date of the applicable prior permission issued by the MHA.
Impact:
- Any charitable or not-for-profit organisations operating in India, which receive foreign contributions under the prior permission route under FCRA, now need to actually receive these amounts within three years from the date of the permission.
- These entities also need to actually spend all of the funds by the end of four years from the date of the permission.
- This causes a break in funding schedules that go beyond these prescribed time periods.
Given the challenges in obtaining any prior permission for foreign contribution, Indian entities/not-for-profit organisations need to immediately and carefully check their business planning, project execution, and fund flow management to ensure compliance with FCRA.
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