📈
Economy
🔴 High
Foreign Exchange Management Act (FEMA), 1999
📅 Published 13 Dec 2025 · December 2025
Foreign Exchange Management Act (FEMA), 1999
Context:
Indian residents who ask friends, associates, or agents abroad to make initial payments (10–20%) for overseas purchases—such as artwork, luxury watches, or real estate—risk violating the Foreign Exchange Management Act (FEMA), even if the transactions are genuine. The Enforcement Directorate (ED) has recently issued notices highlighting this issue, invoking Section 3(a) of FEMA.
Foreign Exchange Management Act (FEMA), 1999
The Foreign Exchange Management Act (FEMA), 1999 is India’s primary law governing foreign exchange transactions, external trade, and cross-border capital flows. It replaced the more restrictive Foreign Exchange Regulation Act (FERA), 1973.
In Force Since
- 1 June 2000
Administered By
- Ministry of Finance
- Enforced by: Reserve Bank of India (RBI) and Directorate of Enforcement (ED)
Objectives of FEMA
- Facilitate external trade and payments
- Promote orderly development and maintenance of the foreign exchange market in India
- Shift from a control-based regime (FERA) to a management-based regime
- Encourage foreign investment and capital inflows while ensuring macroeconomic stability
📝 Relevant Exams:
UPSC