It may be recalled that perhaps the most critical use of foreign exchange at that time was for import of food grains; during most of 1960’s over seven per cent of food grain requirement had to be imported. In this backdrop, FERA, 1947 was replaced by Foreign Exchange Regulation Act, 1974.
Given the importance of foreign exchange, it is no wonder that the purpose of the new legislation as stated in the preamble to Act was “….for the conservation of the foreign exchange resources of the country and the proper utilisation thereof….” and mandated that any contravention of the provision of the Act was treated as a criminal offence punishable with imprisonment.