India: More Questions For Foreign NGOs/NPOs – FEMA Amendments

The Reserve Bank of India (RBI) on August 31, 2018 notified the Foreign Exchange Management (Establishment in India of a branch office or liaison office or a project office or any other place of business) (Amendment) Regulations, 2018 (Amendment Regulations).

The limited amendments, at first glance, appear to simply clarify that the RBI and the Ministry of Home Affairs (MHA) oversee different kinds of not for profit entities – those which are engaged in activities within the purview of Foreign Contribution (Regulation) Act, 2010 (FCRA) and hence under the MHA, and all others who would continue to be under the aegis of the RBI.

However, while the intent may have been to clarify, additional questions are being raised due to the amendments.

The Foreign Exchange Management (Establishment in India of a branch office or liaison office or a project office or any other place of business) Regulations, 2016 (Applicable Regulations) enabled foreign companies to establish a Branch Office (BO) / Liaison Office (LO) / Project Office (PO). The Applicable Regulations under regulation 5(d) specifies that RBI approval was necessary when the applicant is inter alia a Non-Government Organisation or a Non-Profit Organisation (NPOs).

The Amendment Regulations have now added to regulation 5(d), a further statement that if any such NPO is engaged, partly or wholly, in any of the activities covered under FCRA it shall obtain a certificate of registration under the FCRA and not seek permission under the Applicable Regulations i.e. from the RBI for setting up a BO, LO or PO in India.

The Amendment Regulations have further amended the declarations to be made by the applicant NPO to include the following additional declaration:

"We will not undertake either partly or fully, any activity that is covered under Foreign Contribution Regulation Act, 2010 (FCRA) and we understand that any misrepresentation made or false information furnished by us in this behalf would render the approval granted under the Foreign Exchange Management (Establishment in India of a branch office or liaison office or a project office or any other place of business) Regulations, 2016, automatically as void ab initio and such approval by the Reserve Bank shall stand withdrawn without any further notice."

The questions which are raised are:       

1)     What are the activities which are covered under the FCRA and how does an NPO decide which is the appropriate authority for it to apply to?

The FCRA does not define activities which are exclusively subject to the FCRA and in fact broadly provides that the requirement for registration under the FCRA is for organisations "having a definite cultural, economic, educational, religious or social program..."    

Since the RBI has simultaneously retained the authority to grant approvals to NPOs, there is confusion concerning (a) which would be these NPOs subject to RBI, since every NPO would invariably either be engaged or deemed to be engaged in some 'economic' or 'social' or the other activities specified under the FCRA – especially since FCRA traditionally identified in its annual reporting form a wide range of activities for foreign contribution and fund utilisation ranging 'welfare and empowerment of women' to 'environmental programs' and 'survey for socio-economic and other welfare programs' and it is debatable as to which NPO would be engaged in an activity not covered under the FCRA, and (b) whether registration under FCRA (as opposed to permission from the RBI) would need to be obtained by such international NPO based exclusively on the fact that charter documents of such entity may make a provision for undertaking social programs and activities even though there is no intention to undertake any social programs or activities within India or provide funding for any social activities in India.

Potentially, the answer lies in the background to the Amendment Regulations which was the alleged illegal diversion/disbursal of funds by various entities operating with RBI approval to other Indian NPOs in violation of the FCRA and more importantly beyond the scope of activities permitted by the RBI. As it was not per se the official activities of these international NPOs which was the issue it is possible that RBI along with the MHA is attempting to curtail unlawful activities. However, since the unlawful activities were not arising out of a gap in law but plain violation of the law, the Amendment Regulations have added questions to which answers will possibly follow with approvals and rejections of applications made to the RBI.

Presumably, RBI will continue to entertain all international NPOs – even though the charter documents of the entity applying provide its main object as undertaking cultural, economic, educational, religious or social programs and activities.

2)     Does the MHA intend to clarify/amend the procedure and the requirements/compliances for obtaining registration under the FCRA for setting up entities in the nature of LO, BO, etc., and not incorporated or registered entities in India?

Presently, the scope and applicability of the provisions of the FCRA as well as the registration form (required to be submitted for obtaining registration under the FCRA) is limited to a society, trust, association or persons and a section 8 company. The FCRA does not make a provision for an international NPO entity directly submitting the application for obtaining registration for setting up entities in the nature of BO, LO, etc. 

While the amendments introduced seem to be another step taken by the Government of India in strengthening the regulatory regime for international NPOs intending to undertake any activities in India and to maintain strict control over foreign funds being remitted to India, from some of the questions being raised, it appears to be a work in progress which will require clarifications over a period of time.

LexCounsel provides this e-update on a complimentary basis solely for informational purposes. It is not intended to constitute, and should not be taken as, legal advice, or a communication intended to solicit or establish any attorney-client relationship between LexCounsel and the reader(s). LexCounsel shall not have any obligations or liabilities towards any acts or omission of any reader(s) consequent to any information contained in this e-newsletter. The readers are advised to consult competent professionals in their own judgment before acting on the basis of any information provided hereby.

To print this article, all you need is to be registered on

Click to Login as an existing user or Register so you can print this article.

In association with
Related Topics
Related Articles
Related Video
Up-coming Events Search
Font Size:
Mondaq on Twitter
Mondaq Free Registration
Gain access to Mondaq global archive of over 375,000 articles covering 200 countries with a personalised News Alert and automatic login on this device.
Mondaq News Alert (some suggested topics and region)
Select Topics
Registration (please scroll down to set your data preferences)

Mondaq Ltd requires you to register and provide information that personally identifies you, including your content preferences, for three primary purposes (full details of Mondaq’s use of your personal data can be found in our Privacy and Cookies Notice):

  • To allow you to personalize the Mondaq websites you are visiting to show content ("Content") relevant to your interests.
  • To enable features such as password reminder, news alerts, email a colleague, and linking from Mondaq (and its affiliate sites) to your website.
  • To produce demographic feedback for our content providers ("Contributors") who contribute Content for free for your use.

Mondaq hopes that our registered users will support us in maintaining our free to view business model by consenting to our use of your personal data as described below.

Mondaq has a "free to view" business model. Our services are paid for by Contributors in exchange for Mondaq providing them with access to information about who accesses their content. Once personal data is transferred to our Contributors they become a data controller of this personal data. They use it to measure the response that their articles are receiving, as a form of market research. They may also use it to provide Mondaq users with information about their products and services.

Details of each Contributor to which your personal data will be transferred is clearly stated within the Content that you access. For full details of how this Contributor will use your personal data, you should review the Contributor’s own Privacy Notice.

Please indicate your preference below:

Yes, I am happy to support Mondaq in maintaining its free to view business model by agreeing to allow Mondaq to share my personal data with Contributors whose Content I access
No, I do not want Mondaq to share my personal data with Contributors

Also please let us know whether you are happy to receive communications promoting products and services offered by Mondaq:

Yes, I am happy to received promotional communications from Mondaq
No, please do not send me promotional communications from Mondaq
Terms & Conditions (the Website) is owned and managed by Mondaq Ltd (Mondaq). Mondaq grants you a non-exclusive, revocable licence to access the Website and associated services, such as the Mondaq News Alerts (Services), subject to and in consideration of your compliance with the following terms and conditions of use (Terms). Your use of the Website and/or Services constitutes your agreement to the Terms. Mondaq may terminate your use of the Website and Services if you are in breach of these Terms or if Mondaq decides to terminate the licence granted hereunder for any reason whatsoever.

Use of

To Use you must be: eighteen (18) years old or over; legally capable of entering into binding contracts; and not in any way prohibited by the applicable law to enter into these Terms in the jurisdiction which you are currently located.

You may use the Website as an unregistered user, however, you are required to register as a user if you wish to read the full text of the Content or to receive the Services.

You may not modify, publish, transmit, transfer or sell, reproduce, create derivative works from, distribute, perform, link, display, or in any way exploit any of the Content, in whole or in part, except as expressly permitted in these Terms or with the prior written consent of Mondaq. You may not use electronic or other means to extract details or information from the Content. Nor shall you extract information about users or Contributors in order to offer them any services or products.

In your use of the Website and/or Services you shall: comply with all applicable laws, regulations, directives and legislations which apply to your Use of the Website and/or Services in whatever country you are physically located including without limitation any and all consumer law, export control laws and regulations; provide to us true, correct and accurate information and promptly inform us in the event that any information that you have provided to us changes or becomes inaccurate; notify Mondaq immediately of any circumstances where you have reason to believe that any Intellectual Property Rights or any other rights of any third party may have been infringed; co-operate with reasonable security or other checks or requests for information made by Mondaq from time to time; and at all times be fully liable for the breach of any of these Terms by a third party using your login details to access the Website and/or Services

however, you shall not: do anything likely to impair, interfere with or damage or cause harm or distress to any persons, or the network; do anything that will infringe any Intellectual Property Rights or other rights of Mondaq or any third party; or use the Website, Services and/or Content otherwise than in accordance with these Terms; use any trade marks or service marks of Mondaq or the Contributors, or do anything which may be seen to take unfair advantage of the reputation and goodwill of Mondaq or the Contributors, or the Website, Services and/or Content.

Mondaq reserves the right, in its sole discretion, to take any action that it deems necessary and appropriate in the event it considers that there is a breach or threatened breach of the Terms.

Mondaq’s Rights and Obligations

Unless otherwise expressly set out to the contrary, nothing in these Terms shall serve to transfer from Mondaq to you, any Intellectual Property Rights owned by and/or licensed to Mondaq and all rights, title and interest in and to such Intellectual Property Rights will remain exclusively with Mondaq and/or its licensors.

Mondaq shall use its reasonable endeavours to make the Website and Services available to you at all times, but we cannot guarantee an uninterrupted and fault free service.

Mondaq reserves the right to make changes to the services and/or the Website or part thereof, from time to time, and we may add, remove, modify and/or vary any elements of features and functionalities of the Website or the services.

Mondaq also reserves the right from time to time to monitor your Use of the Website and/or services.


The Content is general information only. It is not intended to constitute legal advice or seek to be the complete and comprehensive statement of the law, nor is it intended to address your specific requirements or provide advice on which reliance should be placed. Mondaq and/or its Contributors and other suppliers make no representations about the suitability of the information contained in the Content for any purpose. All Content provided "as is" without warranty of any kind. Mondaq and/or its Contributors and other suppliers hereby exclude and disclaim all representations, warranties or guarantees with regard to the Content, including all implied warranties and conditions of merchantability, fitness for a particular purpose, title and non-infringement. To the maximum extent permitted by law, Mondaq expressly excludes all representations, warranties, obligations, and liabilities arising out of or in connection with all Content. In no event shall Mondaq and/or its respective suppliers be liable for any special, indirect or consequential damages or any damages whatsoever resulting from loss of use, data or profits, whether in an action of contract, negligence or other tortious action, arising out of or in connection with the use of the Content or performance of Mondaq’s Services.


Mondaq may alter or amend these Terms by amending them on the Website. By continuing to Use the Services and/or the Website after such amendment, you will be deemed to have accepted any amendment to these Terms.

These Terms shall be governed by and construed in accordance with the laws of England and Wales and you irrevocably submit to the exclusive jurisdiction of the courts of England and Wales to settle any dispute which may arise out of or in connection with these Terms. If you live outside the United Kingdom, English law shall apply only to the extent that English law shall not deprive you of any legal protection accorded in accordance with the law of the place where you are habitually resident ("Local Law"). In the event English law deprives you of any legal protection which is accorded to you under Local Law, then these terms shall be governed by Local Law and any dispute or claim arising out of or in connection with these Terms shall be subject to the non-exclusive jurisdiction of the courts where you are habitually resident.

You may print and keep a copy of these Terms, which form the entire agreement between you and Mondaq and supersede any other communications or advertising in respect of the Service and/or the Website.

No delay in exercising or non-exercise by you and/or Mondaq of any of its rights under or in connection with these Terms shall operate as a waiver or release of each of your or Mondaq’s right. Rather, any such waiver or release must be specifically granted in writing signed by the party granting it.

If any part of these Terms is held unenforceable, that part shall be enforced to the maximum extent permissible so as to give effect to the intent of the parties, and the Terms shall continue in full force and effect.

Mondaq shall not incur any liability to you on account of any loss or damage resulting from any delay or failure to perform all or any part of these Terms if such delay or failure is caused, in whole or in part, by events, occurrences, or causes beyond the control of Mondaq. Such events, occurrences or causes will include, without limitation, acts of God, strikes, lockouts, server and network failure, riots, acts of war, earthquakes, fire and explosions.

By clicking Register you state you have read and agree to our Terms and Conditions