The Indian government should probe allegations that officials are using the law on foreign contributions to repress groups critical of the government, Human Rights Watch said Thursday.
It also demanded that the government should amend the 2010 Foreign Contribution (Regulation) Act to protect the right to freedom of association and expression.
"The Indian government is using the Foreign Contribution Act to make advocacy groups toe the line," said Meenakshi Ganguly, South Asia director at Human Rights Watch.
"Non-profit and advocacy groups say officials harass them with constant queries and threaten investigations in apparently deliberate efforts to curtail dissent."
In recent months, the Foreign Contribution Act has been used by Indian authorities to prevent organisations that question or criticize government policies and practices from receiving funding from abroad, Human Rights Watch said.
For instance, the act was used to target groups protesting against nuclear plants and big infrastructure projects.
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Among groups that lost permission to receive foreign funds was the Indian Social Action Forum, a network of more than 700 NGOs across India.
Human Rights Watch knows of at least two other groups doing important work opposing custodial torture and providing assistance to victims of domestic violence that are contending with inquiries from home ministry officials.
The Foreign Contribution Act was enacted to prohibit political parties, politicians and election candidates from accepting foreign support to ensure that Indian elections were not affected by foreign interests.
But provisions were also included making it compulsory for associations to register with the government before accepting any foreign contribution and for all NGOs to renew their certification every five years.