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FERA
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Objectivesof FERA,1973
Theprinci pal objectiveoftheForeignExchangeRegulationAct(FERA)isto preventtheout flow of Indiancurrencyandtoseethattheforeignexchangedueto Indiashouldbe
received.Indetail, theobjectivesoftheActareasfollows:
To regulatecertainpayments.
To regulatedealingsinforeignexchangeandsecurities
To regulatethetransactionsindirectlyaffectingforeignexchange.
To regulateimportandexportof ofcurrencyandbullion.
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Toconservetheforeignexchangeresourcesofthe
countryandtoutilisethesameintheinterestsof
theeconomicdevelopmentofthecountry. To regulatetheholdingofimmovableproperty
outsideIndia.
To regulateemploymentof foreignnationals.
To regulateacquisition, holdingetc. ofimmovable
propertyinIndiabynon-residents.
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Someinstancesof FERA violations:
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From FERA to FEMA
FERA(1973)categorisedforeignexchangelaw
violatorsascriminalsandactionsagainstthemwer
verystrict. ItwasreplacedbyFEMA(1999) whichaimedatfacilitatingexternaltradeandpayment
andlawviolatorsweretreatedascivil offenders
ratherthanascriminals.
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DifferencebetweenFERA andFEMA
FERAcameinto forceonJanuary1,1974 whereasFEMA wasintroducedintheparliamentonAugust4,1998.
FERA laidemphasisonexchangeregulationandexchangecontrol whereasFEMA laysemphasisonexchangemanagementandfacilitatesexternaltradeandpayments.
Itwasnecessaryto obtaintheReservebankspermissioninrespectofmostregulationstherunder.
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Whereasunder FEMA withtheexceptionofsection
3which relatestodealinginforeignexchangeno
other provisionof FEMAstipulatesobtainingRBIspermission.
o Acontraventionunder FERA wastreatedasa
criminal offencewhereasviolationof FEMAis
treatedascivil offence.
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FEMA,1999
Theactamendsthelaw relatingto foreignexchange
withtheobjectiveof facilitatingexternaltradeand
paymentsandfor promotingtheorderlydevelopments.
Theactappliestothewholeof India. Itshall also
applyto allbranches, officesandagenciesoutside
India ,ownedandcontrolledbya personresidentinIndia.
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FEMA, incontrast, seekstoestablish amoreliberal andorderly
regulatoryframeworkconducivetoeconomicgrowthbylimiting
itsambitto:
Dealinginforeignexchange
Holdingof foreignexchange
CurrentAccounttransactions Capital Accounttransactions
Exportofgoodsandservices
Realisationandrepatriationof foreignexchange Exemptionfromrealisationandrepatriation
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