Foreign Exchange Management Act (FEMA)

The Enforcement Directorate (ED) has recently imposed a penalty of over ₹3.44 crore on BBC World Service India for alleged FDI violations under the Foreign Exchange Management Act (FEMA).

• About FEMA: Introduced in 1999 to regulate foreign exchange transactions & promote external trade, and empowers the central government to control foreign payments & ensure legal transactions.

o Applicable to Indian citizens, agencies, companies abroad owned by Indians (≥60% ownership).

o Covers: Foreign exchange, foreign security, exports-imports, banking, financial & insurance services.

o Prohibited transactions: Remittances from lottery winnings, racing/riding income → Commissions on equity investment of Indian firms abroad →Transactions with residents of Bhutan & Nepal.