FEMA is stand for the Foreign Exchange Management Act. A system of exchange management was first time introduced through a series of rules beneath the Defense of Indian Act, 1939 on temporary basis. The foreign crises persisted for an extended time and eventually it got enacted within the statute beneath the title exchange Regulation Act, 1947 after, this act was replaced by the Foreign Exchange Regulation Act, 1973(FERA) that was came into force with impact from June month 1, 1974 and control exchange for over twenty six years beneath this Act.
In 1991 Government of Indian initiated the policy of economic alleviation. After this foreign investment in several sectors were permissible in India. In 1997, Tarapore committee on Capital Account interchangeability, deep-seated by the banking concern of India, suggested amendment within the legislative framework governing exchange transactions. Consequently, the Foreign Exchange Regulation Act, 1973 was repealed and replaced by the new FEMA, 1999 (Foreign Exchange Management Act) with impact from June month 01, 2000. Beneath independent agency the stress was on management of exchange.
Applicability of Foreign Exchange Management Act
As Indian has become a hub of techno globalization i.e. intellectual and information capital, R & D, innovation, producing center for elements like cars and prescription drugs, there are currently signs of reverse brain-drain and reduction in importing and banking system transactions.
The exchange Management Act, 1999 was enacted to consolidate and amend the law regarding exchange with the target of facilitating external trade and for promoting the orderly development and maintenance of exchange market in India. FEMA extends to the entire of India. The Act additionally applies to any or all branches, offices and agencies outside India of India in hand or controlled by someone resident in India and additionally to any dispute committed there beneath outside India by anyone to whom this Act is applies.