The Foreign Exchange Regulation Act, 1973, governs India’s Foreign Exchange Control
System. On September 3, 1939 the Exchange Control was introduced in India on the outbreak of the Second World War.
In the closing stages of the war, it became clear that control over foreign exchange transactions would have to continue in some form. The FERA of 1947 was enacted and decided on a statutory basis to place the control. It was found necessary to continue foreign exchange control for the substantial requirements of foreign exchange to undertake the planned development efforts.
The FERA of 1973 was reviewed in 1993 and several amendments were enacted as part of the on going process of economic liberalization relating to foreign trade and investments for closer interactions with world economy.
FERA provisions that imposed restrictions on locally incorporated companies with foreign equity holding in excess of 40 percent, which is called as FERA companies have been removed. Without any special restrictions such companies are permitted in India.
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