To promote ease of doing business in cross-border trade through simplified procedures and reduced compliance burdens, the Reserve Bank of India (“RBI“), on January 16, 2026, has notified the Foreign Exchange Management (Export and Import of Goods and Services) Regulations, 2026 and Directions on Export and Import of Goods and Services (together referred to as the “New Regulations“). These New Regulations are set to come into force on October 1, 2026. The New Regulations supersede the FEMA (Export of Goods & Services Regulations), 2015, the Master Direction – Export of Goods and Services and Master Direction – Import of Goods and Services as well as the related circulars and mark a significant structural intervention in India’s foreign trade regulatory framework.
While the underlying objectives of monitoring cross-border flows and ensuring timely realisation of foreign exchange remain unchanged, the method by which these objectives are pursued has been fundamentally reorganised. Rather than introducing dramatic new compliance thresholds or substantive prohibitions, the New Regulations focus on consolidation, delegation, and procedural clarity. In doing so, it reshapes how exporters, importers, authorised dealers, and regulators operate in practice.
Defined Timelines for Export Declarations
Under the new framework, exporters of services must submit the Export Declaration Form (EDF) within 30 (thirty) days from the end of the month in which the invoice is raised. Where multiple service exports are made in a single month, a single consolidated EDF may be submitted. This is a departure from the earlier practice, where service exporters often faced ambiguity around declaration timing, particularly when payments were milestone based or staggered. The New Regulations also permit authorised dealers to extend declaration timelines where reasons for delay are found to be reasonable.
The New Regulations also clarify that software is to be treated as a form of ‘service’. Earlier, software exports were governed through a mix of service export norms and specific instructions in this regard, often resulting in parallel compliance requirements. By expressly subsuming software within the service export framework, the New Regulations align declaration timelines, realisation periods and reporting for software exports with those applicable to services.
Realisation of Export Proceeds
The time period for realisation and repatriation of export proceeds bas been uniformly set at 15 (fifteen) months from:
- The date of shipment of goods;
- The date of invoices for services; and
- The date of sale of goods exported to overseas warehouses.
In case of project exports, which refer to the export of engineering goods on deferred payment terms and execution of turnkey projects and civil construction contracts abroad collectively, the time period for realisation and repatriation are as per payment terms of the contract.
Where exports are invoiced or settled in Indian Rupees, the period is extended to 18 (eighteen) months, a position that was earlier scattered across circulars and FAQs. For project exports, the applicable timeline is tied to contractual payment terms rather than a fixed statutory period.
Critically, the power to extend these timelines is now expressly vested in authorised dealers. Extensions are no longer framed as exceptional regulatory approvals but as part of routine compliance oversight, provided the authorised dealer records satisfaction regarding the reasons for delay.
Low Value Transactions and Self-Declaration Thresholds
A significant operational change relates to the treatment of lower value transactions. For exports and imports up to Rs. 10,00,000/- (Rupees Ten Lakh) per shipping bill or invoice, authorised dealers may close Export Data Processing and Monitoring System (“EDPMS“) or Import Data Processing and Monitoring System (“IDPMS“) entries based on a declaration from the exporter or importer, without insisting on full documentary proof.
This threshold based relaxation did not exist in a consolidated form earlier and is likely to reduce procedural friction for small exporters and service providers. The New Regulations also permit quarterly bulk declarations for closure of multiple low value entries, introducing predictability into what was previously handled through informal bank specific practices.
Import Payments and Advance Remittances
On the import side, the New Regulations align payment timelines with the underlying contractual terms, rather than prescribing a uniform statutory deadline. Authorised dealers are required to monitor compliance through IDPMS and may grant extensions where justified.
Advance remittances for imports continue to be permitted, subject to dealer satisfaction regarding genuineness. However, where imports fail to materialise and advance payments are not repatriated within the contract period (or extended period), the New Regulations introduce a prospective safeguard i.e. future advance remittances by the importer may require an unconditional standby letter of credit or bank guarantee.
Set-Off, Third Party Payments, and Reduction in Realisation
The New Regulations expressly permit:
- Set-off of export receivables against import payables, including transactions involving overseas group or associate companies, within the realisation period or any permitted extension;
- Third party receipts and payments for exports and imports, subject to dealer satisfaction regarding bona fides; and
- Reduction in export realisation, including non-realisation, based on authorised dealer’s assessment.
For transactions up to Rs. 10,00,000/- (Rupees Ten Lakh) reduction in realisation may again be permitted on the basis of exporter declaration. These positions were earlier governed largely by circulars and dealer practice, their incorporation into the New Regulations reduces interpretive uncertainty.
Merchanting Trade: Defined Timelines and Conditions
Merchanting Trade Transactions (“MTTs“) are now comprehensively regulated within the New Regulations. The framework mandates that the time gap between inward and outward remittances must not exceed 6 (six) months, subject to extension by the authorised dealer where justified.
Payments must ordinarily flow directly between the overseas buyer and seller, though third party involvement is permitted with authorised dealer’s approval. Importantly, authorised dealers are required to monitor both legs of the transaction and ensure closure of corresponding EDPMS and IDPMS entries, reinforcing institutional oversight of merchanting trade.
EDPMS and IDPMS as Compliance Tools
The New Regulations formally elevate EDPMS and IDPMS from reporting systems to active compliance mechanisms. Authorised dealers are responsible for timely data entry, follow up with constituents and closure of outstanding entries. Where advances cannot be repatriated or imports do not materialise, authorised dealers are empowered to close entries based on recorded satisfaction. This system level monitoring model replaces the earlier reliance on ad hoc follow ups and circular driven instruction, aligning compliance with ongoing transaction oversight.
Conclusion
By standardising timelines for declaration and realisation, introducing value based thresholds, codifying merchanting trade norms, and embedding dealer level discretion within defined parameters, the New Regulations recalibrate how foreign trade compliance is administered. The framework’s significance lies not merely in consolidation but in its intent towards predictable, system driven oversight anchored in clearly articulated regulatory timelines and responsibilities.
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