According to FEMA, foreign exchange does NOT include 

1. Deposits payable in any foreign currency

2. Bills of exchange drawn in Indian currency but payable in any foreign currency

3. Traveller's cheques drawn by institutions outside India but payable in Indian currency

4. Drafts drawn by banks outside India and payable in foreign currency 

Foreign Exchange Management Act – FEMA

1. The main objective for which FEMA was introduced in Indian was to facilitate external trade and payments.
2. In addition to this, FEMA was also formulated to assist the orderly development and maintenance of the Indian forex market.
3. FEMA outlines the formalities and procedures for the dealings of all foreign exchange transactions in India.
4. These foreign exchange transactions have been classified into two categories — Capital Account Transactions and Current Account Transactions.

Foreign Exchange Means Foreign Currency and Includes:

1. Deposits, credits, and balances payable in any foreign currency
2. Drafts, traveler's cheques, letters of credit, or bills of exchange expressed or drawn in Indian currency but payable in any foreign currency.
3. Drafts, traveler's cheques, letters of credit, or bills of exchange drawn by banks, institutions, or persons outside India but payable in Indian Currency.

• According to FEMA, foreign exchange includes drafts drawn by banks outside India and payable in Indian currency but it does not include any drafts drawn by banks outside India and payable in foreign currency.