Know all about Foreign Exchange Management Act (FEMA)

Have you ever considered why the government needs foreign currency while the people remain in India? Consider someone who lives in India and wishes to travel abroad for work, travel, education, migration, or any cause that necessitates the use of foreign currency. Similarly, if someone lives outside of India and wants to visit here for identical reasons, he or she will require Indian currency. If an Indian resident leaves the country, this is an outflow of foreign currency, and if a person travels to India, this is an influx of foreign currency.

The purpose is to influence and stabilize the influx and outflow of foreign currency. The RBI is the regulating body for this management. This Act is known as the Foreign Exchange Management Act, 1999.

The Foreign Exchange Regulation Act of 1973 (FERA) was amended by the Foreign Management Act of 1999. (FEMA). FEMA was adopted by the Indian Parliament and went into effect on June 1, 2000. There are a total of 49 sections separated into 7 chapters. The reason for the alternative arose because it was no longer acceptable for the triumphant circumstances and had grown severe because it included a provision for incarceration.

On the other hand, FEMA became a part of the changes brought about by the new, liberal, and changing environment. Also, in advance, FERA became exceeded due to insufficient forex within the United States, and FEMA became exceeded to loosen currency regulations in India. FEMA’s headquarters, known as the Enforcement Directorate, are in New Delhi and are directed by a Director.


  • FEMA no longer applies to Indian residents who live outside of India. These criteria are determined by the number of days someone spent in India for more than 182 days during the preceding fiscal year.
  • The Central Government has the ability granted by FEMA to establish restrictions and regulate three matters: bills issued to any person outside India or receipts from them, foreign exchange, and overseas protection arrangements.
  • It specifies the areas for storing foreign currency that require special approval from the Reserve Bank of India (RBI) or the authorities.
  • FEMA classified the transaction as a cutting-edge and capital account.


  • To strengthen and reform the forex regulation.
  • Outside change and bills should be simplified and simplified.
  • To sell the systematic development and restoration of a healthy FX market in India.
  • To postpone the difference in bills.
  • Manipulate and direct non-resident employment commercial enterprise and money.
  • To make the most use of the United States’ FX assets.

Disclaimer: The views expressed above are for informational purposes only based on industry reports and related news stories. PropertyPistol does not guarantee the accuracy, completeness, or reliability of the information and shall not be held responsible for any action taken based on the published information.


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