FERA and FEMA
As a developing country which has been planning to quicken the process of its economic growth, India always wanted to use its foreign exchange wisely and judiciously. Even during the British rule, the government legislated measures to control foreign exchange under the Defence of India Rules in 1939. The Indian government of free India used legislative provisions of foreign exchange control to enact her own Foreign Exchange Regulation Act (FERA) in 1947. The basic objectives of the FERA 1947 were the following: It aimed to regulate and control (i) business activities of foreign companies; (ii) the flow of foreign capital, technology and managerial enterprises; and (iii) foreign collaborations. This Act was amended several times to incorporate the required changes taking cognizance of the changing dynamics of the country’s economic growth. The amendments to the Act were made in 1957, 1965 and more importantly in 1973 and 1993.
The Foreign Exchange Regulation Act, (Fera) 1973
The FERA was promulgated in 1973 and it came into effect on 1 January 1974. FERA, 1973 was enacted when India was passing through an acute foreign exchange crisis. India had less than USD I billion foreign exchange reserves in the exchequer. Besides, it was a time when almost all the sectors of the economy were under the tight control of the government, it being at the height of Nehruvian socialism. The main revisions of the Foreign Exchange Regulation (Amendment) Act of 1973 were as follows:
- All foreign companies that sought approval under the FERA, save those in shipping and airlines, had to convert themselves into Indian companies.
- A minimum of 74 per cent of shareholding by foreign principals would be permitted only in case of companies that produced (a) certain specified items listed in the Industrial Policy of 1973; or (b) primarily export-oriented commodities; or (c) goods employing state-of-the-art technology; or (d) tea; or (e) companies engaged in trading not exceeding 25 per cent of ex-factory value of production or having a turnover of less than INR 50 million.
- If a company is 100 per cent export-oriented, a foreign shareholding exceeding 74 per cent might be permitted, the decision being based on merit in each case.
- A foreign shareholding of 40 per cent would be permitted in case of companies engaged in the production of items other than those listed in the Industrial Policy of 1973, trading, consultancy and plantation companies other than those that produce tea.
- In case of airlines and shipping companies, the extent of foreign shareholding would be determined on a reciprocal basis.
- In case of banking companies, the extent of foreign shareholding will be determined based on the guidelines issued by the Reserve Bank of India and the Banking Department of the Ministry of Finance, government of India.
These guidelines of FERA, 1973 were again revised in 1976 with a view to increasing participation of Indians in some kinds of companies governed by the Act, especially those of export-oriented units.
Apart from these guidelines, FERA also stipulated regulations with regard to dealings in foreign exchange and securities; transactions indirectly affecting foreign exchange and import and export of currency.
The primary objective of FERA was to conserve the country’s forex reserves and to ensure their proper utilization with the view to helping the economic growth of the country. With this end in view, FERA could regulate the acquisition, holding, transfer or disposal of immovable property abroad by Indian nationals; it could regulate participation by Indians in the trading, commercial and industrial activities abroad in the form of joint ventures; it could regulate the appointment of an agent or technical or management advisor of any person or company in companies owned by foreigners; it could regulate the buying of goods in India by foreign companies with a view to reselling them elsewhere before processing; it could regulate employment of foreign nationals in India; it could regulate the acquisition of immovable property in India by foreign nationals or foreign companies; and it could regulate foreign investment in India in the form of branches to carry on any trading, commercial or industrial activity without prior permission of the Reserve Bank of India.
FERA was a highly restrictive legislation. The main provisions of FERA, 1973 as amended in 1993, were highly restrictive in nature. The following were the restrictions FERA placed on those who dealt with foreign exchange.
- Restrictions on dealing in foreign exchange: As per the Act, the RBI was the sole authority to regulate foreign exchange transactions. Section 8 of the Act stressed that no person other than an authorized dealer could deal in foreign exchange, or enter into any transaction involving foreign exchange without the prior approval of the central bank.
- Restrictions on payments: Section 9 imposed certain restrictions on payments. Accordingly, unless approved by the RBI, no person in India shall:
- (a) Make any payment to or for the credit of any person residing outside India.
- Accept, other than through an authorized dealer, any payment by order or on behalf of any person residing outside India.
- (c) Draw, issue or negotiate any bill of exchange or promissory note or acknowledge any debt, so that a right, be it actual or contingent, to receive a payment is created or transferred in favour of any person residing outside India.
- Effect a payment to or for the credit of any person by order or on behalf of any person residing outside India.
- (e) Place any sum to the credit of any person residing outside India.
- (f) Effect a payment to or for the credit of any person or receive any payment for or by order or on behalf of any person as consideration for or association with the receipt by any person of a payment or the acquisition by any person of property outside India; the creation or transfer in favour of any person of a right (whether actual or contingent) to receive payment or acquire property outside India.
- Draw, issue or negotiate any bill of exchange or promissory note, transfer any security or acknowledge any debt, so that a right (whether actual or contingent) to receive a payment is created or transferred in favour of any person as consideration for or in association with any matter referred to in clause (f).
- Restriction on import and export of certain currency and bullion: Section 13 of the Act laid down that except with the approval of the RBI, no person can bring or send into India any foreign exchange or any Indian currency other than foreign exchange obtained by him from an authorized dealer or from a money-changer. This clause in the Act implied that if any person had foreign exchange without the authorization/permission of the central bank, that foreign exchange had to be offered for sale to the RBI (or to such person, as the RBI may authorize for the purpose) at a price fixed by the Central government.
- Duty of persons entitled to receive foreign exchange: Section 16 of the Act stipulated that no person who has a right to receive any foreign exchange or to receive from a person resident outside India a payment in rupees shall, except with the permission of the RBI, do anything which has the effect of securing that the receipt by him of the whole or part of that foreign exchange or payment is delayed, or that the foreign exchange or payment ceases in whole or in part to be receivable by him.
- Payment for exported goods: Section 18 of the Act stipulated that the Central government may, by notification in the official Gazette, prohibit the export of goods from India to any place so specified unless the exporter furnishes to the prescribed authority a declaration in the prescribed form all particulars relating to the full export value of goods and affirms in the said declaration that the full export value of the goods (whether ascertainable at the time of export or not) has been, or will within the prescribed period be, paid in the prescribed manner. The Central government may, by notification, specify that goods cannot be sold at a value less than that declared by the exporter except with the permission of the RBI.
- Regulation of export and transfer of securities: Section 19 of the Act stipulated that no person shall, except with the permission of the RBI, transfer or send any security to any place outside India; transfer any security, or create or transfer any interest in a security, to or in favour of a person staying outside India; issue any security which is registered in India to a person outside India; and acquire, hold or dispose of any foreign security.
- Restrictions on holding of immovable property outside India: Section 25 of the Act laid down that no person, a resident of India, shall, except with the permission of the RBI, acquire or hold or transfer or dispose of by sale, mortgage, lease, gift, settlement, or otherwise any immovable property outside India (excepting the acquisition or transfer of any such immovable property by way of lease for a period not exceeding 5 years). The section does not apply to a foreigner.
- Restriction on acquisition, holding etc., of immovable property in India: Sub-section 1 of Section 31 of the Act laid down that no person who is not a citizen of India and no company (other than a banking company) which is not incorporated under any law in force in India shall, except with the permission of the central bank, acquire or hold or transfer or dispose of by sale, mortgage, lease, gift, settlement or otherwise any immovable property in India excepting the acquisition or transfer of any such immovable property by way of lease for a period not exceeding 5 years.
Sub-section 2 of Section 31 laid down that any person or company referred to in sub-section 1 can acquire immovable property in India provided it makes application to the RBI in this regard in the prescribed form (and containing all particulars as required by the RBI) and provided that the RBI grants permission after an examination of his/its application.
- Restrictions on appointment of certain persons and companies as agents or technical or management advisers in India: Section 28 of the Act laid down that a person resident outside India (whether a citizen of India or not) or a person who is not a citizen of India but is resident in India, or a company (other than a banking company) which is not incorporated under any law in force in India or any branch of such company, shall not, except with the permission of the RBI, act, or accept appointment, as an agent in India of any person or company, in the trading or commercial transactions of such person or company. Sub-section 2 of Section 28 laid down that where any such person or company acts or accepts appointment as such agent without the permission of the RBI, such acting or appointment shall have no legal sanction.
- Restrictions on establishment of place of business in India: Section 29 of the Act laid down that a person resident outside India (whether a citizen of India or not) or a person who is a not a citizen of India but is resident in India, or a company (other than a banking company) which is not incorporated under any law in force in India or any branch of such company, shall not, except with the permission of the RBI:
- (a) Carry on in India, or establish in India, a branch, office or other place of business for carrying out any activity of a trading, commercial or industrial nature, other than an activity for the carrying on of which permission of the RBI has been obtained under Section 28; or
- Acquire in whole or in part any undertaking in India of any person or company carrying on any trade, commerce or industry or purchase the shares in India of any such company. Sub-section 2 of Section 29 laid down that if any person or company referred to above has established an office or other place of activity, that person or company may make an application to the RBI within a period of 6 months from such commencement (or such further period as the RBI may allow) for permission to continue to carry on such activity. The Reserve Bank, after making such enquiry as it may deem fit, may either allow the application or reject it. In the latter case, the person or company concerned shall discontinue its activity or close down the branch, office or other place of business established for carrying on such activity, on the expiry of a period of 90 days (or such other later date as may be specified by the Reserve Bank).
- Prior permission necessary for nationals of foreign states for taking up employment in India: Section 30 of the Act laid down that no national of a foreign State shall, without the prior permission of the RBI, practice any profession or carry on any occupation, trade or business in India in a case where such national desires to acquire any foreign exchange (such foreign exchange being intended for remittance outside India) out of any moneys received by him in India by reason of the practising of such profession or the carrying out of such occupation, trade or business, as the case may be.
Provisions Relating to Enforcement, Penalty and Prosecution
- Sections dealing with enforcement: The following sections deal with the enforcement of FERA:
- (a) Section 33 provided that the Central Government may, at any time by notification, direct the owners to submit returns regarding their transactions in foreign exchange or foreign securities or immovable properties outside India;
- (b) Section 34 talks about the power conferred on the officers of Enforcement to search suspected persons and to seize documents;
- (c) Section 35 discusses the power to arrest persons guilty of an offence punishable under the Act;
- (d) Section 36 deals with the power to search conveyances;
- (e) Section 37 deals with the power to search premises;
- (f) Section 38 deals with the power to seize documents, etc.;
- (g) Section 39 deals with power to examine persons;
- (h) Section 40 deals with power to summon persons to give evidence and to produce documents;
- (i) Section 41 deals with custody of documents, etc.;
- (j) Section 42 deals with encashment of cheque, draft, etc.;
- (k) Section 43 deals with inspection of the books and accounts and other documents of any authorized dealer;
- (l) Section 44 deals with prohibition of disclosure of documents or information except in certain cases;
- (m) Section 45 deals with the power of police officers and other officers to enter, search, etc.; and
- (n) Section 46 deals with procedure in respect of foreign exchange or any other goods seized by police officers.
- Penalty, adjudication and appeal: Section 50 stipulates that if any person contravenes any of the provisions of the Act or of any rule, direction or order made thereunder, he shall be liable to such penalty not exceeding five times the amount or value involved in any such contravention or INR 5,000, whichever is more, as may be adjudged by the adjudicating officer. Section 51 deals with the power of the adjudicating officer to impose penalty, Section 52 relates to the constitution of the Appellate Board consisting of a chairman and such number of other members, not exceeding four, to be appointed by the Central government for hearing appeals against the order of the adjudicating officer made under Section 51. Section 53 is concerned with the powers of the adjudicating officer and the Appellate Board to summon witnesses, etc.
- Offences and prosecutions: Section 56 stipulates that if any person contravenes the provisions of the Act, he shall, upon conviction by a court, be punishable: (a) in the case of an offence where the amount or value involved exceeds INR 1,00,000, with imprisonment ranging from 6 months up to 7 years and with fine; (b) in any other case, with imprisonment extending to 3 years or with fine or with both. Section 57 laid down that if a person fails to comply with such directions or orders, he shall, upon conviction by a court, be punishable with imprisonment for up to 2 years or with fine or with both.
Draconian Nature of FERA, Its Content and Reach
FERA with its sweeping and restrictive provisions came under severe criticism. The section in the Act which stipulated that ‘whenever a person was prosecuted or proceeded against for contravention of any provision, rule, regulation, directive or any order under the Act, the onus of providing that he had the requisite permission on him,’ was especially considered draconian. This provision often led to unwarranted harassment of bona fide business persons and companies. Many innocent persons and organizations were victimized by corrupt bureaucrats with show cause notices and prosecution for alleged FERA violations on narrow technical grounds. On the other hand, there were thousands of individual and corporate violators who got away scot free because of the right connection or by sheer luck.
FERA, 1973 was considered a piece of draconian legislation because of the enormous powers that were vested with the Enforcement Directorate of the Income Tax Department. There was hardly any Indian company promoter or major industrialist who did not dread it and pray for its withdrawal. This was because of the fact that any offence under FERA was a criminal offence liable to imprisonment. ‘Unlike other Acts where every activity is permitted unless otherwise expressly disallowed under FERA, it was just the opposite–nothing was allowed to be done unless specifically allowed. Moreover, even a very minor offence would lead to imprisonment’. Under FERA, a person was considered guilty unless they proved themselves guiltless whereas under normal laws, a person is considered to be innocent unless he is proved otherwise. It was therefore only natural that when FERA was repealed and a much less severe Act, Foreign Exchange Management Act (FEMA) took its place, many industrialists heaved a sigh of relief.
The foreign exchange reserves of India are now managed under the provisions of FEMA. In the aftermath of the economic liberalization of 1991 and the copious flow of foreign exchange that followed it, it was found that FERA evoked strong reactions from the market players for its harsh provisions that looked at them as criminals. Therefore, it was found necessary to replace FERA with a new and more acceptable Act to regulate and control foreign exchange reserves. Therefore, the government was prompted to introduce FEMA in the place of the very stringent FERA, which now stands cancelled.
The Foreign Exchange Management Act (Fema) 1999
The Foreign Exchange Management Act (FEMA), 1999 has repealed the FERA 1973. The FEMA consolidates and amends the Act relating to foreign exchange. FEMA was passed by Lok Sabha on 2 December 1999. It extends to the whole of India and applies to all branches, offices and agencies outside India owned or controlled by any Indian national. It also applies to any contravention thereunder committed outside India by any person to whom this Act applies. The Act came into force with effect from 1 June 2000.
FEMA has the following twin objectives: (i) to facilitate external trade and payments, and (ii) to promote the orderly development and maintenance of foreign exchange market in India. In other words, the objective of FEMA is to consolidate and amend FERA so as to promote foreign trade, while promoting the country’s foreign exchange market.
In India, exchange control is being managed by the exchange control department of the Reserve Bank of India. ‘Exchange control is related to and supplemented by the Trade Control under the Foreign Trade (Development and Regulation) Act of 1992, administered by the Director General of Foreign Trade’. While control on trade regulates physical transfer of goods, exchange control involves supervision over settlement and financial transactions relating to imports and exports.1 Exchange control is more broad-based and includes, apart from imports and exports, invisible and capital transactions.
The Reserve Bank of India has notified from time to time a number of regulations under FEMA 1999. The following are some of the most important features of FEMA, as gleaned from the provisions of FEMA and the notifications issued by Reserve Bank.
- According to Section 3 of the FEMA 1999, no one shall deal in or transfer foreign exchange or foreign security to any unauthorized persons.
- Section 4 of FEMA 1999 states that no Indian national shall acquire, hold, own, possess or transfer any foreign exchange, foreign security or any immovable property located outside India except as otherwise provided for in the Act.
- Section 5 of FEMA 1999 stipulates that any person may sell or draw foreign exchange to or from an authorized person if such sale or drawal is one of current account transaction ‘provided that the Central government may, in public interest and in consultation with RBI, imposed such reasonable restrictions for current account transactions, as may be prescribed’.
- Section 5 of FEMA 1999, provides that any individual may sell or draw foreign exchange to or from any authorized person for a capital account transaction. The Reserve Bank may in consultation with the government of India specify the clause of permissible capital account transactions, the limit up to which foreign exchange shall be admissible for such transactions. However, the RBI may prohibit, restrict or regulate the following:
- (a) Transfer or issue any foreign security by an Indian national by a person living outside India, or by any branch, office or agency in India of a person resident outside India.
- Borrow or lend in terms of foreign exchange in whatever form or by whatever name it is called.
- (c) Borrow or lend in rupees between an Indian national and a person resident outside India.
- Deposits between Indian national and a person outside India.
- (e) Export, import or holding a currency or currency notes.
- (f) Transfer of immovable property outside India other than a lease for a period not exceeding 5 years by an Indian national; Likewise, acquire or transfer of immovable property in India other than a lease for a period not exceeding 5 years by a person resident outside India.
- Give a guarantee or surety in respect of any debt, obligation or other liability incurred by a person resident in India and owed to a person resident outside India.
- Subsection 4 of Section 6 of FEMA 1999 stipulates that a person resident in India may hold, own, transfer or invest in foreign currency, foreign security or any immovable property located outside India, if such currency, security or property was acquired, held or owned by such person when he was resident outside India or inherited from a person who is resident outside India.
- Subsection 5 of Section 6 of the Act applies to persons who reside outside India, i.e., they may hold, own, transfer or invest in Indian currency, security or any immovable property situated in India if such currency, security or property was acquired, held or owned by such person when he was resident in India.
- Under Subsection 6 of Section 6, the RBI is empowered by regulation of the said Act, prohibit, restrict, or regulate establishment in India of a branch, office or other place of business by a person resident outside India, for the purpose of carrying on any activity relating to such branch, office or other place of business.
- Under FEMA, 1999, every exporter of goods shall declare to RBI a document containing true and correct material particulars including the amount representing the full export value of the goods exported without any delay for the purpose of ensuring the realization of the full export proceeds by such exporter. Moreover, every exporter of services shall declare to RBI a statement containing the true and correct material particulars in relation to payment for such services.
- Where any amount of foreign exchange is due or has accrued to any person resident in India, such person shall take all reasonable steps to realize and repatriate the amount to India within the time limit and manner specified by RBI.
- Section 9 refers to certain exemptions from realization and repatriation of foreign exchange in certain cases.
Contravention and Penalties
- If anybody contravenes any provision of FEMA, 1999 or contravenes any rule, regulation, notification, direction or order issued in exercise of the powers under this Act or contravenes any condition subject to which authorization is issued by the RBI, such person shall be liable to penalty up to twice the sum involved in such contravention.
- ‘Property’ in respect of which contravention is said to have taken place refers to for the purpose of this Act, ‘deposits in a bank, where the said property is converted into such deposits, Indian currency, where the said property is converted into that currency, and any other property which has resulted out of the conversion of that property.’
- An Appellate Tribunal for Foreign Exchange shall be established by the Central government to hear appeals against the orders of the adjudicating authorities under this Act. Appeal against the judgement of the Appellate Tribunal lies with the High Court.
- If anybody does not make full payment of the penalty awarded to him within 90 days of the notice issued to him in this context, he shall be liable for civil imprisonment.
- Section 40 of the Act empowers the Central government to suspend or relax, either for a specific period or indefinitely, the operation of all or any of the provisions of FEMA. The notification thus issued by the Central government will have to be approved by the Parliament within a specified period.
- The Act also stipulates that Central government shall establish a Directorate of Enforcement to enforce the provisions of this Act.
The Directorate of Enforcement shall investigate to prevent leakage of foreign exchange which generally occurs through the following malpractices:
- Remittances of Non-resident Indians other than through normal banking channels, i.e. through compensatory payments.
- Acquisition of foreign currency illegally by any Indian national.
- Non-repatriation of the proceeds of the exported goods.
- Unauthorized maintenance of accounts in foreign countries.
- Under-invoicing of exports and over-invoicing of imports and any other type of invoice manipulation.
- Siphoning off foreign exchange against fictitious and bogus imports.
- Illegal acquisition of foreign exchange through Hawala secreting of commission abroad.
Functions of the Directorate of Enforcement
The Directorate of Enforcement has to detect cases of violation and also perform substantial adjudicatory functions to cure the above and other related malpractices.
The headquarters of the Enforcement Directorate will be located at New Delhi. The Directorate has seven zonal offices at Bombay, Calcutta, Delhi, Jalandhar, Chennai, Ahmedabad and Bangalore, headed by Deputy Directors. The Directorate has nine sub-zonal offices at Agra, Srinagar, Jaipur, Varanasi, Trivandrum, Calicut, Hyderabad, Guwahati and Goa, which are headed by Assistant Directors. The Directorate has also a unit at Madurai, which is headed by a Chief Enforcement Officer. Besides, there are three Special Directors of Enforcement and one Additional Director of Enforcement.
The following are the main functions of the Directorate:
- Collecting and collating intelligence in respect of violation of the provisions of FEMA and while doing so studying the circumstances of the case.
- Seizing incriminating materials (including Indian and foreign currencies involved) by conducting searches of suspected persons, conveyances and premises.
- Enquiring into and investigating suspected violations of provisions of the FEMA.
- Adjudicating cases of violations of FEMA with a view to levying penalties departmentally and also for confiscating the amounts involved in contraventions.
- Collecting the penalties imposed in departmental adjudication.
Procedural Provisions of FEMA
For enforcing the provisions of various sections of FEMA, 1999, the officers of Enforcement Directorate of the level of Assistant Director and above will have to undertake the following functions:
- Collection and development of intelligence/information.
- Keeping surveillance over suspects.
- Searches of persons/vehicles by provisions of Income-tax Act, 1961.
- Searches of premises as per provisions of Income-tax Act, 1961.
- Summoning of persons for giving evidence and producing of documents as per provisions of Income-tax Act, 1961.
- Power to examine persons as per provisions of Income-tax Act, 1961.
- Power to call for any information/document as per provisions of Income-tax Act, 1961.
- Power to seize documents, etc., as per provisions of Income-tax Act, 1961.
- Custody of documents as per Income-tax Act, 1961.
Adjudication and Appeals
The Deputy Director of Enforcement and officers of higher ranks investigate cases of contravention of the provisions of the Act. These proceedings are quasi-judicial in nature and commence with the issuance of show cause notice. In the event of such show cause Notice being found unsatisfactory, further proceedings are held. These proceedings are through personal hearing, in which the notice has a further right to present his defence, either in person or through any authorized representative. On conclusion of these proceedings, the adjudicating authority has to examine and consider the evidence on record in its entirety and in case the charges not being proved, the notice is acquitted, and in the event of charges being substantiated, such penalty, as is considered appropriate as per provisions of Section 3 of the Act, can be imposed, besides confiscation of amounts involved in these contraventions.
Appeals Against Orders Passed Under FERA
As we have seen earlier FEMA, 1999 was a successor Act to FERA, 1973 with a number of modifications, relaxations and changes envisaged afresh. Obviously, there was some confusion as to what would happen regarding cases that were pending and being investigated under the FERA regime. FEMA had prescribed a ‘sunset clause’ wherein a two year limit was provided under FEMA for the resolution of pending cases and taking account of offences under FERA. The expiry date for this clause was 31 May 2002.
In this context, Section 49 of the FEMA stipulated that no court can take cognizance of an offence under the repealed FERA and no adjudicating authority can take notice of any contravention under Section 51 of the repealed FERA after the expiry of two years from the date of commencement of the FEMA. Further Section 49(4) of the FEMA maintained that ‘all offences committed under the repealed FERA were to be governed by the FERA provisions as if it had not been repealed at all. In view of the saving clause, any offence committed under the FERA was necessarily to be dealt with only under the provisions of the repealed Act’.2
Decision of the Bombay High Court Relating to FERA
The Bombay High Court (WP/1567/2005 dated 13 July 2006) that was seized of the matter considered four writ petitions filed with it together. An underlying question of law in all these writ petitions was, whether, an appeal against the adjudication orders passed by the Assistant Director, Deputy Director of Enforcement under the repealed provisions of FERA read with Section 49 of FEMA is maintainable before the Special Director (Appeals) appointed under FEMA. In all these cases, the Special Director (Appeals) dismissed the appeals against the orders passed by the Assistant Director, Deputy Director of Enforcement under the repealed provisions of FERA as not maintainable.3
The Honourable High Court of Bombay considering all relevant facts submitted before it concluded that since the Act did not specifically say that after the dissolution of the Appellate Board, al1 appeals against the orders passed by the Adjudicating Authorities under FERA should be instituted only before the Appellate Tribunal constituted under FEMA, it is clear that on commencement of FEMA, it was intended that appeals against the orders passed by the Adjudicating Authorities under FEMA as also under FERA have to be maintained before the Special Director (Appeals) or the Appellate Tribunal as the case may be. ‘On perusal of the provisions contained in the FEMA, it is evident that on dissolution of the Appellate Board, the intention was to allow appeals against the orders passed by the Appellate Authorities before the appropriate appellate forum provided under FEMA.’4
30.1. How does the growth of monopolies and restrictive trade practices affect the industrial growth of a country? Is it not possible for the market system to eliminate these unhealthy practices by itself?
30.2. What are the major findings of the Monopoly Inquiry Commission? Comment on its major recommendations.
30.3. What purpose did FERA serve? Is it relevant anymore in the context of the economy with the doors of foreign investment having been opened?
30.4. Review the economic reforms in foreign investment policies after the 1991 crisis. What has been the impact of these reforms on trade and foreign investment flows?
30.5. Critically evaluate FERA. Why was it criticized by traders and businessmen?
30.6. What was the objective of passing FEMA, 1999. How far is FEMA an improvement over FERA?
30.7. Write notes on any three of the following:
(i) Foreign Exchange
(ii) Authorized Person
(iii) Directorate of Enforcement
(iv) Appellate Tribunal
30.8. State and explain the provisions of FEMA with respect to regulation of export of goods and services out of India.
30.9. Enumerate some of the more important regulations made by the Reserve Bank of India under FEMA?
30.10. Write a note on contravention by companies. State the penalties prescribed under FEMA for contravention of its provisions.
30.11. FERA 1973 that was succeeded by FEMA 1999 expired on 31 May, 2002. There were some pending issues of FERA even after its expiry date. What were the issues involved in settling the pending disputes? In this context, explain the judgement of the Bombay High Court that settled the problem once for all.
1. Varshney, R. L. and Maheswari, K. L. (2006), Managerial Economics (New Delhi, India: Sultan Chand & Sons).
2. Sadhale, V. and Agarwal, V. (2007), ‘Appeals Against Orders passed Under FERA’, Pune, http://www.icsi.edu/cs/July2007/Articles/AppealsunderFERA.pdf.
30.1. Annual Reports of World Bank and IMF 2006–07 and 2007–08.
30.2. FEMA for NRIs/PIOs (Reserve Bank of India, Exchange Control Department, Central Office, Mumbai (Notification No.FEMA.67/2002-RB), dated 20 August 2002.
30.3. FEMA from the Finance Ministry, The Gazette of India (Extra Ordinary), Ministry of Finance, Department of Economic Affairs (Notification no. FEMA 1912000-RB), New Delhi, dated 3 May 2000.
30.4. Foreign Exchange Management Act, The Gazette of India, (Extra Ordinary), Ministry of Finance, Department of Economic Affairs (Notification), New Delhi, 3 May 2000.
30.5. Government of India (2007–08), Economic Survey 2007–08 (New Delhi: Ministry of Finance).
30.6. Gulshan, S. S. (2005), Business Law (New Delhi: Excel Books).
30.7. Kapoor, N. D. (2008), Elements of Mercantile Law (New Delhi, India: Sultan Chand & Sons).
30.8. Paranjape, H. K. (1991), ‘New Industrial Policy: A Capitalist Manifesto’, Economic and Political Weekly, 26 October.
30.9. Reserve Bank of India FEMA, Reserve Bank of India, Exchange Control Department, Central Office, Mumbai (Notification no. FEMA. 97/2003–RB), dated 8 July 2003.
30.10. Reserve Bank of India (2006), RBI Bulletin, Mumbai, August 2006.
30.11. Reserve Bank of India (2005–06 and 2007–08), Report on Currency and Finance, 2005–06 and 2007–08, Mumbai.