INDIAN ECONOMICS ASSIGNMENT ON FOREIGN EXCHANGE REGULATION ACTFERAFOREIGN EXCHANGE
INDIAN ECONOMICS
ASSIGNMENT
ON
FOREIGN EXCHANGE REGULATION ACT
(FERA)
FOREIGN EXCHANGE MANAGEMENT ACT
(FEMA)
SUBMITTED TO- SUBMITTED BY-
Dr. JASBIR SINGH SATISH CHAND BBA (GEN) SEC-B 07214901713 MAHARAJA SUSARJMAL INSTITUTE
Foreign Exchange Regulation Act
FERA
CONCEPT
Foreign Exchange Regulation Act (FERA) was promulgated in 1973 and it came into force on January 1974. Section 29 of this Act referred directly to the operations of MNC’s in India. According to the section, all non-banking foreign branches and subsidiaries with foreign equity exceeding 40 percent had to obtain permission to establish new undertakings, to purchase shares in existing companies, or to acquire wholly or partly any other company. Guidelines for administering this section of FERA were announced in 1973 and later amended in 1976.
According to these guidelines, the principle rule was that all branches of foreign companies operating in India should convert themselves into Indian companies with at least 60 percent local equity participation. Furthermore, all subsidiaries of foreign companies should bring down the foreign equity share to 40 percent or less. The companies exporting the substantial amount of their production and those which were engaged in core sectors and priority industries were exempted from these rules. These expectations to the general rules reflected the government’s endeavours to induce trans National Companies (TNCs) to use their superior access to global distribution and marketing system, with a further view to improving India’s balance of payments position. Besides, they reflected a desire on the part of the Indian government to channel TNCs away from certain industries and into core sectors and high priority industries. The latter included
ASSIGNMENT
ON
FOREIGN EXCHANGE REGULATION ACT
(FERA)
FOREIGN EXCHANGE MANAGEMENT ACT
(FEMA)
SUBMITTED TO- SUBMITTED BY-
Dr. JASBIR SINGH SATISH CHAND BBA (GEN) SEC-B 07214901713 MAHARAJA SUSARJMAL INSTITUTE
Foreign Exchange Regulation Act
FERA
CONCEPT
Foreign Exchange Regulation Act (FERA) was promulgated in 1973 and it came into force on January 1974. Section 29 of this Act referred directly to the operations of MNC’s in India. According to the section, all non-banking foreign branches and subsidiaries with foreign equity exceeding 40 percent had to obtain permission to establish new undertakings, to purchase shares in existing companies, or to acquire wholly or partly any other company. Guidelines for administering this section of FERA were announced in 1973 and later amended in 1976.
According to these guidelines, the principle rule was that all branches of foreign companies operating in India should convert themselves into Indian companies with at least 60 percent local equity participation. Furthermore, all subsidiaries of foreign companies should bring down the foreign equity share to 40 percent or less. The companies exporting the substantial amount of their production and those which were engaged in core sectors and priority industries were exempted from these rules. These expectations to the general rules reflected the government’s endeavours to induce trans National Companies (TNCs) to use their superior access to global distribution and marketing system, with a further view to improving India’s balance of payments position. Besides, they reflected a desire on the part of the Indian government to channel TNCs away from certain industries and into core sectors and high priority industries. The latter included