Introduction to FEMA & FCRA By Ms Moksha Kotian

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Foreign Exchange Management Act, 1999 is an Act of Parliament 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 and maintenance of foreign exchange market in India.

It was passed in the 50th year of indepedence of India replacing the Foreign Exchange Regulation Act (FERA).  It extends to the whole of India. The Act also applies to all branches, offices and agencies outside India owned or controlled by a prson resident in India and also to any contravention committed there under outside India by any person to whom this Act is applies.

In 1991 Government of India initiated the policy of economic liberation.  After this foreign investment in various sectors were permitted. In 1997, Tarapore committee on Capital account Convertibility constituted by RBI recommended changes which emphasized on Management of Foreign Exchange rather than Regulation.  Thus the Foreign Exchange Regulation Act, 1973 was repealed and replaced by Foreign Exchange Management Act, 1999.

Foreign Exchange Management Act envisages that Reserve Bank of India (“RBI”) will have a key role in management of foreign exchange.  It enabled a new foreign exchange management regime consistent with the emerging framework of the World Trade Organisation (WTO) and also paved the way for the introduction of the Prevention of Money Laundering Act, 2002.

Introduction to FCRA
Foreign Exchange Management Act, 1999 is an Act of Parliament 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 and maintenance of foreign exchange market in India.

It was passed in the 50th year of indepedence of India replacing the Foreign Exchange Regulation Act (FERA).  It extends to the whole of India. The Act also applies to all branches, offices and agencies outside India owned or controlled by a prson resident in India and also to any contravention committed there under outside India by any person to whom this Act is applies.

In 1991 Government of India initiated the policy of economic liberation.  After this foreign investment in various sectors were permitted. In 1997, Tarapore committee on Capital account Convertibility constituted by RBI recommended changes which emphasized on Management of Foreign Exchange rather than Regulation.  Thus the Foreign Exchange Regulation Act, 1973 was repealed and replaced by Foreign Exchange Management Act, 1999.

Foreign Exchange Management Act envisages that Reserve Bank of India (“RBI”) will have a key role in management of foreign exchange.  It enabled a new foreign exchange management regime consistent with the emerging framework of the World Trade Organisation (WTO) and also paved the way for the introduction of the Prevention of Money Laundering Act, 2002.

Disclaimer : All information contained on this page is for reference only.

Email: moksha_kotian@yahoo.co.in

Author: Team InsideGoa

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