Difference Between Fera and Fema

By : Neha Dhyani

Updated : Apr 12, 2022, 9:07

The Foreign Exchange Regulation Act or FERA was passed in 1973 in India. It sought to impose stringent regulations on some types of payments, especially in the forex and securities department, including the transactions having an indirect impact on the forex and the import and export of currency.

The Foreign Exchange Management Act or FEMA was passed in 1999 in India. It sought "to consolidate and amend the law relating to foreign exchange to facilitate external trade and payments and promote the orderly development and maintenance of foreign exchange market in India."

The Main Difference Between FERA and FEMA is that while the latter promotes the orderly management of foreign exchange and its associated dealings in India, the former is an act ushering a regulated foreign trade and associated payments in India.

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Difference Between FERA and FEMA

There is numerous Difference Between FERA and FEMA. Some of them are provided in the table below -

SL. No.FERAFEMA
1FERA, or the Foreign Exchange Regulation Act, was passed in 1973 by the Parliament of India.FEMA, or the Foreign Exchange Management Act, was passed on December 29, 1999, by the Parliament. FEMA replaced FERA.
2It was on January 1, 1974, that FERA came into force.June 2000 saw FEMA replacing FERA.
3The Vajpayee government of 1998 repealed FERA.FEMA was enacted to replace FERA.
481 sections were included in the FERA.FEMA is equipped with 49 sections.
5The main idea behind the enactment of FERA was that foreign exchange was a scarce resource.The main idea behind FEMA was the consideration of forex as an asset.
6Conservation of foreign exchange was the main objective of FERA.Management of forex is the main objective of FEMA.
7It had a vague description of the concept of "Authorized person."The idea of "Authorized Person" in FEMA was more defined.
8Banks were not included within the ambit of "Authorized person."Banks were included within the definition of "Authorized person."
9Violation of the rules laid down by FERA was considered a criminal offence.Violation of rules laid down by FEMA is now considered a civil offence.
10No legal help was provided to a person violating the FERA rules.Legal aid can be obtained by people violating the FEMA rules.
11In case of a violation, there was no scope for tribunals as appeals were sent directly to the state High Courts.Special Director (Appeals) and Special Tribunals can be provided in case of any violation of FEMA rules.
12Direct punishment was often provided to individuals/companies violating the rules laid down by FERA.An individual or a company guilty of flouting the FEMA rules are required to pay the penalty. If the same is not paid within 90 days (starting from the day of conviction), the guilty party is imprisoned.
13Prior approval from the Reserve Bank of India was required to transfer funds for external operations.No approval from the RBI is required to transfer funds for external operations.
14IT was not within the ambit of FERA.FEMA enjoys the provision of IT.

The above were some significant Difference Between FERA and FEMA.

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FAQs on the Difference Between FERA and FEMA

Q.1. What is the Major Difference Between FERA and FEMA?

The Main Difference Between FERA and FEMA is that while the latter is an act promoting the orderly management of foreign exchange and its associated dealings in India, the former is an act ushering a regulated foreign exchange and associated payments in India.

Q.2. What is the Difference Between FERA and FEMA with regard to their full form?

The Difference Between FERA and FEMA with regard to their full form is that the full form of FERA is Foreign Exchange Regulations Act, whereas the full form of FEMA is Foreign Exchange Management Act.

Q.3. Is there any Difference Between FERA and FEMA concerning the authorized person?

Yes, there is a major Difference Between FERA and FEMA concerning the authorized person. In the case of FERA, its definition is vague, while in the case of FEMA, it is more defined.

Q.4. What is the Difference Between FERA and FEMA with regard to enactment?

The Difference Between FERA and FEMA with regard to enactment is that the FERA was enacted in 1973, whereas FEMA was enacted in 1999.