UGC NET Foreign Exchange Management Act (FEMA) FEMA is a set of regulations that empowers the Reserve Bank of India to pass regulations and enables the Government of India to pass rules relating to foreign exchange in tune with the foreign trade policy of India. The Foreign Exchange Management Act, 1999 (FEMA) is an Act […]
The Foreign Exchange Management Act (FEMA), 1999 is a significant piece of legislation in India that governs foreign exchange and foreign investment activities. Enforced by the Reserve Bank of India (RBI), FEMA replaced the earlier Foreign Exchange Regulation Act (FERA), 1973 to facilitate external trade and payments and to promote the orderly development and maintenance of the foreign exchange market in India.
Objectives of FEMA
- Facilitate external trade and payments.
- Promote orderly development and maintenance of India’s foreign exchange market.
- Regulate transactions involving foreign exchange and foreign security.
- Balance capital account and current account transactions.
Key Features of FEMA
- Applies to India and all branches, offices, and agencies outside India owned or controlled by Indian residents.
- Deals with both Current Account Transactions (like imports/exports) and Capital Account Transactions (like foreign investments).
- Provisions are civil in nature, unlike FERA which had criminal implications.
- Covers individuals, corporates, NRIs, and foreign nationals.