# Section 1: Applicability of FEMA

## Territorial Extent

FEMA extends to the whole of India.

## Extra-Territorial Operation

FEMA also applies to:

Branches
Offices, and
Agencies

...located outside India, provided they are owned OR controlled by a Person Resident in India (PRI).

## Key Insight

FEMA has limited extra-territorial reach. Even though India's sovereignty ends at its borders, FEMA reaches across borders to regulate entities controlled by PRIs. The link is ownership or control by a PRI, not the location of the entity.

## Diagrammatic Understanding

```

FEMA Applies To

+-----------+-----------+

| |

Whole of India Branch/Office/Agency

outside India

(Owned OR Controlled by PRI)

```

Worked example

### Example 1

Example 1: Tata Motors (Indian PRI) has a branch in Dubai. The Dubai branch is OWNED by a PRI → FEMA applies to this branch even though it is outside India.

### Example 2

Example 2: An Indian resident sets up an agency in London that is controlled from India. FEMA applies to this London agency by virtue of control by a PRI.

⚠️ Common exam mistakes

Assuming FEMA applies to all Indian-owned entities abroad regardless of control — both ownership OR control by PRI is the test.
Believing FEMA does not have extra-territorial reach at all.
Confusing this with the Companies Act jurisdiction rules.

Bare-Act text Section 1 · Foreign Exchange Management Act, 1999 · click to expand

It extends to the whole of India. It shall also apply to all branches, offices and agencies outside India owned or controlled by a person resident in India.

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Section 1 - Applicability of FEMA

Worked example

⚠️ Common exam mistakes