INDIA’S FOREIGN EXCHANGE REGULATION: EVOLUTION, ENFORCEMENT, AND EMERGING LEGAL DOCTRINES UNDER FEMA
AUTHOR – ANTO J ALAPPATT, LLM CANDIDATE, RESEARCH SCHOLAR, AMITY LAW SCHOOL, NOIDA. EMAIL ID: ANTOALAPPAT1998@GMAIL.COM
BEST CITATION – ANTO J ALAPPATT, INDIA’S FOREIGN EXCHANGE REGULATION: EVOLUTION, ENFORCEMENT, AND EMERGING LEGAL DOCTRINES UNDER FEMA, INDIAN JOURNAL OF LEGAL REVIEW (IJLR), 5 (6) OF 2025, PG. 580-593, APIS – 3920 – 0001 & ISSN – 2583-2344
ABSTRACT
This research article critically examines the evolution, enforcement, and emerging legal doctrines of India’s foreign exchange regulation framework, with a particular focus on the transition from the Foreign Exchange Regulation Act (FERA) to the Foreign Exchange Management Act (FEMA), 1999. The study aims to trace the shift from a control-oriented regime under FERA to a more liberalized, civil framework under FEMA, emphasizing regulatory modernization in the context of globalization, capital mobility, and compliance with international financial norms.
Using a doctrinal and analytical methodology, this study systematically reviews statutory provisions, delegated legislations, and institutional roles—primarily that of the Reserve Bank of India (RBI) and Authorized Dealers (ADs). It delves into the Foreign Exchange Management Rules governing current and capital account transactions and examines their significance within India’s broader economic and legal frameworks.
The paper also explores the integration of anti-money laundering (AML) mechanisms within FEMA through compliance, supervisory, and technological frameworks, highlighting India’s alignment with global AML standards. The enforcement mechanisms under the Directorate of Enforcement (ED), and their interface with the Prevention of Money Laundering Act (PMLA), are critically analyzed through doctrinal scrutiny and select case laws.
Key judgments such as ED v. Hasan Ali Khan, Ketan Parekh v. Union of India, and J. Sekar v. Directorate of Enforcement are studied to understand judicial interpretations on civil penalties, procedural fairness, and RBI’s regulatory discretion. The findings underscore an evolving jurisprudence characterized by a balance between economic liberalization and regulatory vigilance.
The article concludes that while FEMA represents a paradigm shift from punitive control to facilitative regulation, emerging challenges in AML enforcement, judicial oversight, and regulatory clarity demand continuous legal adaptation to meet global compliance expectations and economic resilience.