Foreign exchange management act fema is an expansion or improvement of the foreign exchange regulation act fera. Under section 47, it empowers rbi to make the regulations. Under section 46, it empowers the central government to make the rules. The similarities between fera and fema are as follows. This act aims to make all the offenses relating to foreign exchange from criminal to civil offenses. Difference between plant vacuole and animal vacuole. The difference between the title, fera and fema of legislation. Fera was established as a result of the federal emergency relief act and was replaced in 1935 by the works progress administration. Fema stands for foreign exchange management act which was introduced in the year 1999 and it acts as a replacement for the fera foreign exchange regulation act.
Latest current affairs and news current affairs today. In view of this change, the title of the legislation has rightly been changed from foreign exchange regulation act to foreign exchange management act. All you need to know about rbis fema guidelines drip. The exchange rate that variates with the variation in market forces is called flexible exchange rate. I want to know what is the difference between fema foreign exchange management act and fera foreign exchange regulation act. Find mailin forms plus spanish, chinese and vietnamese applications under complete an. Foreign exchange and management act, 1999 academike. Fera was mainly formulated to deal with deep crunch of foreign exchange post world war ii and hence was a rigid piece of legislation which have left all the businesspeople and indian citizens at the mercy of enforcement directorate as violence of fera was considered a criminal act and there. Some of them are restrictive, and some has widened the scope. Difference between fera and fema formulation of fema. The paper deals with the foreign exchange and management act, 1999 comprehensively. Fera was mainly formulated to deal with deep crunch of foreign exchange post world war ii and hence was a rigid piece of legislation which have left all the businesspeople and indian citizens at the mercy of enforcement directorate as violence of fera was considered a criminal act and there were major penalties associated with it. The federal emergency relief administration fera was the new name given by the roosevelt administration to the emergency relief administration era which president franklin delano roosevelt had created in 1933. It was formulated in the year 1999 while it replaced fera foreign exchange regulation act.
Nikhil agarwalneha gargneha baliwalmegha singhmegha mahasvarinavdeep kaurmohit goyalnikhil chaddanitin sachdevmohit badera 2. Foreign investors, frequently hear the terms fera and fema, when they deal with india. On the other hand, despite being an improvement of fera, which feka that it also covers payments and facilitation of foreign exchange activities, fema has a specific role of ensuring that external trade and payments are correctly executed. This was meant to close all the loopholes and drawback of fera and hence major economic reforms were introduced under this act. Fema an act initiated to facilitate external trade and payments and to promote orderly management of the forex market in the country. Instead of negative balance, there was substanital foreign exchange reserve so it was felt necessary to drop out the draconian law of fera. The primary difference between fera and fema is that fera was enacted to facilitate all the payments and other foreign exchange activities in.
The difference between fema and fera are as follows. The foreign exchange regulation act of 1973 fera in india was repealed on 1st june, 2000. Though certain amendments were made in 1993 but they were not sufficient. Foreign exchange management act fema features of fema. The main change that has been brought is that fema is a civil law, whereas the fera was a criminal law. The objective of fema is to facilitate external trade and payments and maintenance of forex market in india. Foreign exchange regulation act and foreign exchange management actpresented by. Foreign exchange management act 1999 summary of key points. The government of india formulated fema or foreign exchange management act to encourage the external payments and across the border trades in india. Fera is an act which is enacted to regulate payments and foreign exchange in india, is fera.
Fera and fema foreign exchange management act fema. However the cases under fera can be initiated with in 2 years from repeal of fera i. Foreign exchange management act fema mba knowledge base. Difference between fera and fema pdf a key difference between fera and fema is that the former regulated the foreign trade while the later encouraged it. The primary differences between fera and fema are explained in the following points. A breif explanation for nris nris frequently hear the words fera and fema when it comes to dealings the involve india. Foreign exchange management act, 1999 fema came into force by an act of parliament. All about foreign exchange management act, 1999 ipleaders. Differences between fera and fema difference between. Fathoming fema overview of provisions of foreign exchange. Here is a brief summarized description of what fera and fema mean. The foreign exchange regulation act fera was legislation passed in india in 1973 that imposed strict regulations on certain kinds of payments, the dealings in foreign exchange forexand securities and the transactions which had an indirect impact on the foreign exchange and the import and export of currency.
Fera was repealed in 1998 by the government of atal bihari vajpayee and replaced by the foreign exchange management act, which liberalised foreign exchange controls and restrictions on foreign investment. Main features of the foreign exchange management act fema. Short title and commencement 1 these regulations may be called the foreign exchange management transfer or issue of security by a. Fema was introduced because the fera didnt fit in with postliberalisation policies. What is fera, what is fema, brief explanation for nris. So please give me the information regarding the topic, the difference between fema and fera. Foreign direct investment difference between fera and fema. Fema 242000rb both dated may 3, 2000, as amended from time to time, the reserve bank makes the following regulations to regulate investment in india by a person resident outside india, namely. Fera was created with the main objective of conserving foreign exchange. Fema was enacted by the parliament of india in the winter session of 1999 to replace the foreign exchange regulation act fera of 1973. Foreign exchange is the system or process of converting one national currency into another, and of transferring money from one country to another 3. It was replaced by the foreign exchange management act fema, which was passed in the winter session of parliament in 1999. Knowing the difference between fixed and flexible exchange rates can help you understand, which one of them is beneficial for the country.
Enacted in 1973, in the backdrop of acute shortage of foreign exchange in the country, fera had a. Fema was intoduced because the fera did not fit in with the postliberalization. The foreign exchange regulation act fera was legislation passed in 1973 that imposed strict regulations on certain kinds of payments. Conclusion fema only permits an authorized person to deal in foreign exchange or foreign security shares, stocks, bonds etc. As their name specifies, fera lays emphasis on the. The exchange rate which the government sets and maintains at the same level, is called fixed exchange rate. This act seeks to make offences related to foreign exchange civil offences. This new act is in consonance with the frameworks of the world trade organisation wto. Fera foreign exchange regulation act was passed in 1947 which was amended in 1973. The foreign exchange regulation act fera is legislation that was passed by the indian parliament in 1973 and came into effect as of january 1, 1974.
Crisp news summaries and articles on current events about fema for ibps, banking, upsc, civil services. In the budget of 199798, the government had proposed to replace fera 1973, by fema foreign exchange management act 1999. Progression of fera to fema and its impact on foreign exchgane in india. Please explain the difference between fema and fera. In this blog post, anumeha saxena, who is currently pursuing a diploma in entrepreneurship administration and business laws from nujs, kolkata, explains the differences between the foreign exchange regulation act, 1973 and the foreign exchange management act, 1999 in terms of foreign direct investment. Difference between fera and fema with comparison chart key. The primary purpose of fema is to regulate and facilitate foreign exchange while at the same time encouraging the development of forex market in the country.
The first and foremost difference between fera and fema is that the former requires previous approval of reserve bank of india rbi, whereas the latter does not require rbis approval, except when the transaction is related to foreign exchange. A key difference between fera and fema is that the former regulated the. The act may be called the foreign exchange management act 1999. Its main powers are with the central government and the rbi. The foreign exchange management act 1999 or in short fema has been introduced as a replacement for earlier foreign exchange regulation act fera. Broadly speaking fema, covers, three different types of categories, and deals. Enactment of fema has brought in many changes in the dealings of foreign exchange, as compared to fera. Difference between fera and fema with comparison chart. However some of the relevant progress made, from fera.
The objective was the conservation of indias foreign exchange reserves, judicious use of foreign exchange, using mainly in these sector which require foreign technology. The foreign exchange management act fema was an act passed in the winter session of parliament in 1999, which replaced foreign exchange regulation act. Difference between fera and fema after liberalisation in 1992, various sectors for opened for fdi time to time which radically changed the foreign exchange position. The foreign exchange management act, 1999 was enacted to consolidate and amend the law relating to foreign exchange with the objective of facilitating external trade and payments and for promoting the orderly development. Know the difference between foreign exchange management act 1999 and foreign exchange. However, fema was created with the main objective of managing. Fema became the need of an hour to be replaced by an old act which was fera as fera was stringent and fema is liberal and also more flexible than fera.