The Foreign Exchange Management Act, 1999 (FEMA) replaced the Foreign Exchange Regulation Act, 1973 (FERA). FERA was introduced in 1974 to consolidate and amend the then existing law relating to foreign exchange. FERA aimed at having strict controls to conserve India’s foreign exchange. FERA was amended in 1993 to bring about certain changes, as a result of introduction of economic reforms and liberalization of the Indian economy. But it was soon realized that FERA had by and large outlived its utility in the changed economic scenario and therefore was replaced by FEMA in 1999. The basic difference between FERA and FEMA is:
FERA is an act to consolidate and amend the law regulating certain payments, dealings in foreign exchange and securities, transactions affecting foreign exchange and import and export of currency for the conservation of the foreign exchange resources of the country and the proper utilization thereof in the interests of the economic development of the country. Whereas FEMA is an act to consolidate and amend the law relating to the foreign exchange with the objective of facilitating external trade and payments and for promoting the orderly development and maintenance of foreign exchange market in India. There are many defenses between FERA and FEMA but there is, however, one underlying similarity in both FERA and FEMA. FEMA would also be governed by the notifications to be issued by the Central Government/Reserve Bank of India for granting general permission as was the case under FERA. But the question is about the differences so the differences are mentioned below.
Comparison of provisions of FERA, 1973 and FEMA, 1999
Sr. No| DIFFERENCES| FERA| FEMA|
1| PROVISIONS| FERA consisted of 81 sections, and was more complex| FEMA is much simple, and consist of only 49 sections.| 2| FEATURES| Presumption of negative intention (Mens Rea ) and joining hands in...