Earlier this month, the Home Ministry said it had cancelled registration of 11,319 organisations that had not applied for renewal of registration under the Foreign Contribution Regulations Act by the June 30 deadline this year.
A statement issued jointly by AI and HRW said, "The ability to access foreign funding is integral to the rights to free association and expression which can only be restricted under narrowly specified grounds.
The NGOs also demanded that foreign contribution law be either amended or repealed so that it is not misused.
"The government should repeal the Foreign Contribution Regulation Act or amend it so that it does not interfere with the rights to freedom of expression and association and cannot be misused for political reasons to restrict the peaceful activities of non-governmental organisations," it said.
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The statement also said, "The (FCRA) law's use of broad and vague terms such as 'public interest' and 'national interest' have left it open to abuse."
"While India is actively encouraging foreign investment in key industries, it is trying to deny funding for efforts to assist the most vulnerable and marginalised," said Meenakshi Ganguly, South Asia Director at Human Rights Watch.
The statement cited how three prominent NGOs--Centre for Promotion of Social Concern, INSAF, Sanchal Foundation--were each denied an FCRA license in October this year.
Earlier this year, the Home Ministry had also suspended the FCRA registration of Lawyers Collective, an advocacy NGO founded by activist lawyers Indira Jaising and Anand Grover. Teesta Setalvad's Sabrang Trust also faced similar action in June.
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