Foreign exchange Management Act. 1999

The Foreign Exchange Management Act (FEMA) is a law enacted by the Indian government in 1999 to replace the Foreign Exchange Regulation Act (FERA) of 1973. The FEMA regulates foreign exchange transactions in India and seeks to promote orderly development and maintenance of foreign exchange market in India.

The FEMA seeks to achieve its objectives by providing for the management of foreign exchange, regulating foreign capital inflows and outflows, and promoting the orderly development and maintenance of the foreign exchange market in India. The Act governs various aspects of foreign exchange, including transactions in foreign exchange, export and import of goods and services, and foreign investments in India.

One of the key features of FEMA is the liberalization of foreign exchange transactions. The Act allows for liberalization of current account transactions, which includes payments for imports, exports, travel, and education. This has made it easier for individuals and businesses to engage in international transactions.

The FEMA also regulates foreign investments in India, including investments in shares, bonds, and other securities. The Act provides for the regulation of foreign investments in India through the establishment of the Foreign Investment Promotion Board (FIPB).

The FEMA also provides for the establishment of the Directorate of Enforcement, which is responsible for enforcing the provisions of the Act. The Directorate has the power to investigate and prosecute individuals and businesses for violations of the FEMA.

Overall, the FEMA has played a crucial role in regulating foreign exchange transactions in India and promoting the development of the foreign exchange market. The Act has helped to liberalize foreign exchange transactions, while also ensuring that foreign exchange transactions are conducted in a manner that is consistent with national interests.