The Foreign Exchange Management Act (FEMA) was passed in 1999 to replace the 1973-enacted Foreign Exchange Regulation Act (FERA). FEMA, 1999 was enacted to unify and alter the legislation governing foreign exchange with the goal of easing international commerce and payments, and as a result, the Act made a number of economic changes. Many people wonder what FEMA stands for (Foreign Exchange Management Act). Let’s look through FEMA’s goals and characteristics, as well as FEMA Act 1999’s requirements.
FEMA stands for Federal Emergency Management Agency
The Foreign Exchange Management Act (FEMA) is a modified version of the Foreign Exchange Regulation Act (FERA), which was enacted in 1973. (FERA). It was established with the goal of liberalizing and privatizing the Indian market in order to enhance external payments and overseas commerce. The Foreign Exchange Management Act (FEMA) is the basic legislation that governs the influx and outflow of capital, as well as commerce and business between India and other countries.
Let’s take an example: if a person lives in India and want to travel, study, or migrate overseas for whatever reason, he or she will need foreign money. Similarly, if someone from outside India wants to visit India for identical reasons, they will need Indian cash. The outflow of foreign cash occurs when an Indian resident travels outside the country, whereas the influx of foreign currency occurs when someone visits India. The goal is to control and balance the flow of foreign cash in and out of the country.
FEMA’s Objectives
The Foreign Exchange Market Act (FEMA) was passed with the goal of enabling international commerce and payments while also supporting the long-term growth and control of the foreign exchange market. It aids in the regulation of the Indian foreign exchange market.
The balance of payment, according to FEMA, is an account of transactions in products, services, or assets between people of two separate nations. Capital Account Transactions and Current Account Transactions are the two kinds of FEMA.
- All capital transactions, as well as the influx and outflow of transactions, are recorded in the capital account.
- As a gauge of an economy’s health, current account transactions for all merchandise exchanges are used.
FEMA Act’s Applicability
The FEMA Act of 1999 applies to the whole country of India. The Act also covers any branches, offices, and agencies owned or managed by Indian citizens that are located outside of India. In terms of foreign exchange, the provisions of the FEMA Act 1999 are extremely liberalized.
It had tumultuous 27-year tenure, during which many top executives from India’s corporate sector found themselves on the Enforcement Directorate’s mercy. In addition, any violation of the FERA constituted a crime punishable by jail. The offenses are, nevertheless, tied to international civil offenses under FEMA.
FEMA had proven crucial in supporting the Indian government’s pro-liberalization initiatives. The Act’s major goal is to unify and update foreign exchange regulations with the goal of facilitating external payments and commerce in order to promote the orderly maintenance and growth of India’s foreign currency market. If you want to know about FEMA then visit now.
The FEMA applies to the entire country of India. It applies to any branches, offices, and agencies outside India that are owned or managed by an Indian resident, as well as any breach of the Act committed outside India by two people to whom the Act applies.
