from fera to fema

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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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