FERA, or the Foreign Exchange Regulation Act, was an Indian law enacted in 1973 to regulate foreign exchange transactions and ensure the conservation of foreign exchange resources in the country. The act aimed to facilitate external trade and payments while promoting the orderly development and maintenance of the foreign exchange market in India.
Key features of FERA included:
1. **Regulation of Foreign Exchange**: It restricted certain types of foreign exchange transactions to prevent capital flight and ensure that foreign currency was used for productive purposes.
2. **Licensing and Permissions**: Individuals and businesses needed to obtain permissions from the Reserve Bank of India (RBI) for foreign exchange dealings, including remittances, foreign investments, and other transactions.
3. **Penalties**: FERA imposed strict penalties for violations, including fines and imprisonment.
In 1999, FERA was replaced by the Foreign Exchange Management Act (FEMA), which aimed to simplify regulations and promote the orderly development of the foreign exchange market in a more liberalized economic environment. FEMA is considered more business-friendly compared to FERA.
