India Regulatory Brief: NGO Regulations May Tighten, Reform for Life Sciences Promised

June 10, 2015 Posted by India Briefing Reading Time: 4 minutes

NGO Regulations May Tighten Further

According to local media, the Prime Minister’s Office has instructed the Ministry of Home Affairs (MHA) to tighten regulations on non-governmental organizations (NGOs. The reports state that the MHA has been asked to amend aspects of the Foreign Contributions Regulation Act (FCRA) to ensure that NGOs report foreign financing within 48 hours of receipt. The reports also claim that the MHA is exploring different ways to audit NGOs and make their financial information public. If enacted, these reforms would significantly increase the compliance requirements of foreign financed NGOs

The report follows widespread criticism of the government’s treatment of foreign funded NGOs. Recently, the MHA cancelled 4,470 licenses for not filing annual returns and other FCRA violations. In May, the MHA revoked the licenses of nearly 9,000 NGOs for non-compliance with the FCRA. US Ambassador to India Richard Verma highlighted the “potentially chilling effects of these regulatory steps focused on NGOs”.

Many critics have similarly argued that the FCRA and its enforcement could inhibit NGO activity in India. Despite this widespread criticism, and following the revocation of nearly 15,000 NGO licenses in the past two months, the government appears unmoved. NGOs in India that receive foreign funding need to begin preparing financial administration teams for increased compliance requirements.

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Reform to Support Life Sciences R&D

The Ministry of Home Affairs (MHA) is in the process of amending the Drugs and Cosmetics Act. Union Minister for Health and Family Welfare J. P Nadda stated that the MHA wanted to amend the Drugs and Cosmetics Act to encourage the growth of the life sciences sector in India. According to the minister, the reforms will specifically provide support for research and development (R&D). The minister reported that Indian pharmaceutical companies, for example, spend less than two percent of their annual turnover on research and development on average.

Despite India’s strong pool of doctors, scientists and engineers, the country continues to trail other Asian countries in R&D investment. The public and private sector have thus far focused on developing manufacturing capacity for life science industries such as biotechnology, pharmaceuticals and medical technology.

Greater Oversight Likely Following Maggi Recall

Nestle India was dealt a serious blow after many states ordered a recall of ‘Maggi’ instant-noodles. The recall followed an investigation by the Uttar Pradesh state Food and Drug Administration, which found high concentrations of lead in the product.

Local industry experts note that food safety regulations are much weaker in India than more developed economies. Although the Food Safety & Standards Authority of India was created to enforce the Food Safety & Standards Act, 2006, the regulatory body does not maintain the resources needed to ensure compliance across the country.

Nevertheless, local media reports state that many prominent processed food producers are reassessing their own products to ensure that they do not fail any forthcoming inspections. Many executives in the industry expect tougher regulatory oversight to follow the highly publicized Maggi recall, but the Maggi recall is one of the first to come to a major food processor in a country that is known for poor food regulations.

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