FEMA: What are the basic objectives of fema?


FEMA stands for the Foreign Exchange Management Act. It is a soft, liberal and simplified law that aims at boosting foreign trade and investment more in tune with country’s new economic environment of globalization of Indian economy.

Its main objective is to facilitate external trade and payment and promote the orderly development’ and maintenance of foreign .exchange market in India. This act is expected to introduce more liberal provisions in keeping with the requirements of liberalized regimes.

Main features of FEMA are:


(a) Any person may sell or draw foreign exchange, without prior permission and can later on inform RBI. This makes it a more positive feature.

(b) Under this act Enforcement Directorate (F, D) will be more investigating in nature.

(c) FEMA recognized the possibility of even the Capital Account convertibility i.e. It classifies foreign exchange transaction and current account transactions.

(d) The violation of FEMA is a civil offence.


(e) Above all FEMA is more concerned with the management instead FERA (Foreign Exchange Regulation Act) was more concerned about exchange regulation or control.

MLP covers wide range of crimes including various sections of Indian Penal Code (IPC), Prevention of Corruption Act, Narcotic Drugs and Psychotropic Substances Act, Arms and SITA. Its important features etc.

a) MLP aims to prevent transfer of funds in order to conceal a transaction of dubious or illegal origin.

b) It seems to check generation of black money by making, the offence cognizable and non-boilable.


c) All rights and title of confiscated properties shall vest with the Central Government.

d) Under MLP designated officers will have powers to arrest an individual even on mere suspicious.


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