LEGAL AND REGULATORY FRAME WORK :

The legal framework that deals with various aspects of forex management in India is the Foreign Exchange Management Act, 1999 (FEMA 1999) which was implemented on 1st of June, 2000. FEMA, 1999 replaced the Foreign Exchange Regulation Act, 1973 (FERA 1973)

FEMA, 1999 – salient features:

1. FEMA 1999 was enacted as part of liberalization process

2. The main objective of FEMA is to consolidate and amend the law relating to foreign exchange to facilitate external trade and payments and also to develop foreign exchange markets in India.