Foreign Exchange Regulation:
The current regulation of foreign currency is under the regime of the Foreign Exchange Management Act of 1999, which replaced the prior legislation of 1973 that hd placed onerous requirements on any transaction involving foreign exchange. The present law allows the following:
Current Account Transactions: The rupee is fully convertible, and foreign exchange may be purchased for current account purposes and trade.
Capital Account Transactions: Such transactions usually require specific permission, with the following exceptions:
(i) Investment in India by a person resident outside India.
(ii) Acquisition or transfer of immovable property in India by a person resident outside India, except in cases involving a lease of less than five years.
(iii) Guarantee by a person resident outside India in favor of a person resident in India.
(iv) Import and export of currency into or out of India by a person resident outside India.
(v) Foreign currency accounts in India of a person resident outside India.
(vi) Remittance of capital assets outside India, owned by a person resident outside India.
(vii) Remittance outside India that have prior approval for matters such as joint ventures and technical collaborations.
(viii) Remittance outside India of interest, dividends, service fees, royalties, repayment of overseas loans etc.