FEMA’S ROLE IN INDIA’S CHANGING FDI POLCY LANDSCAPE

AUTHOR – VIDIT SANTOSH MISHRA, LLM SCHOLAR (CORPORATE BANKING AND INSURANCE LAW) ATAMITY LAW SCHOOL, NOIDA

BEST CITATION – VIDIT SANTOSH MISHRA, FEMA’S ROLE IN INDIA’S CHANGING FDI POLCY LANDSCAPE, INDIAN JOURNAL OF LEGAL REVIEW (IJLR), 5 (8) OF 2025, PG. 787-795, APIS – 3920 – 0001 & ISSN – 2583-2344

Abstract

India’s journey toward economic liberalization brought about a significant transformation in the way foreign investments and foreign exchange were regulated. Replacing the rigid and restrictive Foreign Exchange Regulation Act (FERA), 1973, the enactment of the Foreign Exchange Management Act (FEMA), 1999 marked a progressive shift towards a more open and business-friendly environment. This paper explores the legal transition from FERA to FEMA and examines how FEMA has shaped India’s Foreign Direct Investment (FDI) landscape. By focusing on the regulatory flexibility introduced by FEMA—such as streamlined procedures, improved transparency, and investor-friendly mechanisms—the study highlights its influence on India’s investment climate. Additionally, it delves into structural reforms including the RBI’s regulatory role and sector-specific liberalization efforts. The research identifies areas where FEMA’s regulatory framework could be enhanced to address existing uncertainties and better support India’s long-term investment goals. Ultimately, this study offers legal insights that can contribute to making India a more dependable and competitive destination for global investors.

Keywords

Foreign Exchange Management Act (FEMA), Foreign Exchange Regulation Act(FERA), Foreign Direct Investment(FDI), Economic Liberalization, Regulatory Reform, RBI, Investment Law, Ease of Doing Business, Non-Debt Rules, Policy Framework, Legal Modernization.