ED Imposes ₹184 Crore FEMA Penalty on NewsClick and Founder Prabir Purkayastha

India’s financial enforcement agency, the Enforcement Directorate (ED), has imposed a penalty of ₹184 crore on digital media platform NewsClick and its founder-editor Prabir Purkayastha for alleged violations of the Foreign Exchange Management Act (FEMA), 1999. Officials stated that ₹120 crore of the penalty has been levied on the company, PPK NewsClick Studio Pvt Ltd, while ₹64 crore has been imposed on Purkayastha personally. The order followed adjudication proceedings initiated after an investigation into foreign investments and remittances received by the organisation.

File photo of NewsClick founder and Editor-in-Chief Prabir Purkayastha. (Photo by Raj K Raj/ Hindustan Times) | Hindustan Times

Allegations of Foreign Funding Irregularities

According to enforcement authorities, the company allegedly received foreign direct investment of approximately ₹9.59 crore during the 2018–19 financial year by misrepresenting its business activities in regulatory filings. Investigators claimed that this enabled the organisation to bypass sectoral conditions governing foreign investments in media entities. In addition, foreign remittances amounting to about ₹82.63 crore between 2018–19 and 2023–24 were allegedly classified as export proceeds without proper documentation or mandatory reporting compliance, including the submission of required forms to regulatory authorities.

Officials concluded that the nature and structure of the transactions indicated deliberate attempts to circumvent India’s foreign exchange regulations. Under FEMA provisions, responsibility was also attributed to Purkayastha as the person in charge of the company’s operations during the relevant period.

Broader Investigation and Legal Developments

The penalty forms part of a wider investigation into the funding patterns of NewsClick that began with enforcement searches conducted in 2021. Multiple agencies, including financial and investigative authorities, have examined various aspects of the case, ranging from alleged financial irregularities to potential violations under other legal frameworks. The matter gained national attention in 2023 when Purkayastha was arrested in connection with related allegations under anti-terror provisions, though he was later granted bail following judicial intervention.

Investigators have also examined claims regarding overseas funding links cited in international reports, assessing whether the inflow of funds complied with Indian laws governing foreign investments and financial disclosures.

Legal Framework and Regulatory Implications

The Foreign Exchange Management Act, enacted in 1999, regulates cross-border financial transactions and aims to ensure transparency and orderly development of India’s foreign exchange market. Violations under the law are treated as civil offences but can lead to substantial financial penalties and restrictions if contraventions are established. Enforcement actions in such cases are intended to strengthen regulatory compliance, particularly in sensitive sectors such as media and digital communications where foreign funding norms are tightly governed.

Response and Future Course

NewsClick has previously denied allegations of wrongdoing, maintaining that all funds were received through legitimate banking channels and reported to relevant authorities in accordance with applicable regulations. The organisation’s detailed response to the latest adjudication order is awaited. Legal experts note that the parties involved may challenge the penalty before the appropriate appellate authorities, which could determine the final outcome of the case.

The MGMM Outlook

The action taken by the Enforcement Directorate against NewsClick and its founder Prabir Purkayastha highlights the seriousness with which financial compliance and foreign funding regulations are being enforced in India, particularly in sensitive sectors like digital media. Allegations of misrepresentation in regulatory filings and improper classification of foreign remittances raise concerns about transparency and accountability, especially when media organisations receive significant overseas funds. Strict enforcement of the Foreign Exchange Management Act strengthens institutional credibility and signals that regulatory frameworks apply equally to all entities, regardless of their influence or platform reach.

The case also reflects a broader need for scrutiny of funding sources in the information ecosystem, where financial backing can potentially influence narratives and public discourse. Ensuring that cross-border transactions follow legal norms protects national interests and promotes trust in media institutions. At the same time, the legal process, including appeals and judicial review, will ultimately determine responsibility, reinforcing the principle that enforcement actions must be balanced with due process under the law.

(Sources: Hindustan Times, Indian Express, Times of India)