FOREGN EXCHANGE REGULATON

ACT {FERA}
1L
PRL3LN1A1l0N
0N
F.E.R.A.
An Aot to oonsolidate and amend the law regulating,
Certain payments,
Uealings in foreign exohange and seourities,
1ransaotions indireotly affeoting foreign exohange and
1he import and export of ourrenoy.
lt applies also to all oitizens of lndia outside lndia and
to branohes and agenoies outside lndia of oompanies
or bodies oorporate, registered or inoorporated in
lndia.
EVOLUTON OF FERA
oreign exohange rule were introduoed by British
government under the Uefense of lndia rules in 1939.
lndependent lndia used the legislative provisions of
foreign exohange oontrol to enaot their own oreign
Lxohange Regulation Aot in 1947.
LRA-1947 was amended in 1957,1965 and more
signifioantly in 1973 and then in 1993.
TERMS MANLY USED N FERA ACT
Appellate Board
Authorised dealer
Bearer oertifioate
Coupon
oreign ourrenoy
oreign exohange
oreign seourity
OBJECTVES
Prevent the outflow of lndian ourrenoy.
Control the aotivities of multinational oompanies.
Conservation and proper utilization of foreign
exohange resouroes of the oountry
1o oontrol and regulate the flow of foreign oapital,
teohnology and managerial enterprises.
1o oontrol and regulate foreign oollaborations.
OBJECTVES - CONT..
1o regulate dealings in foreign exohange and seourities
1o regulate the transaotion indireotly affeoting foreign
exohange
1o regulate import and export of ourrenoy and bullion
1o regulate employment of foreign nationals
1o regulate foreign oompanies
1o regulate aoquisition, holding eto of immovable
property in lndia by non-residents
!ROVSONS OF FERA ACT 1973
All branohes of foreign oompanies exoept airlines and
shipping oompany seeking approval under LRA will
have to oonvert themselves into lndian oompanies.
A Minimum of 74 foreign shareholding will be
allowed to oompanies manufaoturing oertain items
listed in industrial polioy of 1973.
A foreign shareholding exoeeding 74 may be allowed
in oase a oompany is 100 export oriented.
!ROVSONS CONT..
A foreign shareholding of 40 will be allowed for
oompanies engaged in manufaoturing items other
than those listed in industrial polioy of 1973.
1he oase of foreign share holding in oase of banking
oompanies will be governed by the guide lines issued
by the RBl and the Banking Uepartment.
oreign shareholding in oase of airlines and shipping
oompanies will be oonsidered and oan be treated on
reoiprooal basis.
FERA VOLATON--A CRMNAL
OFFENSE
1ransaotions that were not mentioned in the aot were
not permitted.
LRA regulations were enforoed by the offioe of the
Lnforoement Uireotorate under the Ueptt. 0f Revenue
and supervised by the Ministry of inanoe.
EXAM!LE OF FERA - VOLATON
Nokia, Lriosson, 3ony, and Bank of 1okyo are
among the 11 multinational oompanies whioh
have been found 'guilty' of foreign exohange
regulation violation to the tune of Rs 40 orore
in 2006.
CONCLUSON
LRA was revised further in 1976 with the objeotive of
inoreasing lndian partioipation in some kinds of
export-oriented oompanies.
LRA was replaoed by the oreign Lxohange
Management Aot(LMA),whioh was passed in the
winter session of Parliament in 1999.
CONCLUSON CONT..
LMA was introduoed beoause the LRA didn't fit in
with post-liberalization polioies.
1he main objeotive behind the LMA is to oonsolidate
and amend the law relating to foreign exohange with
the objeotive of faoilitating external.
THANKS..!!!!
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