Page 220 - DMGT401Business Environment

Unit 9: Foreign Exchange Management

The Foreign Exchange Management Act (FEMA), 1999, has been enacted as part of the Notes
ongoing liberalisation process.
The object of the FEMA Bill is to consolidate and amend the law relating to foreign
exchange, with the objective of facilitating external trade and payment and for promoting
the orderly development and maintenance of the foreign exchange market in India.
Regulations relating to the export of goods and services from India are contained in the
Foreign Exchange Management (Export of Goods and Services) Regulations 2000.
If any person contravenes any provision of the FEMA, he shall be liable for a penalty upto
thrice the sum involved in such contravention where such amount is quantifiable, or up to
two lakhs rupees where the amount is not quantifiable, and where such contravention is
a continuing one.

9.4 Keywords

Contact Manufacturing: A company takes up manufacturing work for another company on
contractual basis

Current Account Transactions: Transaction other than a capital account transaction
Fema: Foreign Exchange Management
Fera: Foreign Exchange Regulation Act
Strategic Alliance: Two or more companies come together for common purpose

9.5 Self Assessment

State whether the following statements are true or false:
1. Under FERA, a coupon means representing dividends and interests on securities.
2. A difference between FERA and FEMA is that, violation under FERA is a civil offence and
under FEMA is a criminal offence.
3. Any borrowing or lending to the persons residing outside the country are recorded as
current account transactions.
Fill in the blanks:
4. Under FEMA, mostly ……………….account transactions are free of any charge.
5. The Foreign Exchange Management Act (FEMA), 1999, has been enacted as part of the
ongoing .......................................
6. The Foreign Exchange Regulation Act was introduced in ................................., which was
replaced with the Foreign Exchange Regulation Act in 1973 and in 2000 by FEMA.
7. The object of ...................................... was to conserve foreign exchange and to prevent its
misuse

8. Regulations relating to the ................................... from India are contained in the Foreign
Exchange Management (Export of Goods and Services) Regulations 2000.
9. An ................................. can retain and possess foreign currency and coins within the scope
of his authority without any limit

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