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Assignment On Fera and Fema: Submitted By: Surbhi Singh Bba (TTM) 6 SEM 01814905009
Assignment On Fera and Fema: Submitted By: Surbhi Singh Bba (TTM) 6 SEM 01814905009
SUBMITTED BY:
SURBHI SINGH
BBA(TTM) 6TH SEM
01814905009
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INTRODUCTION
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The introduction of Foreign Exchange Regulation Act was done in 1974, a
period when India’s foreign exchange reserve position wasn’t at its best. A
new control in place to improve this position was the need of the hour.
FERA did not succeed in restricting activities, especially the expansion of
TNCs (Transnational Corporations). The concessions made to FERA in
1991-1993 showed that FERA was on the verge of becoming redundant.
[1]
After the amendment of FERA in 1993, it was decided that the act would
become the FEMA. This was done in order to relax the controls on foreign
exchange in India, as a result of economic liberalization. FEMA served to
make transactions for external trade (exports and imports) easier –
transactions involving current account for external trade no longer required
RBI’s permission. The deals in Foreign Exchange were to be ‘managed’
instead of ‘regulated’. The switch to FEMA shows the change on the part of
the government in terms of foreign capital.
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MAIN FEATURES
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EXCHANGE CONTOL(FEMA)
The object of FERA 1973 was to conserve foreign exchange and prevention
of leakage of it due to adverse position of foreign exchange balance in India.
After liberalisation in 1992, various sectors for opened for FDI time to time
which radically changed the foreign exchange position. Instead of negative
balance, there was substanital foreign exchange reserve so it was felt
necessary to drop out the draconian law of FERA.The object of FEMA
which replaced FERA from 1st June, 2000 was:
To consolidate and amend the law relating to foreign exchange with the
object to facilitating external trade and payments and for promoting the
foreign exchange market in India.So the new law is for the management of
foreign exchange instead of regulation of foreign exchange.
The draconian provisions were droped out in new enactment.
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