Which one of the following statements is correct with reference to FEMA in India?

The correct answer is C because the primary objective of replacing FERA with FEMA was to shift the focus from conservation of foreign exchange to its management. Under the old FERA regime, violations were treated as criminal offences punishable with imprisonment. However, under FEMA, these violations have been decriminalized and are now treated as civil offences. Instead of arrest and prosecution, violators are now liable to pay monetary penalties. Regarding the other options: Option A is incorrect because FEMA was enacted in 1999 and came into force on June 1, 2000. Option B is incorrect because the sunset clause for FERA ended on May 31, 2002, but it was a two year period starting from June 2000. Option D is incorrect because the Enforcement Directorate no longer has the power to arrest or prosecute for mere violations of FEMA rules, as they are now civil matters rather than criminal ones. Arrest is only possible in rare cases involving the non payment of penalties.