A Review of Foreign Exchange Management Act 1999

Abstract

The Foreign Exchange Management Act 1999 (FEMA) is a seminal piece of legislation in India that governs foreign exchange transactions and the management of foreign exchange reserves. It represents a crucial pivot in the country's economic policy, replacing the antiquated Foreign Exchange Regulation Act (FERA) of 1973 and aligning India with the global trend towards liberalization. FEMA embodies the principles of economic openness and facilitation of foreign investments, with keywords such as "foreign exchange," "current account transactions," and "capital account transactions" serving as its foundational elements. This legislation empowers the Reserve Bank of India (RBI) and the Central Government to regulate and oversee foreign exchange transactions, while also establishing a robust enforcement mechanism to address violations and contraventions. One of the essential aspects of FEMA is its adaptability. The legislation has undergone several amendments to keep pace with changing economic dynamics and global trends, demonstrating its flexibility in response to evolving conditions.