02-06-2012, 10:46 AM
FOREIGN EXCHANGE REGULATION ACT
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Foreign Exchange Regulation Act-
The Foreign Exchange Regulation Act--one of the key pieces of legislation regulating international trade in the 1970s--helped shape the climate of the global economy today. It was passed in India, and it redefined how the country would interact economically with other regions of the globe.
OBJECTIVES OF FERA 1947
Control the activities of multinational companies.
Conservation and proper utilization of foreign exchange resources of the country.
To control and regulate the flow of foreign capital, technology and managerial enterprises.
PROVIsIONS OF FERA ACT 1973
All branches of foreign companies except airlines and shipping company seeking approval under FERA will have to convert themselves into Indian companies.
A Minimum of 74% foreign shareholding will be allowed to companies manufacturing certain items listed in Industrial policy of 1973, companies using sophisticated technology, tea plantations, companies producing predominantly export oriented goods.
conclusion
FERA was revised further in 1976 with the objective of increasing Indian participation in some kinds of export-oriented companies.
FERA was replaced by the Foreign Exchange Management Act (FEMA), which was passed in the winter session of Parliament in 1999.