The American Factor in FCRA: Soft Power, Realpolitik, and Washington's Stake

How the USA has been using religion as a soft power tool and why changes to the FCRA have shaken the American diplomatic playbook in India.

India is tightening its regulations on foreign financial flows entering its civil society. First enacted during the 1976 National Emergency to curb Cold War-era political influence, the Foreign Contribution (Regulation) Act (FCRA) has evolved from a counter-espionage mechanism into a proactive instrument of internal security and financial intelligence. The legislative overhaul in 2010, the stringent 2020 amendments, and the recent introduction of the 2026 Amendment Bill demonstrates New Delhi’s continued resolve in regulating external financing. Crucially, the administration of the Act by the Ministry of Home Affairs, rather than Ministry of Finance or Corporate Affairs, underscores the importance of foreign funding in the domain of national security.

Provisions of the FCRA

Under the current legal framework, the entities seeking foreign contributions are mandated to obtain a five year registration from the MHA subject to strict audit rules, donor identity disclosures, biometric and Aadhaar details of office bearers. The law requires entities to open a single designated bank account at the main branch of State Bank of India (55% stake is owned by the Government for India) in New Delhi to make transactions traceable and prevent multi-tier networks. Furthermore, there is a complete ban on re-routing the funds by sub-granting to secondary organisations, cap of utilisation of foreign funds for administrative expenses to 20% and an absolute prohibition on political candidates, Members of Parliament, Judges, Government Officials and Media Personnel from receiving foreign donations.

The 2026 Bill, which is currently under review by the Joint Parliamentary Committee, advances this framework from financial monitoring to direct state control over physical assets. The Bill introduces a ‘deemed cessation’ clause which stipulates that an FCRA license automatically lapses if a renewal is denied, unapplied for or expired. It says that upon cessation or cancellation of license, a ‘Designated Authority’ established under the Act is to take provisional custody of physical assets created wholly or partly through foreign funds. The Authority may transfer the assets to the state agencies or liquidate the proceeds into the Consolidated Fund of India when the registration is permanently revoked. Furthermore, the Bill bars foreign nationals from holding key decision-making roles, prohibits foreign contributions from agencies tied to news production abroad, and specifically restricts entities from using foreign funds for proselytisation while permitting it for legitimate charitable and religious works.

Purpose of the FCRA

Former Prime Minister, Manmohan Singh, had confirmed the involvement of foreign funded NGOs behind protests delaying the Kundakulam Nuclear Power Plant and remarked that “the country’s development cannot be held hostage to foreign funding” (something similar to what is happening against the Great Nicobar Island Project which has immense geopolitical significance). Moreover, the Department-Related Parliamentary Standing Committee on Home Affairs in its 2017 Report had recommended the tightening of oversight on foreign funds. The 255th Report of the Law Commission on India related to Electoral Reforms noted the foreign influence in Indian elections highlighting that foreign funds enter the political arena through NGOs and shell entities, posing a threat to free and fair elections. Furthermore, the Hon’ble Supreme Court in Noel Harper v. Union of India (2022) had clarified that there is no fundamental right to receive foreign contributions. The apex court upheld the FCRA amendments of 2020 accepting that the unregulated foreign funds can adversely affect the socio-economic structure and security of the nation.

Therefore, the objectives of this legal policy is to to safeguard the democratic processes of India, have an auditable trail to avoid halal style sub-granting, sustain religious harmony and prevent physical assets built by foreign capital to be used as a base for illegal operations against the country. The stance of Government of India, irrespective of the ruling party, is consistent and clear - that foreign funding into civil society is welcome but under state oversight to ensure that it is not used against the sovereignty and security of India.

However, a proponent argues that the FCRA has burdened organisations with extra compliances and impeded their liberty of operations. The government interference into the workings of the organisation such as audit verifications, submission of personal details of office bearers, cap on use of foreign funding, proposal to provisionally confiscate physical property built from foreign funds indicate excessive intrusion and breach of fundamental rights and international human rights of freedom of association. But, the resistance against the FCRA 2026 Bill was not limited to domestic civil society entities but included foreign governments who seem to have been deeply impacted by the legislation.

What has been the International Response on the Foreign Contribution (Regulation) Act?

Post 2020 Amendment to the FCRA, the UN Commissioner for Human Rights condemned the changes alleging that they were in violation of the international norms on freedom of association. Moreover, the US Commission on International Religious Freedom (USCIRF), established under the International Religious Freedom Act of 1998, recommended India as a ‘Country of Particular Concern’ for consecutive seven years but the US State Department has always disapproved of such designation. The USCIRF is empowered to recommended any country as a ‘Country of Particular Concern’ when they are committing systemic, ongoing and egregious violations of religious freedom. The purpose of the Act and the USCIRF is to monitor nations that are involved in severe persecution of its people based on faith or religion. Furthermore, the FCRA is discussed in the Congressional hearing by US lawmakers highlighting its impact on American philanthropies, missionary groups and pro-democratic organisations like the NED. In fact, US Secretary of State are sent joint letters by lobbies to raise the issue of FCRA in bilateral negotiations with India and in global forums.

When the news of the introduction of the FCRA Bill of 2026 in the Monsoon Session of the Parliament broke, there was a surge of activity by the US counterparts. Vice President J.D Vance had a phone call with PM Modi. The US Ambassador, Sergio Gor, had successive meetings with the Foreign Secretary and NSA Ajit Doval. In the same week, he undertook state outreach in opposition ruled states and in Kerala (a Jesuit Hub), he was accompanied by Trump’s son-in-law, Michael Boulous (the family members of Trump are his direct representative and their presence symbolises the importance of the meetings). Concurrently, the US Senate passed the Lindsey O. Graham Sanctioning Russia and Iran Act of 2026 which authorised tariffs of up to 100% on India and four other major buyers of Russian energy. And unprecedentedly, all these developments happened within a span of just 7 days! This undoubtedly indicates the importance of the FCRA for the USA and how the cluster of events planned concurrent to the introduction of the Bill in the Monsoon Session created diplomatic pressure on New Delhi.

Consequently, many Christian NGOs, Associations and Leaders publicly condemned the stringent provisions proposed in the 2026 Amendment Bill. A high-level delegation of Christian leaders met with the Home Minister and petitioned the Government to halt the introduction of the 2026 Amendment Bill and demanded its reference to the Joint Parliamentary Committee for a review. They called the FCRA as a ‘confiscatory law’ and demanded deletion of provisions that allowed property to be seized without any appeal option and despite it being built by government approved foreign funds.

How has Christianity been used as a Diplomatic Tool by the USA?

USA has capitalised on Christianity in diplomacy to project its soft power globally. Starting from the Cold War Era, the USA used Christianity as a weapon to counter the atheist Soviet Union. The narrative they presented was that the USA was ‘god-fearing’ and was against the ‘godless communism’ prevalent in the Soviet Union. President Eisenhower used evangelic leaders like Billy Graham to influence European and Asian allies using Christianity as a unifying base against communism. In 1954, Eisenhower added the phrase ‘under God’ to the US Pledge of Allegiance that is read to vow loyalty to the US Flag and Republic. Later, in 1956, Congress changed the National Motto from a latin phrase to ‘In God We Trust’, projecting that it is distinguishing itself from atheism that is prevalent in the communist Soviet Union. Subsequently, this Motto was printed on US currency to remind the people and the world about the religiosity present in America.

Gradually, the USA used religion to project itself as the guardian and protector of international peace and security. For example, in 1983, Ronald Reagan labeled the Soviet Union as the ‘Evil Empire’ and indicated that that the Cold War was not just a political disagreement, but a spiritual battle between right and wrong, and good versus evil. In 2001, George Bush launched the White House Office of Faith Based and Community Initiatives, shifting away from the longstanding policy of secular funding and distinguishing between the state and church, to implicitly institutionalising religious funding from the US Government. And Post 9/11, the USA unilaterally designated Iran, North Korea and Iraq as the ‘Axis of Evil’. These strategies have been acknowledged by Madeleine Albright, former US Secretary of State, in her book “The Mighty and the Almighty: Reflections on America, God and World Affairs”. She reveals an insider view of how religion intersects American Foreign Policy and how religion became an important diplomatic tool in the post 9/11 world. She confirmed that religious rhetoric is deeply embodied in America’s foreign policy ranging from historical concepts like ‘City upon a Hill’ and continues to prove as a vital tool of persuasion, moral superiority and soft diplomatic influence.

Christianity as the Link between the USA and Indian Civil Society

There exists long standing links between Churches and Christian associations of India with its US counterparts and umbrella organisations, especially from the North East India and Kerala. For instance, the Council of Baptist Churches in Northeast India have maintained strong historical and ministerial ties with American Baptist Churches in the USA. Specifically, the roots of Protestant Christianity in Manipur is directly tied to America’s Baptist Foreign Mission Society. It was a missionary named William Pettigrew who arrived in Imphal in 1894 under an American Baptist Sponsorship and established the region’s first Baptist Church in Ukhrul, Manipur. And the Manipur Baptist Convention, the umbrella body, is directly affiliated to the Baptist World Alliance which is headquartered in Virginia, USA.

Moreover, there are many organisations formed by the Northeast Indian diaspora in the US such as the Mizo and Kuki Community Associations, and the North American Naga Christian Fellowship that act as informal channels. Their members actively engage in discussion on the developments on socio-political issues and religious freedom in their respective regions.

Furthermore, it were the American missionaries who were responsible for the origination of Pentecostalism in Kerala. Entities such as the Indian Pentecostal Church of God and the Church of God in Kerala, have extensive organisational and administrative links across North America. Moreover, the Protestant Churches in Kerala, such as and the Mar Thoma Syrian Church maintain institutional inter-church relations with its US denominations like the Episcopal Church, the Evangelical Lutheran Church, and the Presbyterian Church in the USA.

International religious link are normal and justified but when such linkages are used as sources of ground-reporting and data on religious freedom, without the approval of the Government, it becomes a slippery slope. The Christian diaspora groups and faith based associations send detailed testimonies and reports to the US organisations such as the USCIRF and Tom Lantos Human Rights Commission detailing the condition of religious freedom and political stability in their respective regions. Notably, the the Evangelical Fellowship of India, which is an alliance of evangelical churches, publishes annual reports documenting incidents of violence, disruption in church services, and harassment against Christians in India. And this data is directly cited by the USCIRF as references while recommending India as a ‘Country of Particular Concern’ (CPC) under their International Religious Freedom Act, 1998.

As mentioned above, whenever the USCIRF recommends the designation of India as a CPC, the US State Department disapproves it every time. It may look like as if USCIRF is making these recommendations independently but there is a symbolic political undertone to this. Irrespective of the repeated disapprovals by the US State Department, the recommendatory reports by the USCIRF are used by the global media organisations to tarnish India’s image. The US State Department knows that the reports would be used against India, irrespective of their approval of designating India as a CPC. In fact, their denial is projected as a goodwill gesture that is leveraged in bilateral relations. Because there is no reason for the USCIRF to continuously recommended India as a CPC seven times despite successive disapprovals except for providing media organisations and enemy countries a basis to target India. It is a soft power leverage against New Delhi, the result of which is controlled by the US State Department. If one closely analyses the reality of these theatrics, India loses on two fronts. First, because it fails to regulate its domestic entities that are sending subjective reports to US institutions without its oversight. Second, these reports are used to tarnish India’s image and the US State Department is using the opportunity by disapproving recommendations of the USCIRF to protect India’s image, when the exact opposite is the intention. Therefore, the USA has created such a system that it has placed itself in a position to decide whether religious freedom prevails in India.

It is not uncommon for religious organisations to have relations with foreign counterparts. It is a common practice across all religious bodies. But the authenticity and morality of such linkages are questioned when it is used against the host country. There are documented financial relations between faith based organisations in India and the USA. One can access details of foreign donors in Indian entities through publicly available Form FC-4 on MHA’s FCRA Portal, which contains annual returns of the organisations that receive foreign funding. The details of the funding trails can also be accessed through US Government Funding websites or publicly available tax filings as transfer grants to religious bodies is exempted from tax by the USA. For example, the US government directly funds the Indian Pentecostal Church of God Shalem which is a Malayalee (Kerala) rooted congregation located in New Jersey. Similarly, many such associations comprising of Indian origin individuals are directly funded by the US Government. Moreover, when US Secretary of State Marco Rubio visited India earlier this year, he landed in Kolkata - a city known for its vibrant Christian population and associations, convent schools and Churches - to visit the headquarters of Missionaries of Charity, an organisation founded by Mother Teresa, before embarking on the official trip to New Delhi. The Missionaries of Charities has a few branches in the USA and was earlier funded by the USAID for its humanitarian missions. This clearly underlines the importance Washington places on Christian organisations in India.

Conclusion

Since most of the faith based organisations linked to the US will be affected by the FCRA, the concern of the US leadership and its lobbies is not a coincidence but a timely strategy to delay its introduction and use it to force the Government in making changes to the 2026 Bill. They were successful in their accord as the Bill was not introduced in the Monsoon Session and has now been sent for a review to a 31- member Joint Parliamentary Committee, which has been asked to submit its report by the Winter Session. It shows how faith based lobbies, religious organisations and lawmakers are interconnected and how an amendment in a domestic legislation can send shockwaves across international donor networks.

New Delhi is obligated to prevent foreign vectors from meddling into internal affairs, especially into legislations concerning national security. The foreign funds should be used for the progress of India’s civil society and not to conduct forced religious conversions, build physical spaces that can be used against the country or to spread foreign narratives and interfere in the democratic processes of India.

The restrictions imposed through the FCRA are not unique to India as similar restrictions have existed throughout the world. For instance, the USA had enacted the Foreign Agents Registration Act back in 1938 which requires entities accepting foreign donations to publish their relationships, activities and financial compensation publicly. Similarly, Australia has the Foreign Influence Transparency Scheme which mandates documenting activities undertaken on behalf of foreign principals that could influence political or governmental processes to be recorded in a public register.

The intense backlash against India’s FCRA amendments remain disproportionate, exposing how foreign stakeholders protect their own vested interests by pretending to act out of concern for the civil society. Nonetheless, New Delhi should ensure that changes are not made under diplomatic pressure while ensuring that genuine grievances of the civil society organisations are incorporated. India should maintain a firm stance as the FCRA is a sovereign imperative and remains an essential mechanism in protecting national security, democratic processes and religious harmony in the country.