FEMA
Context:
- The Enforcement Directorate has seized ₹5,551.27 crore from Xiaomi Technology India Private Ltd. under the provisions of the Foreign Exchange Management Act (FEMA), in connection with the alleged illegal remittances made by the company.
About FEMA:
- The Foreign Exchange Management Act of 1999 (FEMA) was enacted by Parliament. It was signed into law on December 29, 1999.
- This new Act is in line with the World Trade Organization’s (WTO) guidelines. It is a set of laws that permits the Reserve Bank of India to adopt regulations and allows the Government of India to pass rules on foreign exchange in accordance with India’s foreign trade strategy.
- The Foreign Exchange Regulation Act was replaced by FEMA (FERA).
Features:
- It grants the Central Government the authority to control the flow of money to and from those living outside the country.
- Without FEMA’s consent, all financial transactions involving foreign securities or exchange are prohibited. “Authorised Persons” must be involved in all transactions.
- The Government of India has the authority to prohibit an authorised individual from conducting foreign exchange transactions within the current account in the public interest.
- Allows RBI to impose limits on capital account transactions, even if they are carried out by an authorised individual.
Source: THE HINDU.
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