The government has surprised many in India and abroad by putting the U.S.-based Ford Foundation, one of the world's largest charitable funds, onto its security watchlist. The home affairs ministry is probing the foundation’s funding of a local organisation in Gujarat run by activist Teesta Setalvad, a long-time critic of Prime Minister Narendra Modi.

The home affairs ministry said it would "keep watch on all the activities" funded by the Ford Foundation and instructed the Reserve Bank of India to get the ministry’s approval before passing any money from the New York-based group to local organisations.

All funds distributed by the foundation should be "utilized for bonafide welfare activities without compromising on concerns for national interest and security", the ministry said in a letter to the RBI published online.

The Ford Foundation, which has worked in India since 1952, said the government was "reviewing information related to their ongoing investigation of Sabrang Communications and Publishing" and highlighted its work in India.

"We have been and continue to be deeply respectful of the laws of the land ... If the Government suggests methods by which we can strengthen and improve our grant-making processes, we will take appropriate steps to incorporate them," the foundation said in a statement on Friday.

Sabrang is run by Teesta Setalvad and aims to strengthen conflict resolution and peace building in Gujarat and Maharashtra. It was given $250,000 by the Ford Foundation in 2009, according to the foundation's website.

Last week Sabrang was accused by a state minister from Gujarat of misusing funds to create "communal disharmony", local media reported.

Setalvad and her husband are reportedly fighting accusations of embezzling funds meant for a museum to honour victims of the 2002 riots in Gujarat that led to the deaths of almost 1,000 people, mostly Muslims.

Modi was chief minister of Gujarat during the riots and was criticized for allowing the violence, but he has always vehemently denied any involvement, and a Supreme Court inquiry found no evidence to prosecute him.

According to Reuters, the Ford Foundation had almost $12 billion in assets at the end of 2013, and provides grants to groups in the United States, Asia, the Middle East, Africa and Latin America, focusing on education, democracy promotion and poverty reduction.

Founded by Ford Motor Company founder Henry Ford’s son, the foundation came to India on an invite from then Prime Minister Jawaharlal Nehru in 1952 – its first step outside the US. According to PTI, it has donated to IIT-Bombay, Jamia Milia Islamia, Wildlife SOS, Tata Institute of Social Sciences and Aga Khan Foundation over the years.

The United States administration expressed concern on Friday over the Indian government’s crackdown on the Ford Foundation.

"We are concerned that this recent ruling limits the necessary and critical debate within Indian society and we are seeking a clarification on this issue with the appropriate Indian authorities," the state deputy acting spokesperson, Marie Harf, told reporters at her daily news conference.

This is not the first time the Indian government has blocked foreign money to a local non-government organisation this year. The home ministry recently froze seven bank accounts of Greenpeace India and barred it from receiving foreign funds for allegedly violating the Foreign Contributions Regulations Act (FCRA) and "prejudicially" affecting the country's public and economic interests.

In January, the Delhi High Court had ruled the government’s action against Greenpeace was “arbitrary, illegal and unconstitutional”.

- Karan Singh

To Learn More:

India puts U.S. charity Ford Foundation on security watchlist (by Joseph, d’Urso, Reuters)

'Concerned' US seeks clarification over India's crackdown on Ford Foundation, Greenpeace (PTI)

Ford Foundation and Modi Govt’s paranoia: Are emergency days back? (by G. Pramod Kumar, Firstpost)

Will Challenge Home Ministry Order in Court: Greenpeace India (IANS)