Foreign entities funding Indian NGOs to stall public projects, Centre tells Supreme Court

Foreign entities are making concerted efforts to stall public projects and “affect the economic interests of India” by funding Indian non-governmental organisations and trusts, the Modi government told the Supreme Court on Monday, reported The Indian Express.

A bench of Justices Sanjiv Khanna and Dipankar Datta was hearing an appeal by the Environics Trust, a non-governmental organisation, against a November 8 Delhi High Court order.

The Environics Trust had moved the High Court against the Income Tax Department’s notice to open tax reassessment proceedings against it. The court rejected the plea, observing that the scope of judicial review in such cases was restricted.

The Supreme Court on Monday allowed the Income Tax Department to initiate tax reassessment proceedings against Environics Trust but said that no final orders can be passed without prior permission, reported PTI.

Opposing the organisation’s appeal in the Supreme Court, the Income Tax Department said that it had begun investigating Environics Trust on September 7, 2022. The department alleged that the organisation’s “activities are neither genuine nor being carried out as per the objects of the Trust”.

“It is found that the petitioner trust is being funded by foreign entities and is being used to stall public projects, which are in the interest of India,” read the Income Tax Department’s affidavit before the Supreme Court. “It is also found that the petitioner trust is hiring paid protestors to protest against public projects in India. More than 90% of the income of the petitioner Trust is from foreign donations.”

The Environics Trust was registered in March 2003 to conduct research on environmental issues, implement programmes for community development and provide assistance to communities to redress injustices and uphold their rights.

The Centre told the Supreme Court that the organisation had received a total of Rs 14.27 crore in donations between 2016 and 2021. Of this, Rs 13.66 crore was obtained through foreign contributions.

The Income Tax Department alleged that Environics Trust “has funded protests against development projects in a village in Odisha under the guise of distribution of relief packages to households”.

“It is found that Environics Trust has transferred an amount of Rs 1,250 per individual from its ICICI bank account…to those who were involved in the said protests and named in the FIR [first information report] registered in this regard,” read the affidavit. “Thus, the Environics Trust is misusing the foreign contribution for stalling development projects instead of using them for the stated purpose.”

The affidavit said that the tax reassessment proceedings against Environics Trust were initiated based on specific facts. However, broader concerns about foreign entities funding and influencing Indian organisations and trusts were pertinent to the case, said the affidavit, according to Hindustan Times.

Several non-governmental organisations have recently had their Foreign Contribution Regulation Act licences revoked for alleged violations of the Act, which was first enacted in 1976 to regulate the acceptance and usage of foreign funds by individuals and associations.

The Foreign Contribution Regulation Act licences of more than 6,600 non-governmental organisations were scrapped between the financial years 2016-’17 and 2021-’22, the Centre told Parliament in December 2022. Nearly 20,700 non-governmental organisations have lost their licences in the past 10 years.

Last year, the Union government told Parliament that 13,520 non-governmental organisations registered under the Foreign Contribution Regulation Act had received Rs 55,741.51 crore in foreign contributions between 2019-’20 and 2021-’22.

Also read:

• Home ministry dodges query on cancelling foreign contribution licences of nonprofits

• Everything you need to know about FCRA, the law that regulates foreign donations to NGOs