42. The present Foreign Exchange Regulation Act, 1973 is outdated and is no longer in keeping with the needs of the economy and the changes that have taken place in foreign exchange markets and transactions. We have moved to full current account convertibility. It is no longer appropriate to deify foreign exchange as something special and maintain a burdensome and highly regulatory structure around this deity. Accordingly, government have decided to repeal FERA and replace it with a new Foreign Exchange Management Act (FEMA), which would be consistent with the needs of a modern economy. The new Bill will be introduced in this session of Parliament.

43. At the same time, I want to assure the House that the replacement of FERA by FEMA is in no way intended to give license for illegal transactions to drug peddlers, terrorists, arm smugglers and other perpetrators of heinous economic crimes. Indeed, to protect our society from the globally recognised and, growing problem of money laundering, I will also bring an anti Money Laundering Bill before the House simultaneously with FEMA.