FEMA

Foreign Exchange Management Act rules and regulations.

Articles

FEMA Basics: Capital Account vs Current Account Transactions

The Foreign Exchange Management Act draws a key distinction between capital and current account transactions, which determines how freely a cross-border transaction is permitted.

15 Aug 2026 · 2 min read

Frequently Asked Questions

Yes — FEMA governs all cross-border foreign exchange transactions by residents and non-residents in India, though many routine transactions are freely permitted within prescribed limits and reporting requirements.

FEMA, enacted in 1999, replaced the older Foreign Exchange Regulation Act (FERA). The shift moved India's foreign exchange framework from a criminal-law-oriented, restrictive regime toward a civil, management-oriented approach aligned with economic liberalisation.