The Intelligence Bureau said in its report that Greenpeace and other lobby groups are costing the country up to 3 percent of its GDP by campaigning against power projects, coal plants and mining. Greenpeace denies this, said it stands for sustainable growth, and has called the allegations an attempt to silence dissent.
The Reserve Bank of India (RBI) has been asked to obtain the government's permission before releasing funding from Netherlands-based Greenpeace International and Climate Works Foundation, both contributors to Greenpeace India.
But did the government do due diligence on Climate Works before placing it on a watch list?
According to Greenpeace India, less than one percent of its funding comes from The Climate Works Foundation, whose Indian chapter, Shakti Foundation, works extensively with central and state governments, including Gujarat.
Nitin Desai has served as an economic advisor to the PM and is a board member of the Shakti Foundation. "We work with many state governments including Tamil Nadu and Gujarat, and essentially what we do (is) we help people who provide services which (the) government uses mainly for capacity-building," he said to NDTV. "For the Gujarat government, we commissioned a detailed research for potential of renewable energy resources... or training of people for implementing of environmental building code is another area."
Mr Desai is just one of Shakti Foundation's eminent board members. The others include Shiv Sena leader and former Power Minister Suresh Prabhu, Naina Lal Kidwai who heads HSBC India, and Jamshyd Godrej, the CEO of the conglomerate Godrej and Boyce.
Since the Shakti Foundation is largely reliant on Climate Works for its funding, the NGO is likely to be crippled by the government's order. Mr Desai says he hopes the government will see reason.
In a further demonstration of the complexity at play, Climate Works has funded Global Legislators International, a network of law-makers in 80 countries who lobby for laws on climate change and sustainability. When the agency opened its Indian arm in 2011, its first President was Prakash Javadekar, the present Environment Minister. He resigned from Globe India after he was inducted into the union cabinet last month.
Globe India does not have legal clearance to receive foreign donations. So how does it support itself?
Mr Javadekar told NDTV in an interview that he isn't aware of any gray funding areas. "I started doing into that forum with (former Power Minister) Suresh Prabhu so I found the whole dialogue about climate change very interesting," he said.
In an email interview, Pranav Sinha, a top administrator at Globe India, said the group is funded by contributions from its board members of 10 Indian MPs. The foreign trips, he says, are paid for by Globe International, for which no government clearance is needed.
There may well be a case for a more nuanced, comprehensive look into the funding of NGOs. But the Intelligence Bureau's report doesn't make that point. Instead, it polarizes the debate between 'virtuous' corporate-political establishment vs 'evil' NGOs, neglecting entirely the closely enmeshed world of big NGOs, international funders and policymakers, as demonstrated by the curious case of Climate Works.
Get Breaking news, live coverage, and Latest News from India and around the world on NDTV.com. Catch all the Live TV action on NDTV 24x7 and NDTV India. Like us on Facebook or follow us on Twitter and Instagram for latest news and live news updates.