The Foreign Exchange Management Act, 1999 ( FEMA) is an act of the parliament to amend and consolidate the law relating to foreign exchange trade and payment and for promoting development of foreign exchange market in India.

The Foreign Exchange Management Act (FEMA) was an act passed in the winter session of Parliament in 1999, which replaced Foreign Exchange Regulation Act. This act seeks to make offences related to foreign exchange civil offences. It extends to the whole of India.

The Foreign Exchange Regulation Act (FERA) of 1973 in India was replaced on June 2000 by the Foreign Exchange Management Act (FERA), which was passed in 1999. The FERA was passed in 1973 at a time when there was acute shortage of foreign exchange in the country.


The main objective of FEMA was to help facilitate external trade and payments in India. It was also meant to help orderly development and maintenance of the foreign exchange market in India. It defines the procedures, formalities, dealings of all foreign exchange transactions in India. This law’s main objective is to increase the flow of foreign exchange in India. Now , under this law , you can bring foreign currency in India without any legal barrier . According to section 3 of FEMA 2000 ,” only authorized person under the government terms can deal in foreign exchange in India .

  1. To simplify and ease the external trade and payments and reinforce the law relating to FEMA

2. To promote the systematized development and maintenance of a healthy foreign exchange market in India.

3. To remove disparity of payments.

4. To control and direct the employment business and investment of the non-residents.

5. To utilize the foreign exchange resources effectively for the country.

Features of FEMA

  1. FEMA does not apply to the Indian citizens who resides outside India. This criteria is checked by the number of days a person stays in India for more than 182 days in the preceding financial year.
  2. Central Government has the authority given by FEMA to impose restrictions on and supervise three things which are- payments made to any person outside India or receipts from them, forex and foreign security deals.
  3. It specified the areas for holding of forex that required specific permission of the Reserve Bank of India (RBI) or the government. 
  4. FEMA classified the transaction into a current and capital account.


  1. Dealing in foreign exchange and Holding of foreign exchange, etc.
  2. Current account transactions.
  3. Capital account transactions.
  4. Export of goods and services.
  5. Realization and repatriation of foreign exchange


In order to conclude, we can say that the objective of FERA did not quite have the effect that was envisioned and the Indian economy continued to decline. To compound matters, the strict regulatory environment created under the ‘License Raj’ dampened the Indian economy further. To mitigate the downturn, then-Finance Minister Manmohan Singh unleashed economic liberalization in 1991 and as a result, the government had to make a series of concessions to FERA’s stipulations under the new rules. These concessions made FERA largely irrelevant under the new economic regime. Eventually, the government decided to move from “currency regulation” to “currency management”, and set up FEMA. And so FERA in India was replaced by FEMA.



Aishwarya Says:

I have always been against Glorifying Over Work and therefore, in the year 2021, I have decided to launch this campaign “Balancing Life”and talk about this wrong practice, that we have been following since last few years. I will be talking to and interviewing around 1 lakh people in the coming 2021 and publish their interview regarding their opinion on glamourising Over Work.

If you are interested in participating in the same, do let me know.

Do follow me on FacebookTwitter  Youtube and Instagram.

The copyright of this Article belongs exclusively to Ms. Aishwarya Sandeep. Reproduction of the same, without permission will amount to Copyright Infringement. Appropriate Legal Action under the Indian Laws will be taken.

If you would also like to contribute to my website, then do share your articles or poems at

We also have a Facebook Group Restarter Moms for Mothers or Women who would like to rejoin their careers post a career break or women who are enterpreneurs.

We are also running a series Inspirational Women from January 2021 to March 31,2021, featuring around 1000 stories about Indian Women, who changed the world. #choosetochallenge

Leave a Reply

Fill in your details below or click an icon to log in: Logo

You are commenting using your account. Log Out /  Change )

Twitter picture

You are commenting using your Twitter account. Log Out /  Change )

Facebook photo

You are commenting using your Facebook account. Log Out /  Change )

Connecting to %s

This site uses Akismet to reduce spam. Learn how your comment data is processed.