The Foreign Exchange Management Act, 1999 (FEMA)

A Mumbai student accepted to a university abroad asks her father to send tuition fees. A small exporter in Andheri is paid in dollars for a consignment. A tech founder wants to set up a subsidiary overseas. Each of them moves money across India's border, and each must do it through a bank that is authorised for the purpose. Why does the law watch foreign exchange so closely, and is breaking these rules a crime or something else? FEMA answers both questions.

In two minutes

FEMA 1999 regulates dealings in foreign exchange to facilitate external trade and payments and to develop the foreign exchange market; current account transactions are largely free, capital account transactions are regulated, and most contraventions are civil wrongs punished by penalty.

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