[1] It was passed on 29 December 1999 in parliament, replacing the Foreign Exchange Regulation Act (FERA).
It enabled a new foreign exchange management regime consistent with the emerging framework of the World Trade Organization (WTO).
[4] FEMA is a regulatory mechanism that enables the Reserve Bank of India to pass regulations and the Central Government to pass rules relating to foreign exchange in tune with the Foreign Trade policy of India.
[9][better source needed] Coca-Cola was India's leading soft drink until 1977 when it left India after a new government ordered the company to dilute its stake in its Indian unit as required by the Foreign Exchange Regulation Act (FERA).
This led on to invention of beliefs among stakeholders that FEMA and FERA co-exist in present Indian scenario.
It constantly undergoes changes and innovations, which can either be beneficial to a country or expose them to greater risks.
Central banks would work towards an orderly functioning of the transactions which can also develop their foreign exchange market.
Any corporate entity receiving FDI or making an outbound investment has to file an annual FEMA return called as Foreign Liabilities and Assets (FLA).
[17] As per Section 1(2) of FCRA, 2010, the provisions of the act applies to: The flow of foreign contribution to India is regulated under As per Section 2(1)(h) of FCRA, 2010, "foreign contribution" means the donation, delivery or transfer made by any foreign source, ─ (i)Of any article, not being an article given to a person* as a gift for his personal use, if the market value, in India, of such article, on the date of such gift is not more than such sum as may be specified from time to time by the Central Government by rules made by it in this behalf.
Explanation 3 ‒ Any amount received, by a person from any foreign source outside India, by way of fee (including fees charged by an educational institution in India from foreign student) or towards cost in lieu of goods or services rendered by such person in the ordinary course of his business, trade or commerce whether within India or outside India or any contribution received from an agent or a foreign source towards such fee or cost shall be excluded from the definition of foreign contribution within the meaning of this clause.