FERA VS FEMA: A comparison

While FERA is an Act of the Parliament introduced in the year 1973, with an intent to manage and conserve India’s foreign reserves, the Foreign Exchange Management Act (FEMA) is an extension to the already existing law. The purpose behind the enactment of FEMA was not only to regulate and facilitate foreign exchange but also for promoting foreign trade and payments along with escalating the size of foreign exchange reserves in India. Promulgated in the year 1999, FEMA, unlike the erstwhile law, liberalised the foreign exchange controls and restrictions on foreign investments to a significant extent.

Not only this, but the latter also laid stress on systematic development and proper management of the forex market in the country. Unlike FERA, the violation of FEMA is a compoundable offence, the charges of which can be removed. Besides this, there are different retributions for contravening the provisions of FERA and FEMA.