India Regulatory Brief: New Rules for Foreign-funded NGOs, Defense Exports

July 28, 2015 Posted by India Briefing Reading Time: 4 minutes

New Reporting Requirements for Foreign-financed NGOs?

A local media report states that the Ministry of Home Affairs (MHA) has finalized language for the Foreign Contribution (Regulation) Amendment Rules, 2015. According to the report, the Foreign Contribution (Regulation) Amendment Rules, 2015 will require foreign-financed non-governmental organizations (NGOs) to complete Foreign Contributions Regulation Act (FCRA) registration and financial reporting online. The report claims that these reforms are currently under review by the Ministry of Law and Justice; the MHA will announce the changes if and when approved.

FCRA registration and financial reporting is currently a manual process. The FCRA reform could help some foreign-financed NGOs comply with the FCRA. However, it is unclear whether the reform is designed to make FCRA compliance easier or simply increase the reporting requirements for foreign-financed NGOs. Earlier in June, the Prime Minister’s Office was reported to have instructed the MHA to tighten NGO regulations and shorten a window for reporting foreign financing. Since May, the Indian government has revoked the licenses of over 10,000 NGOs for not complying with the FCRA.

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Export Regulations Eased for Defense Companies

The Indian government has eased export regulations for Indian defense companies. To date, Indian defense companies needed to obtain certification from ‘the ultimate end user’ to export military parts and components. As a result of the reform, Indian defense companies now only need to obtain certification from the ‘immediate buyer’ to export military parts and components.

The reform is designed to make Indian defense companies more competitive in the global market. Where Indian defense companies previously needed to certify the entire supply chain before exporting their military parts and components, now companies will be able to complete the sales and export process at a much faster pace.

While the government has eased restrictions for military parts and components, Indian defense companies still need to obtain certification from ‘the ultimate end user’ to export military vehicles and other heavy equipment. Previously in May, the government extended the validity of industrial licenses for the defense industry from three to seven years. This reform was also designed to make the Indian defense industry more competitive.

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India, Singapore to Expand CECA

India and Singapore officials have reportedly entered into talks to expand the Comprehensive Economic Co-operation Agreement (CECA) signed between the two countries in 2005. Any expansion of the CECA, which mandates tariff privileges for 80 products amongst other benefits, would encourage greater trade and investment between the two countries. Many Indian companies are interested in setting up in Singapore to access ASEAN markets as well as duty free imports onto the massive Chinese market.

During the International Business Conference 2015 in Coimbatore, Tamil Nadu state, Singapore Minister for Foreign Affairs and Law Kasiviswanathan Shanmugam, who is of Tamil origin, stated that Singapore would like to deepen its economic relationship with India. In recent years, India and Singapore have considered expanding the CECA, but talks dissolved due to Singaporean concerns over allowing Indian banks to setup in Singapore as well as the free movement of Indian nationals in Singapore.

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