Mention the utility of Foreign Exchange Regulation Act (FERA).
The Foreign Exchange Regulation Act (FERA) purposes to regulate dealings in foreign exchange and securities, import and export of currency and to conserve the foreign exchange resources of the country. Its primary purpose is to regulate foreign companies. It is realized that foreign investment does play all important role in generating income, employment and output, it helps the transfer of technology and managerial skill.
FERA regulates the stock and flow of foreign investment in India. Various facilities were extended to FERA companies, on the appointment of technical and management advisors, opening of branches, acquisition of immovable property, borrowing of money or acceptance of deposits etc.
An amendment to Section 29 of FERA, effected on January 29, 1992, frees FERA companies from any limits imposed on their non-priority sector operations. This amendment also enables FERA companies to acquire shares of, any company or acquire any company in India, to take up any trading without obtaining RBI permission FERA companies are also permitted to use their trade mark, borrow and accept deposits from the public, open branches and liaison offices, acquire and sell immovable property and export goods on a rental, hire or lease basis.
They have also granted freedom to invest and dis-invest their stocks at the market price. The focus of FERA has been on conserving foreign exchange and controlling its use which have lost much of their validity in the present scenario.