Foreign Exchange Management Act (FEMA)

Abstract:

The government of India has formulated the Foreign Exchange Management Act (FEMA), which relates to the foreign direct investment in the country. Foreign Exchange Management Act (FEMA) has helped the country by encouraging external payment and trade.

Formulation of Foreign Exchange Management Act (FEMA):

In 1999, the Indian government formulated the Foreign Exchange Management Act (FEMA).

On the 1st of June, 2000, FEMA came into force replacing the Foreign Exchange Regulation Act (FERA), which was formulated in 1973. Extensive economic reforms were undertaken in India in the early 1990s and this led to the deregulation and liberalization of the country's economy. Foreign Exchange Management Act (FEMA) was thus formulated in order to be compatible with the policies of pro- liberalization of the Indian government.

Extent of Foreign Exchange Management Act (FEMA):

Foreign Exchange Management Act (FEMA) is applicable to the entire country. Agencies, branches, and offices, outside India, that are owned by Indian residents, also fall under the jurisdiction of this act. Foreign Exchange Management Act (FEMA) also extends to any dispute that are committed in offices, agencies and branches outside India that are owned by individuals covered by this act.

Objectives of Foreign Exchange Management Act (FEMA):

Among the various objectives of the Foreign Exchange Management Act (FEMA), an important one is to revise and unite all the laws that relate to foreign exchange. Further FEMA aims to promote foreign payments and trade in the country. Another important objective of the Foreign Exchange Management Act (FEMA) is to encourage the orderly maintenance and development of the foreign exchange market in India.

Implementation of Foreign Exchange Management Act (FEMA):

Extensive efforts have been undertaken to ensure the effective implementation of FEMA in India. Proper implementation measures and efficient supervision are important preconditions for the success of the Foreign Exchange Management Act (FEMA).