FCRA Amendment Bill hits British Indians on charitable donations to India
During a recent meeting with the Indian Foreign Secretary, H. E. Shri Harsh Vardhan Shringla during his official visit to London, Lord Dolar Popat raised an issue of major concern to the British Indian community regarding the recent FCRA Amendment Act 2020 regarding the transfer and use of foreign charitable donations to India.
The Indian community in the UK send huge amounts each year to India, currently £3bn in remittances and approximately £1bn for charitable causes and other initiatives. Many British Indian donors and charities would be hit hard by this new Act, such as GMSP Foundation who donate in excess of £500,000 a year for good causes in India.
While recognising the virtuous motivations for passing the Act, Lord Popat advised the Foreign Minister to look into the adverse impacts for British Indian donors to ensure India does not lose out from lost charitable donations from the UK. The Minister agreed to raise this with the relevant department.
One of the stumbling blocks highlighted at the meeting was the Foreign Exchange Management Act (FEMA), which restricts Indian firms from borrowing money at low interest rates from the UK. Lord Popat mentioned to the Foreign Minister that it is important to allow firms to access foreign capital and allow inexpensive capital to come to India, through low interest rates, compared to the current interest rate in India at 7-8%.
Sherry Madera, Chief Industry and Government Affairs Officer at Refinitiv also stressed the negative impact that the Foreign Exchange Management Act was having on India’s financial services market. With the UK being one of the largest financial markets in the world, Sherry works to increase the efficiency of capital between the UK and India, allowing companies in India to borrow money from the UK at much lower rates.