Who counts as a foreign source under the FCRA?

A foreign source is any giver the Foreign Contribution (Regulation) Act, 2010 (FCRA) treats as foreign: foreign governments and their agencies, foreign companies and multinational corporations, foreign trusts, foundations and associations, and any citizen of another country. Money, goods or securities from any of them are foreign contribution, which an Indian NGO may accept only with FCRA registration or prior permission, whatever the currency and wherever the money is paid.

So what decides whether the FCRA applies isn’t the bank or the currency but the identity of the giver. Most cases are clear. A few aren’t, and the most important is CSR money from Indian companies that belong to foreign groups.

This guide, with a table of common cases at the end, is written for NGO finance staff, and for CSR teams at the Indian subsidiaries and branches of multinationals, who are asked this question by every partner they fund. It explains the law as in force on 3 October 2026, and it can’t replace advice on your own structure. For the wider rules, start with what FCRA is.

The definition in the Act

Section 2(1)(j) lists ten kinds of foreign source.

Two rules in the definition of foreign contribution matter as much as the list:

• Money keeps its character. Money that passes from a foreign source through one or more people stays foreign contribution at every step, so an Indian go-between changes nothing.
• The currency is irrelevant. Rupees from a foreign source are foreign contribution.

The exempt international agencies are listed on the FCRA portal, fcraonline.nic.in. Money from them isn’t foreign contribution.

Foreign companies, multinationals and their Indian branches

The Act’s definition of a foreign company, in Section 2(1)(g), is wide. It means a company or body incorporated outside India, and it includes:

• a foreign company within the meaning of the Companies Act;
• “a company which is a subsidiary of a foreign company”;
• the registered office or principal place of business in India of either of those;
• and a multinational corporation: a corporation incorporated abroad that operates in two or more countries.

An Indian company that operates in two or more countries isn’t a multinational corporation for this purpose.

Branches and project offices. Section 135 of the Companies Act, 2013 and the CSR Rules require a foreign company with a branch or project office in India to spend on CSR if it meets the CSR tests. A branch isn’t a separate company: its CSR grants are made by the foreign company itself, which is incorporated outside India, and the definition also names a foreign company’s registered office or principal place of business in India. On the Act’s definitions, CSR from an Indian branch or project office is foreign contribution. We found no statement from the Ministry of Home Affairs (MHA) saying otherwise.

Indian companies with foreign shareholders: the FEMA proviso

Limb (vi) catches an Indian company with more than half its share capital held by foreigners. A proviso, inserted by the Finance Act, 2016 with effect from 26 September 2010, takes many such companies out again.

The Foreign Exchange Management Act, 1999 (FEMA) and the rules made under it set how much foreign investment each sector of the economy may take: 100% in many sectors, less, or only with government approval, in others. So, on the shareholding test, an Indian company is a foreign source only if both of these are true:

1. more than half its share capital is held by foreign governments, citizens, companies or other foreign bodies; and
2. that foreign holding is outside the FEMA limits.

A company with less than half its shares in foreign hands isn’t caught by limb (vi) at all. And because foreign investment made lawfully under FEMA should be within its limits, the proviso appears to take most companies with lawful foreign investment outside limb (vi).

The open question: subsidiaries of foreign companies

Here the law isn’t settled. The FEMA proviso is attached only to limb (vi). But limb (iii) makes every foreign company a foreign source, and the definition of a foreign company includes “a company which is a subsidiary of a foreign company”. Read literally, an Indian company controlled by a foreign parent could be a foreign source under limb (iii), however its shareholding stands under FEMA.

There are two readings, and advisers differ:

As of October 2026 we found no MHA guidance and no court ruling on the current Act that reconciles the two for CSR. So nobody can honestly tell you that every multinational’s Indian arm is, or isn’t, a foreign source.

What CSR teams of multinationals should do

• Take a written legal opinion on your own company. It should cover limb (vi) and the FEMA limits, and the “subsidiary of a foreign company” wording in limb (iii). Branches and project offices should start from the position that their CSR is foreign contribution.
• Record the position once, in your CSR policy file or grant manual, and review it whenever your shareholding or structure changes.
• Tell every implementing agency in writing what your position is, before the agreement is signed. NGOs will ask, and their auditors may too.
• If you treat your CSR as foreign contribution, fund only organisations with FCRA registration or prior permission, pay into their FCRA Account at SBI’s New Delhi Main Branch, expect administrative costs within 20% of the foreign contribution, and don’t design projects that need the NGO to pass money to partners: Section 7 bans it.
• If you treat it as domestic, say so in the agreement, keep the opinion on file and pay into the NGO’s ordinary account.

Our guide to choosing an NGO partner covers a CSR team’s other checks.

What NGOs should do

• Ask every company with foreign ownership for a written statement of its FCRA position before you sign.
• If the company is a foreign source and you have no FCRA registration, you can’t accept the money. A newer organisation can apply for prior permission for that grant.
• If the position is unclear and the company won’t take a view, take advice before you accept.
• Keep the statement with the grant file, where your auditors will look for it.

See also how NGOs can get CSR funding.

People: Indian citizens abroad, OCI cardholders, foreigners and relatives

The MHA’s FAQ is plain on the first two. A contribution from an Indian citizen living abroad, out of personal savings and through normal banking channels, isn’t treated as foreign contribution. Foreign citizens of Indian origin, including PIO and OCI cardholders, are foreigners, and anyone without an Indian passport is treated as a foreign source.

For foreigners living in India, the Act makes “a citizen of a foreign country” a foreign source with no exception for residents, so their donations are foreign contribution even in rupees from an Indian account. Relatives are the one personal exception: no permission is needed to accept foreign contribution from your relatives (Section 4(e) covers even people the Act otherwise bars), subject to the Form FC-1 report above. The exception is for individuals and their own relatives; it doesn’t let an NGO accept money from its trustees’ foreign relatives. For appeals to individual donors, see individual giving and crowdfunding.

International bodies, foreign charities and intermediaries

• UN bodies and exempt agencies. The UN and its specialised agencies, the World Bank, the IMF and agencies the government notifies aren’t foreign sources. Check the list on the FCRA portal before relying on this for a particular agency.
• Foreign charities, trusts and foundations are foreign sources, as are societies, clubs and associations formed abroad, and trusts or foundations mainly financed by a foreign country.
• Intermediaries don’t change anything. Because foreign money stays foreign however it travels, a foreign donation passed through an Indian platform, trust or person is still foreign contribution when it reaches the NGO. And an organisation that holds FCRA registration can’t pass foreign contribution on at all (Section 7).

Payments that aren’t foreign contribution

• Fees and payments for goods or services. Fees, such as an Indian institution’s fees from foreign students, and payments for goods or services in the ordinary course of business aren’t foreign contribution.
• Personal gifts of articles for personal use worth up to ₹1 lakh.
• Money from Indian citizens abroad, as above.

Be careful with the first. A payment is excluded only if it is genuinely the price of goods or services supplied in the ordinary course of business. Calling a grant a fee doesn’t change what it is.

Common cases at a glance

For a deeper look at how CSR teams handle FCRA when they choose partners, see the Academy course Choosing NGO partners.