FERA versus FEMA:
Foreign Exchange Regulation Act, shortly known as FERA, was introduced in the year 1973. The act came into force, to regulate foreign payments, securities, currency import and export and purchase of fixed assets by foreigners. The act was promulgated in India, when the position of foreign reserves wasn’t satisfactory. It aimed at conserving foreign exchange and its optimum utilization in the development of the economy.
The act was applicable to the whole country. Therefore, all the citizens of the country, inside or outside India were covered under this act. The act extended to branches and agencies of the Indian multinationals operating outside the country, which are owned or controlled by the person who is the resident of India.
Foreign Exchange Management Act was promulgated in the year 1999, to repeal and replace FERA. The act applies to the whole country and to all the branches and agencies of the body corporate operating outside India, whose owner or controller is an Indian resident and also any violation committed by the person covered under the act, outside India.
The main objective of the act is to facilitate foreign trade and to encourage systematic development and maintenance of forex market in the country.
Key Differences between FERA and FEMA:
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