New Delhi: The Reserve Bank of India has overhauled decade-old foreign exchange rules and brought exports and imports of goods and services under uniform regulation to simplify procedures, ease compliance for smaller exporters and strengthen monitoring through digital systems.
The new Foreign Exchange Management (Export and Import of Goods and Services) Regulations, 2026 (Fema), notified on January 13 and which will come into effect after nine months in October 2026, replace the Export Regulations, 2015. The RBI issued the order on Friday.
The overhaul follows two rounds of public consultation and nearly two years of deliberation. Due to the well-developed foreign trade policy, customs laws and other sector-specific rules, RBI has now placed greater responsibility on authorized dealer banks to manage day-to-day business affairs based on their internal policies and fairness assessment of each transaction, according to experts.
Read also | What RBI’s draft dividend norms mean for banks and government finance
“This marks a shift in the way trade regulation is managed. Banks now have wider discretion – and are closer to their customers – which is expected to simplify the process and promote ease of doing business,” said Sunil Kumar, partner, tax and regulatory services, EY India. “One significant change is the requirement that exporters of services enter into a formal reporting system. This increases transparency and brings services into line with how exports of goods are already handled under FEMA.”
According to Kumar, the framework also tightens the discipline around the realization of export earnings. “If the exporter’s fees remain unpaid for more than a year after the permitted period of realization, including any extension approved by the bank, further exports can only be made on full advance or on the basis of an irrevocable letter of credit,” he said.
According to the RBI notification, exporters of goods will continue to declare the shipment values through the Export Declaration Form (EDF), which is part of the shipping bills at EDI ports. Service exporters will now have a defined 30-day window from invoicing to declaration submission with flexibility for consolidated monthly submissions and bank-approved extensions. Export of software has been specifically included in the definition of services, with authorized resellers and Software Technology Parks of India (STPI) recognized as specified bodies.
EDI, or Electronic Data Interchange, are ports where customs clearance and trade documentation are processed electronically rather than using manual paperwork.
STPI is a government organization under the Ministry of Electronics and Information Technology that promotes and regulates the export of software and IT services.
The RBI has retained the existing 15-month period for realization and repatriation of proceeds from exports of goods and services, but has extended the period to 18 months if exports are invoiced or settled in Indian rupees.
Banks have more oversight
Banks have been given the option to grant extensions on a case-by-case basis, requiring them to actively monitor overdue export earnings. For smaller ones transactions up to ₹10 lakh, exporters and importers will be allowed to close backlogs in RBI’s export and import tracking systems based on self-declarations, including quarterly bulk submissions, easing the procedural burden on MSMEs and service exporters as per the order.
The regulations also codify existing flexibility such as is underutilized export value, netting of export receivables against import liabilities and receipts and payments of third parties, subject to bank satisfaction as to the authenticity of the transactions.
Read also | RBI warns states against fiscal discipline as borrowing costs rise sharply
Business transaction involving intermediaries it must now be completed within six months between incoming and outgoing transfers, although banks may grant extensions. Advance payments on imports will continue to be allowed, but advance payments on gold and silver imports are prohibited.
Payment tracking
On the import side, banks have been tasked with closer monitoring of late payments and advance payments not reflected in imports, with repeated defaults triggering stricter conditions such as standby letters of credit.
According to the notification, if export payments remain unpaid for more than a year after the due date, exporters will be allowed to make future shipments only against a full advance or an irrevocable letter of credit.
For exporting companies, the revised framework introduces greater procedural clarity, particularly for service exporters, software exporters and smaller firms. Defined deadlines for submission of export declarations, together with the possibility of consolidated monthly submissions, are expected to reduce compliance uncertainty and reliance on different banking procedures.
Under the earlier framework, Fema regulations and RBI guidelines governed import payments, advance remittances and reporting, but were largely addressed through RBI circulars, master guidelines and banking practice, rather than through a single consolidated regulation.
Meanwhile, a new provision allowing export tracking records to be closed for transactions up to ₹10 lakh through self-declaration, including quarterly bulk filings, is likely to simplify documentation requirements for small-value exporters.
At the same time, exporters will be under stricter supervision by authorized dealer banks with mandatory follow-up to delayed realization of export revenues and restrictions on further exports in case of longer non-realization.
Banks to implement SOPs
“Requiring banks to put in place detailed internal policies and standard operating procedures is expected to ensure greater standardization of compliance processes across banks and shape the way exporters pursue expansion, off-loading and settlement adjustments,” said Vinod Kumar, president of the SME Forum.
The RBI has also directed authorized dealers to put in place detailed internal policies and standard operating procedures, transparently disclose charges and ensure customers are not penalized for regulatory delays, signaling a sharper focus on procedural discipline in banks while making compliance easier for genuine exporters and importers.
Read also | RBI cracks the whip on banks in 2025 – just not that hard
“For individuals involved in foreign exchange transactions, including students, tourists and those who send or receive money abroad, the impact is indirect,” said Abhash Kumar, a business expert. “The regulations primarily regulate trade in goods and services rather than personal remittances. However, stronger monitoring and standardized banking processes could lead to smoother cross-border transactions overall.”
India’s total merchandise exports during April-December 2025 (FY26) rose to $330.29 billion from $322.41 billion a year earlier, while imports rose to $578.61 billion, resulting in a trade deficit of $248.3 billion.
In December 2025 alone, exports rose to $38.51 billion from $37.80 billion a year earlier, while imports climbed to $63.55 billion from $58.43 billion, pushing the monthly trade deficit to $25.04 billion, compared with $24.53 billion in November 2025 and $20.63 billion in December, according to Commerce Department data.
