HOW FEMA REPLACED FERA?

2. INEFFECTIVNESS OF: FERA
The following are the main and the appropriate features of the same –
 It was prerequisite with the current accounts convertibility and also the provisions for the progressive liberalization for
capital account transactions.
 It had more transparency as over the permission of the reserve bank or government of India on the accruing or holding
foreign exchange.
 It also classified the foreign exchange transaction in two categories such as capital accounts and current accounts under
transactions .
 It also provided indirect power to the reserve banks with the consultation of the central government.
 It also give full authority to the person who is or isn’t resident of India or outside India to hold , own , transfer any foreign
security even immovable property situated put side the one can be easily acquires by the resident of India.
 Under this act all the laws are consider to be civil laws and in very exceptional situations the arrest is allowed.
 It did not al allow to the India citizens residing outside India.

4. Features of FEMA 1999
The foreign exchange management bill was introduced
in the year of 1998 by the government of India in the
parliament the main aim of the bill was the consolidate
and amend the laws relating to the foreign exchange
trade and payment which would ed to the management o
the foreign exchange market in India , this was some
laws were not related to the foreign payment and trade
in the country and also the ac does not encourage the
maintenance of the foreign exchanges market in India
which ultimately resulted in to the causation and passing
the bill for te changes I n the laws and regulations.

5. FEMA as major departure from FERA
• The name of the act it self promogulated that the change has
emphasis under FEMA is on exchange management, whereas under
FERA the emphasis was on the exchange regulations ,or exchange
controls.
• Under the FERA it was very necessary to obtain reserve bank’s
permission wither special or general , but in respect or most of the
regulations.
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6. Important changes under FEMA regulation
governing CAT:
• The Finance Act, amendment section -6 (capital account transactions), sections 46 (power of central government to make
rules) and section 47 (power of RBI to make rules) of the foreign exchange management act, 1999 (FEMA,1999).
• In terms of the amendment portions of FEMA, the central government has made foreign exchange management (Non-Debt
Instruments) Rules, 2019 (NDI Rules) on October 17, 2019 superseding the erstwhile foreign Exchange management
(transfer of Issue of security by a person resident outside India) Regulations, 2017.
• The NON- Debt Instrument: All the investment in equity in incorporated entities (public, private, listed, unlisted).
• Investment trusts: investment in unit of natural funds and exchange traded fund which invest more then 50 percent in the
equity.
• Debt Instruments: debts instruments mean all instruments other than no- debt instruments enumerated above.
• Hybrid securities:- this is included in the law NON- Debt rules this is instrument which have optionally and partially
convertible preference shares or debentures and the other such instruments as specified by the central government for time
to time , which can be issued by the Indian company or trust to a persons resident outside India.

7. Key changes in reporting mechanism in India
since 1973 till march 2020
• Physical form
• From the time of the introduction of the FERA and FEMA in 1999 and till 2016, reporting was to be made
in the physical form.
• e-biz platform the view to promote the ease of the reporting of the transactions related to the foreign direct
investment (FDI), RBI has enabled them to the online filing of the returns through the E-Biz portal.
• FIRMS (FOREGINE INVESTMENT REPORTING AND MANAGEMENT SYSTEM) with the objective
of integrating the extent reporting structure of various type of foreign investment in India which shall be
filed online.

8. Mrs . Dr tapati Sengupta and others vs, enforcement officer
On 13th august , 1997
• In this case the common question of the law and the fact being involved in birth the write petitions
, the same have been heard analogously and will be governed by the same judgment.
• One of the question which has come up for consideration in the instant write proceeding is whether
section 40(1) of the foreign exchange regulation act of 1973.
• Section 32(2) of FERA are Ultra virus the constitution of India and is Illegal , invalid and null and
Void.
• Each of the write in the case of the petition summons issued against each of them under the section
40(1) one of the FERA by the appropriate authority on merit.

9. Summary of the case
• In this case the petitions MS, Amgana Sengupta , daughter of justice Ajit kumar Sengupta , a former judge o
his honorable court and the Allahabad high court who obtained bachelor of degree of law from London
university and master of law from Cambridge university and had also qualified as a barrister at law , and she
is now residing in England and is not a resident of India , and after a short stay now she had returned to
Indian and wanted to practice in Calcutta , on the 10th the officer f income tax department conducted raid at
the resident of her father and seize no of documents including the bank paper and the records of the petitioned
under the section 40 of FERA , directing the petitioners to appear before the in 1996, together with her
passport and bank pass books, transcripts of banks accounts maintained by her in India and abroad.
• This however , should be interpreted as giving license to the officer of enforcement directors including the
present respondent to subject any of the petitioners or from the matter of that petitioner or for they summoned
under section 40 of FERA to torture , physical or mental for extracting statement of their choice from such
person , it is necessary for all cornered to remember that the supreme court although upheld the necessity of
interrogation persons summoned under section 40 of FERA .

10. Conclusion
• The effect of the FERA was in dept very irritable to the current situation as the above cases it was
also giving extra bifurcate power to the officer and was in volitation to the article 21 of the Indian
constitution , this led to the deem emphases on the need of the change and the negative impact of
the FERA on the people of the country.
• In the course of the FERA they were more oriented to wards the infrastructure management of the
foreign investment rather then then exchange restrictions.
• Also when the FEMA was in effective as the government adopted LPG , regulations as for the
attracting more foreign investment , this made the FERA totally in effective as new adoption of the
liberalization, privatization and globalization was more reluctant to motivate the foreign investor
in the country which could ed the improvement in the infrastructure of the country.

11. • Some section of the FERA was very much violative to the Indian constitution as they provide
unambitiously power to the officers of the act to arrest , harass and coercion and cause undue
influence in the mind of the detainee , the amendment help the improvement in the upliftment of
the rules as they are more prominent in providing more request opportunities to the for the
investor in India.
• In the course of the most recent couple of many years, world protections markets have gotten
essentially more complex as far as how protections are exchanged just as the assortment of
protections exchanged. The uprightness of protections markets is basic to the economy of a
country and it is vital for controllers to uphold laws, restricting business sector maltreatment to
ensure market honesty. As an aftereffect of these changes, markets are getting genuinely
worldwide, subsequently, permitting brokers to exchange instantly across a wide assortment of
items and in business sectors around the globe.

12. Presented By
Ginit Pal Kaur Bal
A3211117310
BA. LLB (H)
SECTION E