FEMA Export-Import Regulations 2026: Key Changes Effective 1st October

RBI’s New FEMA Export & Import Regulations, 2026 – A Comprehensive Guide and Comparative Analysis

Summary: The Reserve Bank of India has introduced a consolidated framework governing cross-border trade through the Foreign Exchange Management (Export and Import of Goods and Services) Regulations, 2026, notified vide Notification No. FEMA 23(R)/2026-RB dated 13 January 2026. The Regulations come into force from 1 October 2026 and supersede the Foreign Exchange Management (Export of Goods & Services) Regulations, 2015, subject to the saving provision. Significantly, before the new framework became operational, RBI issued the Foreign Exchange Management (Export and Import of Goods and Services) (Amendment) Regulations, 2026 on 22 September 2026. The amendment reduced the ordinary export-realisation period originally prescribed in January 2026 from 15 months to 9 months and the specified period for INR-invoiced or settled exports from 18 months to 12 months. The new framework introduces an Export Declaration Form (EDF) for services, including software, brings export and import transactions within a common regulatory architecture, permits declaration-based closure of EDPMS/IDPMS entries up to ₹10 lakh, expressly provides for set-off and third-party receipts/payments, links import-payment monitoring primarily to contractual terms and gives Authorised Dealer banks substantially greater operational responsibility. Businesses engaged in international trade should therefore review outstanding transactions, software/service-export reporting, EDPMS/IDPMS reconciliation, contractual payment terms and internal FEMA controls before 1 October 2026.

1. New FEMA Export and Import Framework from 1 October 2026

The Reserve Bank of India has comprehensively restructured the FEMA framework governing exports and imports of goods and services.

The principal instrument is the Foreign Exchange Management (Export and Import of Goods and Services) Regulations, 2026, notified through Notification No. FEMA 23(R)/2026-RB dated 13 January 2026.

The Regulations come into force from 1 October 2026. They supersede the Foreign Exchange Management (Export of Goods & Services) Regulations, 2015, subject to the applicable saving provision.

The earlier regulatory structure was spread across separate export regulations, Master Directions relating to exports and imports and several RBI circulars. The 2026 framework seeks to consolidate the principal regulatory treatment of:

• export of goods;
• export of services;
• software exports;
• import of goods and services;
• merchanting trade transactions;
• export and import payments;
• third-party receipts and payments;
• set-off of export receivables against import payables;
• EDPMS and IDPMS monitoring; and
• operational responsibilities of Authorised Dealer banks.

The accompanying RBI Directions similarly seek to consolidate the operational framework and replace a substantial part of the earlier directions and circular-based regime.

2. September 2026 Amendment Changed the Framework Before Commencement

An important point is that the January 2026 Regulations should not be read in isolation.

On 22 September 2026, RBI issued the Foreign Exchange Management (Export and Import of Goods and Services) (Amendment) Regulations, 2026.

The amendment takes effect from 1 October 2026 along with the principal Regulations.

It makes three particularly important changes:

1. reduces specified export-realisation periods;
2. provides a transitional rule for exporters already on the Caution List as on 30 September 2026; and
3. inserts Regulation 20 empowering Authorised Dealers to handle specified pre-1 October 2026 transactions which previously required RBI approval.

Accordingly, compliance systems should be configured on the basis of the 2026 Regulations as amended on 22 September 2026, rather than the original January text.

3. Key Changes Under FEMA Export and Import Regulations, 2026

Particulars	Earlier Framework	FEMA 2026 Framework
Principal export regulation	FEMA Export of Goods & Services Regulations, 2015	FEMA Export and Import of Goods and Services Regulations, 2026
Regulatory structure	Separate export/import regulations, directions and circulars	Consolidated framework
Effective date	Existing framework up to 30 September 2026	1 October 2026
Ordinary export realisation	Applicable existing period	9 months
Overseas warehouse exports	Existing prescribed framework	9 months from date of sale
INR-invoiced/settled exports	Existing provisions	12 months where applicable
Software reporting	SOFTEX-based framework	EDF-based framework
Import payment	Existing regulatory timelines	Underlying contractual period
Small-value EDPMS/IDPMS closure	Existing procedures	Declaration-based closure up to ₹10 lakh
Set-off	Existing provisions	Expressly covered by Regulation 7
Third-party payments	Permitted subject to conditions	Expressly recognised
AD bank role	Spread across regulations/directions	Greater operational responsibility
Merchanting trade	Separate guidelines	Integrated into Regulations

4. Export Realisation Period Reduced to 9 Months Before Implementation

January 2026 Position

Regulation 5 as originally notified provided a considerably longer realisation period.

The January version broadly prescribed:

• 15 months from shipment for ordinary goods exports;
• 15 months from invoice for services;
• 15 months from sale for goods exported to an overseas warehouse; and
• 18 months in the circumstances covered by the proviso relating to exports invoiced and/or settled in Indian Rupees.

Position from 1 October 2026

The September amendment substituted 9 months for 15 months and 12 months for 18 months.

Export Transaction	Original January 2026 Regulations	Applicable from 1 October 2026
Goods – normal export	15 months	9 months
Services	15 months	9 months
Goods exported to overseas warehouse	15 months	9 months from sale
INR-invoiced/settled exports covered by proviso	18 months	12 months

For ordinary goods, the nine-month period runs from the date of shipment. For services, it runs from the date of invoice. For goods exported to a warehouse outside India, it runs from the date of sale of the goods from the warehouse.

The Authorised Dealer may grant an extension beyond the specified period where the exporter requests an extension citing reasons and the AD is satisfied with those reasons.

Businesses should therefore ensure that ERP and treasury systems are not configured on the original 15-month period contained in the January 2026 version.

5. Export Declaration Form Becomes Important for Service and Software Exports

One of the most significant procedural changes is the wider use of the Export Declaration Form (EDF).

Regulation 3 requires exporters of services to furnish an EDF specifying the full export value of services within 30 days from the end of the month in which the invoice is raised.

An exporter providing services to one or more recipients during a month may submit a single EDF covering those exports.

For services other than software, the exporter may also submit the EDF on or before the date of receipt of payment. An AD may extend the EDF-submission period where satisfied with the reasons for delay.

Software Exports Move from SOFTEX to EDF Framework

The 2026 framework is particularly significant for software exporters.

The definition of “services” expressly includes software, while the specified authorities include an Authorised Dealer or Software Technology Parks of India (STPI) in the Domestic Tariff Area and the Development Commissioner in an SEZ, as applicable.

Thus, businesses presently operating under the SOFTEX-based framework should prepare for the EDF-based reporting structure applicable under the new regime from 1 October 2026.

6. ₹10 Lakh Threshold Simplifies EDPMS and IDPMS Closure

Regulation 4 provides an important simplification for smaller transactions.

Export Transactions

Where the shipping bill for goods or invoice for services is up to ₹10 lakh, or its equivalent in foreign currency, the EDPMS entry may be closed on the basis of the exporter’s declaration that payment has been realised, whether in full or otherwise.

The declaration may alternatively be submitted quarterly for bulk closure of EDPMS entries.

Import Transactions

A similar facility applies where the Bill of Entry for goods or invoice for services is up to ₹10 lakh.

The IDPMS entry may be closed based on the importer’s declaration that payment has been made, either in full or otherwise. Quarterly bulk declarations are also permitted.

7. Import Payment Period Linked to Underlying Contract

Another significant change concerns the timeline for import payments.

Under the 2026 framework, an Authorised Dealer must monitor its IDPMS entries and follow up with the importer for payment within the period specified in the underlying contract.

Where payment cannot be made within that contractual period, the AD may grant an extension if the importer makes a request, reasons for the delay are provided and the AD is satisfied with those reasons.

This aligns FEMA monitoring more closely with the commercial payment terms agreed between the Indian importer and overseas supplier.

However, contractual freedom should not be understood as eliminating FEMA monitoring. The transaction continues to remain subject to IDPMS reporting, AD-bank scrutiny and other applicable FEMA requirements.

8. Set-Off of Export Receivables Against Import Payables

Regulation 7 expressly empowers an Authorised Dealer to allow set-off of export receivables against import payables.

Set-off may involve:

• the same overseas buyer or supplier; or
• their overseas group or associate companies.

The set-off must occur within the stipulated period for realisation of export proceeds or within an extended period allowed by the AD.

This express recognition is commercially useful for businesses with reciprocal cross-border transactions and multinational groups having both receivables and payables.

9. Third-Party Receipts and Payments Expressly Recognised

The new Regulations permit an Authorised Dealer to allow a receipt or payment involving a third party other than the parties undertaking the export or import, subject to the applicable requirements.

The central condition is that the AD must be satisfied about the bona fides of the transaction.

Accordingly, businesses using group treasury arrangements, payment intermediaries or other third-party settlement structures should maintain documentation establishing:

• the underlying transaction;
• relationship between the contracting and paying/receiving entities;
• commercial reason for third-party settlement; and
• traceability of the payment to the relevant invoice or transaction.

10. Advance Payments Require Coordination With the AD Bank

The new framework also addresses advance receipts and payments.

Advance Receipt for Exports

An exporter receiving an advance must ordinarily route the advance and subsequent export realisation through the same Authorised Dealer.

A different AD may be used subject to the applicable intimation requirements.

Advance Payment for Imports

The framework also regulates advance payments for imports, with the Authorised Dealer having an important role in examining and processing such remittances in accordance with the applicable conditions and its internal policy.

11. Transitional Provisions for Existing Transactions

The September 2026 amendment contains important transitional measures.

Caution-Listed Exporters

Exporters appearing on the Caution List as on 30 September 2026 pursuant to orders under the 2015 Regulations continue to be governed by those orders until they are removed from the Caution List.

Pre-1 October 2026 Transactions

New Regulation 20 empowers Authorised Dealers to handle specified export, import and merchanting-trade transactions undertaken before 1 October 2026 which previously required RBI approval under the earlier framework.

Businesses should therefore separately identify:

1. transactions completed before 1 October 2026;
2. transactions initiated before 1 October but outstanding on that date; and
3. transactions undertaken on or after 1 October 2026.

12. Merchanting Trade Brought Into the Consolidated Framework

Merchanting Trade Transactions are also integrated into the consolidated regulatory framework.

This reduces dependence on a separate regulatory architecture and brings merchanting transactions within the broader system governing export and import transactions, monitoring and Authorised Dealer oversight.

13. Authorised Dealer Banks Get Greater Responsibility

A defining feature of the 2026 framework is the increased operational role of Authorised Dealers.

AD banks are required to establish internal policies and Standard Operating Procedures governing the handling of export, import and merchanting-trade transactions.

For exporters and importers, this means the practical treatment of certain transactions will increasingly depend upon the relevant AD bank’s documented internal policy and procedures.

Businesses should therefore obtain and review the revised FEMA 2026 SOP or operational checklist of their principal AD bank.

14. Particular Impact on IT, Software and Service Exporters

The new framework has substantial implications for India’s service sector, including:

• IT and IT-enabled services;
• software and SaaS companies;
• consulting firms;
• engineering and design businesses;
• digital marketing agencies;
• professional service providers;
• BPO/KPO businesses; and
• Indian entities supplying services to overseas group companies.

Invoice Date Becomes a Critical FEMA Date

For services, the nine-month realisation period is calculated from the date of invoice.

EDF Reporting Requires New Processes

Service exporters should establish controls to ensure EDF submission within the prescribed period.

Software Export Reporting Requires Transition Planning

Businesses presently using SOFTEX processes should prepare for the EDF framework applicable under the 2026 Regulations.

EDPMS Reconciliation Should Become Part of Monthly Closing

A practical control trail should be:

Sales Invoice → EDF → Bank Receipt → EDPMS Closure → Accounting Records

Differences between these records should be identified and resolved periodically rather than being left until an AD-bank follow-up.

15. Comprehensive Comparison of Old and New FEMA Framework

Area	Earlier Framework	FEMA 2026 Framework
Regulatory structure	Separate export/import framework	Consolidated export and import framework
Main export regulation	FEMA 23(R)/2015-RB	FEMA 23(R)/2026-RB
Effective date	Existing regime	1 October 2026
Ordinary export realisation	Existing applicable period	9 months
Services realisation	Existing applicable period	9 months from invoice
Overseas warehouse	Existing prescribed period	9 months from sale
Specified INR exports	Existing provisions	12 months
Software declaration	SOFTEX framework	EDF
Service declaration	Existing reporting framework	EDF framework
Import payment	Existing regulatory framework	Contractual period
Import extension	Existing RBI/AD mechanisms	AD may extend based on reasons
EDPMS	Existing system	Continued with simplified ₹10 lakh closure
IDPMS	Existing system	Continued with simplified ₹10 lakh closure
Third-party settlement	Existing conditions	Expressly recognised
Set-off	Existing provisions	Express Regulation 7
Advance payments	Existing rules	Integrated framework
AD-bank role	Multiple rules/directions	Greater operational responsibility
Merchanting trade	Separate guidelines	Integrated framework
Caution List	2015 framework	Transitional protection for existing orders
Pre-1 October transactions	Existing approval framework	Specified matters may be handled by ADs

16. FEMA Compliance Checklist Before 1 October 2026

Businesses engaged in international transactions should consider completing the following exercise:

1. Identify all export and import transactions outstanding as on 30 September 2026.
2. Segregate pre-1 October and post-1 October transactions.
3. Review all export invoices pending realisation.
4. Configure export-realisation monitoring for the applicable 9-month period.
5. Identify INR-invoiced/settled exports falling within the applicable 12-month period.
6. Review existing SOFTEX procedures.
7. Implement the new EDF process for service and software exports.
8. Reconcile outstanding EDPMS entries.
9. Reconcile outstanding IDPMS entries.
10. Match bank receipts with export invoices and EDF reporting.
11. Match import payments with Bills of Entry and invoices.
12. Document third-party receipts and payments.
13. Review export/import set-off arrangements.
14. Review export advances and import advance payments.
15. Obtain the AD bank’s revised FEMA 2026 policy/SOP or operational checklist.
16. Update ERP and treasury controls for FEMA due dates.
17. Train finance, treasury, export and compliance teams.
18. Review merchanting-trade transactions separately.
19. Identify any Caution List status as on 30 September 2026.
20. Establish periodic reconciliation between accounting records and EDPMS/IDPMS.

17. Conclusion

The Foreign Exchange Management (Export and Import of Goods and Services) Regulations, 2026 represent a major restructuring of India’s foreign-exchange compliance framework for international trade.

They bring exports and imports of goods and services within a more integrated regulatory architecture, introduce EDF reporting for services including software, expressly recognise set-off and third-party settlements, simplify closure of specified small-value EDPMS and IDPMS entries, align import-payment monitoring with contractual terms and transfer substantial operational responsibility to Authorised Dealer banks.

The most important last-minute change is the 22 September 2026 amendment. The original January Regulations contemplated a 15-month ordinary export-realisation period, but RBI reduced this to 9 months before the new regime became operational. The corresponding specified period for INR-invoiced or settled exports was reduced from 18 months to 12 months.

Businesses should therefore use the Regulations as amended up to 22 September 2026 when redesigning their compliance systems for 1 October 2026. The immediate priorities should be EDF readiness, software-export transition, EDPMS/IDPMS reconciliation, ageing of export receivables, contractual import-payment terms, documentation of third-party transactions and alignment with the relevant AD bank’s new SOP.