Summary: Effective 1 October 2026, the Reserve Bank of India has introduced the Foreign Exchange Management (Export and Import of Goods and Services) Regulations, 2026, replacing the earlier export regulations and bringing exports and imports within an integrated FEMA framework. The regulations cover exports of goods and services, software exports, import payments, merchanting trade, third-party settlements, set-off arrangements, reporting, advance receipts and advance remittances. Important operational changes include an Export Declaration Form (EDF) framework for service and software exports, declaration-based closure of small-value EDPMS and IDPMS entries, greater flexibility for reduction and non-realisation of export proceeds, wider set-off arrangements, recognition of third-party receipts and payments, dedicated merchanting trade provisions and enhanced responsibilities for Authorised Dealer banks. The framework reflects RBI’s movement towards greater delegation, declaration-based compliance and risk-based monitoring. Exporters, importers, software and service companies and businesses undertaking cross-border transactions should therefore review their invoicing, reporting, receivables monitoring, EDPMS/IDPMS reconciliation, settlement arrangements and internal FEMA compliance processes for the new framework.
- FEMA Export & Import Regulations 2026: RBI Rewrites Rulebook for Foreign Trade Transactions
- 1. Single FEMA Framework for Both Exports and Imports
- 2. Mandatory Export Declaration Form (EDF) for Services
- 3. Export Realisation Period Increased to 15 Months
- 4. Small-Value Transactions Move to Self-Declaration Model
- 5. Simplified Treatment of Under-Realisation and Non-Realisation
- 6. Wider Flexibility for Set-Off Arrangements
- 7. Liberalisation of Third-Party Settlements
- 8. Merchanting Trade Gets Regulatory Clarity
- 9. New Consequences for Unrealised Exports
- 10. Mandatory SOPs for Banks
- What Businesses Should Do Before 1 October 2026
- Conclusion
FEMA Export & Import Regulations 2026: RBI Rewrites Rulebook for Foreign Trade Transactions
Effective 1 October 2026, the Reserve Bank of India has replaced the decade-old export regulations framework with the introduction of the Foreign Exchange Management (Export and Import of Goods and Services) Regulations, 2026. The new regulations supersede the earlier export regulations and bring both exports and imports under a single integrated regulatory framework.
While many underlying FEMA principles remain unchanged, the new regulations introduce several operational relaxations and procedural simplifications that can significantly impact exporters, software companies, service providers, merchant traders and authorised dealer banks.
In my view, the most significant shift is RBI’s movement away from process-heavy approvals towards a declaration-based and risk-based compliance framework.
1. Single FEMA Framework for Both Exports and Imports
Earlier, FEMA regulations primarily focused on export transactions. Import-related requirements were largely governed through RBI Master Directions and operational instructions.
For the first time, RBI has consolidated export and import provisions into one regulation covering:
- Export of goods
- Export of services
- Software exports
- Import payments
- Merchanting trade
- Third-party settlements
- Set-off arrangements
- Reporting obligations
- Advance receipts and advance remittances
This creates a more cohesive framework for cross-border trade transactions.
2. Mandatory Export Declaration Form (EDF) for Services
One of the most notable changes is the formal introduction of EDF filing for service exports.
Under the new regulations, service exporters are required to furnish EDF within 30 days from the end of the month in which the invoice is raised. Software exports are also covered through the same framework.
The regulations permit:
- Consolidated monthly EDF reporting for multiple export invoices.
- Submission through Authorised Dealers.
- Delayed submission with bank approval where justified.
This is likely to bring service exports closer to the monitoring framework traditionally applicable to goods exports.
3. Export Realisation Period Increased to 15 Months
The new regulations prescribe a uniform period of:
- 15 months for export of goods.
- 15 months for export of services.
- 15 months from the date of sale for goods exported to overseas warehouses.
An even more beneficial provision has been introduced for transactions settled in Indian Rupees.
Where exports are invoiced and/or settled in INR, the permissible realisation period extends to 18 months.
This may significantly support businesses undertaking cross-border INR settlement arrangements under India’s internationalisation of Rupee initiatives.
4. Small-Value Transactions Move to Self-Declaration Model
Perhaps the most business-friendly amendment is RBI’s introduction of declaration-based closure for small transactions.
For exports and imports up to ₹10 lakh per shipping bill or invoice:
- EDPMS closure may be based on exporter declaration.
- IDPMS closure may be based on importer declaration.
- Quarterly consolidated declarations are also permitted.
This significantly reduces documentation burden and bank-level operational processing for routine transactions.
5. Simplified Treatment of Under-Realisation and Non-Realisation
The RBI has expressly empowered Authorised Dealers to permit reduction in export realisation.
More importantly, where export value is up to ₹10 lakh, reduction or even non-realisation may be permitted based merely on exporter declaration.
This is a substantial shift from the conventional approach that often involved lengthy documentary evaluation for commercial disputes, discounts and short-payments.
6. Wider Flexibility for Set-Off Arrangements
The regulations now explicitly permit set-off of export receivables against import payables involving:
- Same overseas buyer/supplier; or
- Overseas group companies; or
- Associated enterprises.
This provision will be particularly relevant for multinational groups operating integrated procurement and sales structures.
7. Liberalisation of Third-Party Settlements
The RBI has formally recognised third-party payment structures.
Authorised Dealers may permit third-party receipts and payments for export and import transactions upon satisfaction regarding genuineness of transactions.
This provision is expected to assist businesses participating in global supply chains, centralised treasury arrangements and procurement hubs.
8. Merchanting Trade Gets Regulatory Clarity
Merchanting Trade Transactions (MTT) receive a dedicated regulatory framework.
The regulations prescribe:
- Completion of both legs within six months.
- Documentary substantiation requirements.
- Monitoring through EDPMS and IDPMS.
- Permissibility of third-party settlements with bank approval.
The codification of these requirements removes several practical ambiguities that previously existed largely through RBI circulars and Master Directions.
9. New Consequences for Unrealised Exports
The regulations introduce a significant compliance consequence.
Where export proceeds remain unrealised beyond one year after the permitted realisation period, future exports must be undertaken only against:
- Full advance payment; or
- Irrevocable Letter of Credit.
Exporters should therefore proactively monitor ageing receivables and seek extensions from banks wherever necessary.
10. Mandatory SOPs for Banks
Another important reform is directed at Authorised Dealers.
Banks are required to formulate documented internal policies covering:
- Export realisation extensions
- Import payment extensions
- Advance receipts
- Advance remittances
- Export factoring
- Import factoring
- Delegation matrix
- Customer grievance handling mechanisms
The regulations further require disclosure of key SOP features on bank websites.
This may improve consistency across banking channels and reduce arbitrary interpretations.
What Businesses Should Do Before 1 October 2026
Businesses engaged in foreign trade should immediately review:
1. Export realisation monitoring systems.
2. Service export invoicing processes.
3. EDPMS and IDPMS closure procedures.
4. Third-party settlement arrangements.
5. Merchanting trade documentation.
6. Group company set-off structures.
7. Contracts involving INR denominated exports
Conclusion
The FEMA Export and Import Regulations, 2026 represent one of the most comprehensive reforms in India’s foreign exchange framework in recent years. Rather than introducing sweeping substantive changes, RBI has focused on reducing operational friction, promoting digitisation and empowering Authorised Dealers through a risk-based compliance architecture.
For exporters and importers, the message is clear: compliance is becoming simpler, but transaction monitoring is becoming more data-driven. Organisations that align their internal processes with the new framework before 1 October 2026 are likely to benefit from faster banking approvals and smoother foreign exchange operations
