Background
Foreign Exchange Management (Export and Import of Goods and Services) Regulations, 2026, notified by the Reserve Bank of India under the Foreign Exchange Management Act, 1999 (FEMA), consolidate and update the regulatory framework governing foreign exchange transactions related to the export and import of goods and services from India. These regulations supersede the earlier 2015 Regulations and reflect the evolving needs of India’s trade ecosystem, including the growing role of digital services, INR-denominated settlements, and modern trade structures such as merchanting trade.
Applicability
These regulations apply to all these regulations apply to all persons and entities in India engaged in the export and import of goods, services, and software, along with their Authorised Dealer (AD) Banks.
Compliance Requirement Under Rules in Accordance with the Sections:
Every exporter of goods shall furnish to the specified authority a declaration in the Export Declaration Form (EDF) specifying the amount representing the full export value of goods, at the time of export. The EDF shall be deemed to be submitted as part of the shipping bill for goods exported through Electronic Data Interchange (EDI) ports. A traveller moving personal effects (accompanied or unaccompanied) from India shall not be treated as an exporter for the purpose of these Regulations. In case of a non-EDI port, the duly authenticated EDF shall be forwarded by the specified authority to the respective Authorised Dealer.
Exporters of services must submit an EDF declaring the full export value to the specified authority within 30 days from the end of the month in which the invoice for services is raised. A single EDF may cover multiple recipients in a month. For exporters of services other than software, the EDF may be filed on or before the date of receipt of payment. The Authorised Dealer may, on request from the exporter citing reasons for delay, extend the period for submission of the EDF after satisfying itself about the reasonableness of the request. Where the specified authority for export of services is other than an Authorised Dealer, the duly authenticated EDF shall be forwarded by the specified authority to the respective Authorised Dealer.
The receipts and payments for export and import of goods and services shall be in the manner specified in the Foreign Exchange Management (Manner of Receipt and Payment) Regulations, 2023, as amended from time to time.
Exporters must realise and repatriate export proceeds within prescribed timelines — 15 months from the date of shipment for goods, 15 months from the date of invoice for services, and 15 months from the date of sale for goods exported to overseas warehouses, or as per contract terms for project exports. Where the export of goods and services is invoiced or settled in Indian Rupees, the period for realisation and repatriation of full export value shall be eighteen months — from the date of shipment in case of goods (other than goods exported to a warehouse outside India), from the date of invoice in case of services, and from the date of sale in case of goods exported to a warehouse outside India. The Authorised Dealer may, on request by an exporter citing reasons for the delay, allow extension of time for realisation of export proceeds beyond the specified period, if the Authorised Dealer is satisfied of the reasons cited.
In case of advance receipt for export, the exporter must route both the advance amount and subsequent realisation of export proceeds through the same Authorised Dealer. Transactions may be routed through another Authorised Dealer only after intimating the change to both Authorised Dealers.
In case of advance payment for imports, an importer shall route the advance payment and its subsequent payments, if any, through the same Authorised Dealer. However, an importer may route the transactions through any other Authorised Dealer provided the importer has intimated the change to both Authorised Dealers. An Authorised Dealer may permit advance remittance for import after satisfying itself of the genuineness of the requirement. The Authorised Dealer may consider specifying thresholds for advance payment, beyond which payment may require a standby Letter of Credit or a bank guarantee.
Exporters and importers must ensure that any interest payable on advance receipts for exports or on delayed payments for imports does not exceed the applicable all-in-cost ceiling prescribed for trade credit under the FEMA Borrowing and Lending Regulations, as amended from time to time.
Where an importer is unable to complete imports within the contract period or any extended period allowed by the Authorised Dealer, the importer shall repatriate the advance payment made. If the advance payment is not repatriated within the contract or extended period, or where the IDPMS entry has not been marked-off in terms of Regulation 18(1)(j), any future advance payment for imports shall require an unconditional, irrevocable standby Letter of Credit or a guarantee from an international bank of repute, or a guarantee of an Authorised Dealer in India issued against a counter-guarantee of an international bank of repute.
Where export proceeds of an exporter remain unrealised for a period beyond one year from the due date of realisation, or any extended period allowed by an Authorised Dealer, the exporter shall undertake further exports only against receipt of full advance payment or an irrevocable Letter of Credit.
Persons undertaking Merchanting Trade, in accordance with the Foreign Trade Policy, must ensure that: (a) the period between outward remittance and inward remittance (or vice versa) does not exceed six months — the Authorised Dealer may, on request citing reasons for delay, allow an extension if satisfied of the reasons; (b) outward remittances are sent only to the overseas seller and inward remittances are received only from the overseas buyer — the Authorised Dealer may, on request, allow receipt from or payment to any third party if satisfied of the reasons; and (c) all documents evidencing the Merchanting Trade Transaction (MTT) are provided to the Authorised Dealer to establish the genuineness of the transactions.
Penalty & Consequences
The following penalty provision under FEMA applies uniformly across all the compliance obligations covered in this write-up:
Section 13 — Foreign Exchange Management Act, 1999 (FEMA)
If any person contravenes any provision of FEMA, or contravenes any rule, regulation, notification, direction or order issued in exercise of the powers under this Act, or contravenes any condition subject to which an authorisation is issued by the Reserve Bank, he shall, upon adjudication, be liable to a penalty up to thrice the sum involved in such contravention where such amount is quantifiable, or up to ₹2 lakh where the amount is not quantifiable. Where such contravention is a continuing one, a further penalty which may extend to ₹5,000 for every day after the first day during which the contravention continues shall also be levied.
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