The Smuggling activities and foreign exchange manipulations had posed a serious threat to the Indian economy and security of the nation. The persons engaged in such malpractices violated laws relating to Income Tax, Wealth Tax and other laws to increase their illegally acquired property and in many cases had held the properties acquired by them through such gains in the names of their relatives, associates and confidants. The government of India had to take some serious measures to deal with the situation. The Smugglers and Foreign Exchange Manipulators (Forfeiture of Property) Act, 1976 was enacted to provide for the forfeiture of illegally acquired properties of smugglers and foreign exchange manipulators and for matter connected therewith or incidental thereto. This act was further amended by the Smugglers and Foreign Exchange Manipulators (Forfeiture of Property) Amendment Act, 1980
