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CS Executive · Economic, Commercial and Intellectual Property Laws · Law relating to Foreign Exchange Management

Meridian Textiles Pvt Ltd, a company in Surat, wants to know whether FEMA applies to its wholly owned office in Dubai, which it owns and controls. Under Section 1 of FEMA, 1999, what is the position?

FEMA applies to the Dubai office. Section 1(3) extends the Act to all branches, offices and agencies outside India that are owned or controlled by a person resident in India, so the office's location abroad does not take it outside FEMA.

  1. AFEMA does not apply because the office is outside India
  2. BFEMA applies to the office because it is owned or controlled by a person resident in IndiaCorrect
  3. CFEMA applies only if the Dubai office remits profits to India
  4. DFEMA applies only after the Central Government issues a special notification for that office

Explanation

Section 1(3) says the Act applies to all branches, offices and agencies outside India owned or controlled by a person resident in India. It also covers contraventions committed outside India by persons to whom the Act applies. The view that FEMA stops at India's borders is therefore wrong.

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