India’s foreign exchange rules for trade change fundamentally from 1 October 2026. The Reserve Bank of India has issued a single, consolidated regulation — FEMA 23(R)/2026-RB, the Foreign Exchange Management (Export and Import of Goods and Services) Regulations, 2026 — that replaces the old 2015 framework and over 167 scattered circulars. Whether you export goods, sell services overseas, import raw materials, or route payments through an overseas entity, this guide breaks down all 15 key changes and what you need to do before October 1.
FEMA (Export of Goods & Services) Regulations, 2015 ·
Master Direction — Export of Goods and Services ·
Master Direction — Import of Goods and Services ·
Merchanting Trade Guidelines, 2020 ·
167 trade circulars. Actions taken under the old rules before 1 October 2026 remain valid.
Exports and imports governed under one consolidated regulation for the first time.
Single EDF now covers goods, services, and software. SOFTEX form discontinued.
New EDF filing obligation for service exporters — monthly, within 30 days of month-end.
Export realisation window extended from 9 months to 15 months.
Exports invoiced or settled in Indian Rupees get 18 months to realise proceeds.
Realisation clock starts from date of sale from overseas warehouse, not date of shipment.
Realisation follows contract payment terms — no fixed FEMA timer for project exporters.
Fixed 6-month import payment cap removed. Payment follows the commercial contract.
Entries up to ₹10 lakh closed on exporter/importer declaration. No documents needed.
One quarterly declaration to cover multiple EDPMS/IDPMS entries below ₹10 lakh.
Goods vs services set-off now permitted. Calendar-year restriction removed. Associates included.
No tripartite agreement mandatory. AD Bank satisfaction is sufficient for approval.
Profitability requirement removed. 9-month cap removed. Agency commission now permitted.
No fixed % cap. Up to ₹10 lakh on declaration. Self write-off option discontinued.
Extensions, reductions, set-offs all decided by AD Bank — no RBI queue for routine cases.
Why RBI Changed the Rules — and Why Now
India’s trade-related foreign exchange rules were last overhauled in 2015. Since then, the nature of India’s exports has shifted dramatically. Software and IT services exports have crossed USD 200 billion. Cross-border e-commerce has grown rapidly. Rupee-denominated trade with new partners has become important. And hundreds of individual circulars piled up, each amending something in the old framework, making compliance increasingly complex for businesses and banks alike.
In July 2024, RBI released a draft for public comment. Another round of stakeholder consultation followed in April 2025. The final regulation was notified on 13 January 2026, with accompanying Directions issued on 16 January 2026. The goal, stated clearly, is to create a principle-based, business-friendly framework — one that trusts businesses and their banks more, and reduces the need for RBI to approve routine transactions.
Under the old framework, many decisions needed RBI approval. Under the new one, most decisions sit with your Authorised Dealer (AD) Bank. This speeds up approvals significantly. Banks are now also required to publish their internal policies and SOPs on their websites, giving businesses better visibility into how decisions are made.
Export Proceeds: You Now Have 15 Months to Get Paid
The most significant change for goods exporters is the extension of the realisation period. Previously, exporters had 9 months to bring payment back to India after shipping goods or raising a service invoice. That is now 15 months.
For exports invoiced or settled in Indian Rupees — an increasingly common arrangement — the window is 18 months.
Which Timeline Applies to Your Shipment?
13 Nov
2025
Exports shipped or invoiced before 13 November 2025 fall under the original 2015 framework where Regulation 9 prescribed nine months. Many of these entries are already overdue or approaching their deadline.
25 to
30 Sep 26
FEMA 23(R)/(7)/2025-RB dated 13 November 2025 amended Regulation 9 of the 2015 rules, substituting “nine months” with “fifteen months” with immediate effect. All exports from this date through 30 September 2026 get 15 months.
1 Oct
2026
15 months for goods and foreign-currency services. 18 months for INR-invoiced or INR-settled exports. Project exports follow contract payment terms.
Warehouse Exports: Clock Starts from Date of Sale
If you export goods to an overseas warehouse — common in e-commerce and some industrial sectors — the 15-month realisation clock now starts from the date of sale from the warehouse, not the date you shipped goods from India. This gives warehouse exporters substantially more time to realise proceeds, as goods can now be stored overseas for extended periods without triggering the realisation timer.
Need More Time? Your AD Bank Can Extend
Unlike before, where extensions often required approaching RBI, your AD Bank is now fully authorised to grant extensions to the 15-month period. If you provide a valid reason and your bank is satisfied, the extension is approved at the bank level without any RBI queue.
If export proceeds remain unrealised for more than one year beyond the due date (including any bank-granted extension), future exports must be made only against full advance payment or an irrevocable Letter of Credit. The old RBI caution-listing process is abolished, but this equivalent restriction now applies automatically through your AD Bank.
SOFTEX Is Abolished — Software and IT Exporters Must Switch to EDF
If you export software, IT services, or ITeS — this is the biggest operational change for you.
Since the early 2000s, software exporters had to use a separate form called SOFTEX, certified through STPI or NASSCOM-authorised units. Every invoice went through this process. Under the 2026 Regulations, software is reclassified as a type of service, and all exports — goods, services, and software — use a single, unified Export Declaration Form (EDF).
| Export Type | Old Process | New Process (from 1 Oct 2026) |
|---|---|---|
| Goods via EDI ports | Shipping Bill = EDF, deemed filed automatically | Same — Shipping Bill still treated as EDF. No change. |
| Goods via non-EDI ports | EDF filed at Customs | EDF filed at Customs. Same process. |
| Services export | No mandatory reporting requirement | EDF filed with AD Bank within 30 days of month-end NEW |
| Software export | SOFTEX form — STPI certification required | EDF filed with AD Bank within 30 days of month-end. STPI certification now optional. KEY |
| Free-of-cost exports | Separate EDF waiver application needed from RBI | Report with ‘nil’ value in EDF — no prior RBI approval required. NEW |
You do not need a separate EDF for every invoice. One EDF can cover all service and software exports for a calendar month. File it with your AD Bank by the 30th of the following month. Service exporters may also file on the date of payment receipt if that falls earlier. Your AD Bank can grant an extension for late filing if you have a valid reason.
STPI certification is no longer mandatory for EDF filing — your AD Bank can now certify software export transactions directly. However, many software exporters maintain STPI registration for other reasons such as tax benefits and government schemes. Check with your chartered accountant before making any change to your STPI status.
Import Payments: The 6-Month Fixed Deadline Is Gone
Under the old rules, import payments had to be made within 6 months from the date of shipment — regardless of what your commercial contract said. This created constant friction: suppliers offering 90-day, 120-day, or 180-day credit terms still had to be paid within 6 months to comply with FEMA.
The 2026 Regulations remove this fixed deadline. Import payments must now be made within the timeframe specified in your commercial contract with the overseas seller. If your contract allows 120 days, that becomes your FEMA timeline. And if you need additional time beyond what the contract provides, your AD Bank can grant an extension based on its own internal policy.
If goods do not arrive within the contract period (or any extension your AD Bank approves), you must repatriate the advance payment back to India. If the IDPMS entry remains open after that, any future import advances will require an irrevocable Standby Letter of Credit (SBLC) or a guarantee from a reputable international bank. This is a real enforcement mechanism — take it seriously.
One restriction that has not changed: advance remittances for import of gold and silver are prohibited unless specifically permitted under FEMA. If your business imports precious metals, verify your process with your AD Bank before 1 October 2026.
Clearing EDPMS and IDPMS Entries: The ₹10 Lakh Self-Declaration
This provision will matter enormously to small and mid-sized exporters and importers — and to anyone carrying open entries in the monitoring systems from previous years.
EDPMS tracks every export shipment until proceeds are realised. IDPMS does the same for imports. Closing an entry requires documentary proof such as bank advice, FIRC, or Bills of Entry. For large transactions this is manageable, but for small transactions, gathering documentation months or years after the trade was completed is disproportionately burdensome.
Under the 2026 Regulations, for any shipping bill, bill of entry, or service invoice up to ₹10 lakh (or its foreign currency equivalent), you can close the EDPMS or IDPMS entry by giving a simple declaration to your AD Bank confirming that payment has been made or received. No documentary proof required.
If you have many small transactions — common for service exporters with multiple overseas clients — you can submit one consolidated quarterly declaration to your AD Bank covering all entries below ₹10 lakh. This replaces filing individual closure requests for each transaction.
If you have legacy EDPMS or IDPMS entries still open — especially from 2020 to 2023 when COVID disruptions made documentation difficult — review these entries now. The self-declaration route can clear a substantial backlog with minimal paperwork.
How Are Old EDPMS and IDPMS Entries Governed After 1 October 2026?
This is one of the most practical questions for businesses carrying open entries from previous years. The answer depends on when the original shipment or invoice was raised, and what type of entry it is.
Realisation Timelines for Old Open Export Entries
13 Nov
2025
Exports shipped or invoiced before 13 November 2025 were governed by the original 9-month realisation window under the 2015 FEMA regulations. If that window has already passed, those entries are overdue. Your AD Bank now has authority to grant an extension under the new framework without needing RBI approval. Approach your bank proactively before 1 October 2026.
25 to
30 Sep 26
FEMA 23(R)/(7)/2025-RB dated 13 November 2025 extended the period from 9 to 15 months. Exports in this window continue with the 15-month timeline under the new 2026 Regulations. This is confirmed by the actual text of the notification which explicitly substitutes “nine months” with “fifteen months” in Regulation 9 of the principal regulations.
1 Oct
2026
15 months standard, 18 months for INR-invoiced exports. Project exports follow contract payment terms.
The 2026 Regulations state that actions taken under the old regulations before 1 October 2026 remain valid. Open EDPMS and IDPMS entries do not disappear or get wiped on switchover day. However, the procedural tools available to close or regularise them shift to the new framework from 1 October 2026. This is good news — the new tools (self-declaration, AD Bank extensions, no-documentation closure for small amounts) are all more business-friendly than the old ones.
The self-declaration closure provision is a procedural mechanism available from 1 October 2026 for all open entries — regardless of when they were created. If you have an old EDPMS or IDPMS entry below ₹10 lakh per shipping bill or invoice that is still open, you can close it on self-declaration from 1 October 2026 — even if the original shipment was in 2020, 2021, 2022, or 2023.
Practical Guidance: Three Categories of Old Entries
Your AD Bank is now your first stop for regularisation. The new framework gives banks explicit authority to handle extensions and closures that previously needed RBI reference. If proceeds are genuinely unrealisable — buyer untraceable, dispute settled at a lower amount — the new invoice reduction provisions give your bank more flexibility to close these out. Do not wait until after October 1; begin discussions now.
Clear all of these via quarterly self-declaration from 1 October 2026. This is the fastest and least burdensome path to regularising old backlogs. One consolidated quarterly declaration to your AD Bank covers multiple entries. No individual documentation required per entry.
Discuss with your AD Bank now — before October 1. If proceeds are genuinely unrealisable (buyer gone, legal dispute, settlement at reduced amount), the new invoice reduction provisions give your bank authority to permit reduction or closure without RBI approval. For entries where payment is still expected but delayed, apply for an extension through your AD Bank under the new framework.
Set-Off of Export Receivables Against Import Payables
If your business both exports to and imports from the same overseas counterpart — or their group companies — you can now set off your export receivables against import payables instead of routing both transactions through the banking system separately.
Key liberalisations compared to the old rules:
- The requirement that both legs of the transaction must happen in the same calendar year is removed. You now have the full 15-month realisation window.
- A formal written agreement or tripartite arrangement is no longer mandatory under FEMA (though your AD Bank may require it under its internal SOP).
- Set-off is now permitted across types: goods receivables can be offset against service payables, and vice versa. The old prohibition on cross-type set-off is removed.
- Group companies and associate entities of the overseas counterpart are also eligible, not just the direct buyer or seller.
You export ₹50 lakh of software to a US entity. The same US group company supplies you with licensed tools worth ₹20 lakh. Under the new rules, you can net this off and only repatriate the ₹30 lakh difference — saving two separate banking transactions, forex conversion costs, and time.
Third-Party Payments: Simplified Process
In many global supply chains, the entity that pays you for an export is not the same entity you sold to. The old rules required a tripartite agreement, specific mention in the invoice, and detailed documentation on every Bill of Entry or Shipping Bill. The 2026 Regulations simplify this significantly.
Your AD Bank may now permit third-party receipts and payments as long as it is satisfied about the genuine, bona fide nature of the transaction. For export transactions with third-party payments, you must declare the name, address, and relationship of the third party in your EDF. Beyond that, the process is at the AD Bank’s discretion under its internal SOP.
Merchant Trade Transactions (MTT): Major Relaxations
Merchant Trade Transactions — where an Indian entity buys from one overseas party and sells to another, with goods never entering India — have historically been the most tightly regulated category. The 2026 Regulations substantially ease these rules.
| Condition | Old Rule | New Rule |
|---|---|---|
| Profitability | MTT must be profitable — mandatory | Profitability requirement removed. NEW |
| Overall timeline | Full transaction to complete within 9 months | 9-month overall cap removed. |
| Payment gap | Outward and inward remittance gap: max 6 months | 6-month gap retained, but AD Bank can extend on valid reasons. |
| Agency commission | Prohibited except in exceptional circumstances | Prohibition removed. NEW |
| Third-party payments | Not allowed | Permitted by AD Bank on valid reasons, with full documentation. |
| EEFC holding | Inward receipts before outward must be held in EEFC account | EEFC holding requirement removed. |
The Merchanting Trade Guidelines, 2020 are repealed from 1 October 2026. AD Banks must verify MTT documents before crediting or debiting customer accounts, and update EDPMS/IDPMS accordingly.
Cannot Realise the Full Invoice Amount? What Has Changed
Sometimes the full invoice value cannot be realised — a buyer disputes quality, faces financial difficulty, or refuses to pay in full. The old rules allowed AD Banks to permit reduction in invoice value only for specific reasons and within a 25% cap in most cases. RBI approval was also needed in certain situations.
The 2026 Regulations change this significantly. AD Banks can now permit reduction in export invoice value in any case where they are satisfied that the reason is genuine — with no pre-set percentage cap. For transactions up to ₹10 lakh per shipping bill or invoice, the exporter’s own declaration is sufficient, including for up to 100% non-realisation.
The old provision that allowed exporters to write off up to 5% of export proceeds themselves (10% for status holders) without approaching the bank has been removed in the 2026 Regulations. All write-offs and invoice reductions must now go through your AD Bank, even for very small amounts above ₹10 lakh.
Your AD Bank Now Has Greater Power — and Greater Obligations
The entire 2026 framework shifts decision-making from RBI to Authorised Dealer Banks. Here is what your bank can now decide without going to RBI:
- Granting extensions for export realisation beyond 15 months
- Granting extensions for import payment beyond contract terms
- Permitting reduction or non-realisation of export invoices
- Approving third-party receipts and payments
- Approving advance remittances for imports and setting thresholds
- Permitting set-off of export receivables against import payables
- Handling EDPMS and IDPMS closure
In exchange for this authority, AD Banks now have binding obligations:
Frame a detailed internal policy and SOP for all trade transactions and publish it publicly on their website.
Set up a structured grievance and escalation mechanism so customers have a clear path to resolve disputes.
Ensure that transaction charges are reasonable and proportionate. Banks cannot impose penalties on customers for regulatory compliance delays.
Route all references to RBI through the PRAVAAH portal and report suspicious transactions to the Directorate of Enforcement.
These transparency requirements mean you can read your AD Bank’s published trade policy once it goes live. If their SOP for extensions or reductions seems more restrictive than you need, you can ask them directly for clarification — they are required to have a formal escalation mechanism for such queries.
Who Is Affected?
Goods Exporters
Realisation window extends to 15 months. EDF via Shipping Bill unchanged for EDI ports. ₹10 lakh self-declaration closes open EDPMS entries. AD Bank handles all extensions.
IT and Software Exporters
SOFTEX is abolished. File monthly EDF with AD Bank by 30th of next month. STPI certification no longer mandatory. One EDF covers all invoices for the month.
Service Exporters
Entirely new EDF reporting obligation — did not exist before. Monthly filing, 30 days from month-end. 15-month realisation. 18 months for INR-settled exports.
Importers
6-month fixed deadline removed — pay per contract. IDPMS entries up to ₹10 lakh close on self-declaration. Advance non-repatriation triggers SBLC requirement for future imports.
Merchant Traders
Profitability requirement gone. 9-month cap gone. Third-party payments permitted. Agency commission now allowed. 6-month outward-to-inward gap extendable by AD Bank.
Project Exporters
Realisation follows contract payment milestones, not a fixed FEMA timer. Overseas short-term investments of surplus cash (up to 1-year maturity) now explicitly permitted under AD Bank monitoring.
Areas Where Clarity Is Still Awaited
The 2026 Regulations are a major step forward, but a few areas need further guidance from RBI:
- Exports under operating leases — how monthly lease receipts should be treated under the EDF framework is not explicitly addressed.
- Long-term supply contracts — specific guidance for exporters with multi-year contracts and phased payment milestones is yet to be issued.
- Asian Clearing Union (ACU) countries — whether the new set-off and realisation relaxations apply to ACU-member country trade is not addressed in the new regulations.
- Advance payment tenure — the old framework allowed up to 10-year advance payment tenure for exporters with 3 years’ satisfactory track record. The new regulations do not explicitly retain this; AD Bank SOPs and any fresh RBI Directions will clarify.
These gaps will likely be addressed through additional Directions or clarifications before October 1, 2026. Watch your AD Bank’s communications and the RBI website for updates.
Your Pre-October 1 Action Checklist
-
Pull your open EDPMS register now. List all shipping bills and service invoices where proceeds are still unrealised. Flag entries below ₹10 lakh — these can be closed by self-declaration from 1 October 2026.
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Review open IDPMS entries. Identify import bills below ₹10 lakh that can be closed on declaration. For larger amounts, check whether documentation is available to close them now under the old rules.
-
If you use SOFTEX, stop after 30 September 2026. Set up a new monthly EDF filing process with your AD Bank. Create a reminder to file by the 30th of each month for the previous month’s invoices.
-
If you are a service exporter with no prior FEMA reporting obligation, you now have a new compliance requirement from 1 October 2026. Set up your EDF filing process with your AD Bank before the deadline.
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Review all import contracts. If you structured payment terms around the old 6-month FEMA cap, you can now renegotiate to match your actual commercial terms. Update your purchase agreements accordingly.
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Speak to your AD Bank’s trade finance team. Ask them to share their internal SOP for extensions, invoice reductions, and third-party payments. They are required to publish it — but ask in advance so you are not waiting.
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Review set-off arrangements with overseas entities. The old same-calendar-year restriction is gone. Update your treasury and intercompany settlement processes to use the new 15-month window.
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If you handle MTT, review how the removal of the profitability requirement and the 9-month cap changes your transaction structure. Update your documentation requirements with your bank for these trades.
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Update your ERP or trade compliance software to reflect the new EDF filing cycles, 15-month realisation timelines, and revised EDPMS/IDPMS closure procedures.
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Based on: FEMA 23(R)/2026-RB dated 13 January 2026 (RBI); Directions on Export and Import of Goods and Services dated 16 January 2026 (RBI); Analysis by Lakshmikumaran & Sridharan Attorneys, Juris Corp, EY India, and PwC India. For transaction-specific guidance, consult your Authorised Dealer Bank or a qualified trade compliance professional.