151 Frequently Asked Questions (FAQs) from NRI+PIO for India

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1. What is meaning of FEMA, 1999 ?

(i) FEMA, 1999 is an act to consolidate + amend the law for foreign exchange with the objective of facilitating external trade + payment + promoting the orderly development and maintenance of foreign exchange market in India.

(ii) FEMA, 1999 is providing legal framework for administration of exchange control in India.

(iii) FEMA, 1999 is applicable from June 1, 2000 by replacing the old Act under head Foreign Exchange Regulation Act (FERA) 1973.

(iv) FEMA, 1999 is covering 100% aspects of foreign exchange business like Exports + Imports + Remittances etc.

(v) FEMA, 1999 versus FERA, 1973

FEMA, 1999

(a) FEMA, 1999 is having lower strong provisions comparatively FERA, 1973 where FEMA, 1999 is permitting monetary compounding against non serious contraventions of the rules and regulations.

(b) However a prosecution is also being recommended after enquiry + examination by the enforcement director (ED) against serious

contravention of the rules and regulations.

(c) Hence FEMA, 1999 is soft + business friendly where imprisonment is only possible where serious contravention of the rules and regulations is existed like smuggling + money laundering etc.

FERA, 1973

(a) FERA, 1973 was having strong provisions comparatively FEMA, 1999 where FERA, 1973 was also not permitting monetary compounding against non serious contraventions of the rules and regulations.