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FEMA to be enforced from May 1

The Foreign Exchange Management Act, which was passed in the winter session of Parliament last year, will be enforced from May 1 through a government notification.

The Ministry of Finance will issue the gazette notification under the Act, known by its sobriquet FEMA, enforcing its clauses on that day. The ministry will simultaneously issue another notification repealing the Foreign Exchange Regulation Act, or FERA.

FEMA was introduced in Parliament in December 1999 by simultaneously repealing the 1973 FERA. With the enforcement of FEMA, a new management regimen for foreign exchange suiting the emerging framework of the World Trade Organisation, or WTO, will come into force.

The law ministry will issue two notifications that will pave way for dismantling of the office of the FERA Appellate Board, and in place constitute the FEMA Appellate Board.

Its complementary law, to be known as Money Laundering Act, is yet to be passed by Parliament. It is pending passage in the Rajya Sabha, the Upper House of Parliament, after getting the nod from the Lok Sabha, the Lower House of Parliament.

The department of revenue in the finance ministry with the help of the Enforcement Directorate and FEMA Board will administer these two laws.

The spirit of FEMA is in keeping with market forces and the law has been designed to ultimately delink rupee from the clutches of the Reserve Bank of India for its linking with hard currency worldwide.

It will function under market mechanism where purchasing power of the rupee is evaluated day to day.

While FEMA is soft and in tune with opening up of the Indian economy to the world economy, money laundering bill is regarded as the harsher part dealing with more heinous crimes.

UNI

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