A recently-imposed law in India is preventing local charities from accessing foreign donations, as the country keeps struggling with COVID-19
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- India is struggling to bring its rampant COVID-19 outbreak under control.
- Around the world people and companies have donated oxygen and PPE, and millions of dollars.
- But a law is stopping charities from distributing aid to smaller groups, making it hard to reach those in need.
- See more stories on Insider's business page.
Donations to help India fight its raging COVID-19 outbreak are flooding in from around the world, but a new law is preventing many nonprofits from using the money effectively.
Prime Minister Narendra Modi's government passed an amendment to the Foreign Contribution Regulation Act last September. The amendment effectively prevents local NGOs from redistributing donations to smaller aid groups.
India is currently in crisis, with authorities reporting record-breaking daily new cases, and shortages of oxygen tanks and hospital beds.
People around the world have raised millions for India, but in many cases, that money is being held up and not reaching those in need, according to The New York Times and Devex, an international-development news site.
It is not clear where the aid goes instead.
According to The Times, the Indian government has instead encouraged international donors to send aid to official charities, including one controlled by Modi and government leaders. The government has not given clarity on how the aid is being used, The Times reported.
REUTERS/Adnan Abidi
As it is, all nonprofits in India require a license to accept international donations, with the process of getting one fraught with red tape and subject to long delays.
India-based nonprofits also need to open bank accounts with the state-owned State Bank of India to be eligible to receive funds from abroad.
In one example cited by Devex, a small charity named the Hemkunt Foundation is working to transport oxygen supplies to cities across India, yet it is unable to access funds donated from abroad as it doesn't have the correct license.
'Everybody is being stymied'
Experts and charities have said that the limits on distributing aid were preventing them from using it effectively. The Times reported that the September amendment was passed with little warning.
"Hundreds of international donors, businesses, and people from the diaspora are running around in circles and trying to help," Ingrid Srinath, director of the Centre for Social Impact and Philanthropy at Ashoka University in Sonipat, India, told Devex.
"Everybody is being stymied."
"This is slowing down the speed and agility of the response. A bigger organization such as Oxfam could help smaller NGOs on the ground but they can't," she said.
Last year Voluntary Action Network India described the aid as "a death blow to development relief," according to The Indian Express.
A group of 13 nonprofits recently wrote a letter to the Indian and US governments highlighting that the law had "paralyzed" the charity sector and would "divert scarce time, bandwidth and human resources" away from helping people, The Times reported.
"The organizations best placed to respond to community needs at the grass roots in a timely, agile manner are unable to access these donors," the letter said, per The Times.
Nonprofits in India are actively seeking a waiver to the country's rules on accepting foreign donations, and government officials are considering the proposal, according to The Economic Times.
"Everyone was caught off guard, especially given the role that NGOs played in COVID relief last year," Nishant Pandey, chief executive of the American India Foundation, told The New York Times.
"To come with an amendment like that in the middle of pandemic was problematic."
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