FEMA Export and Import Regulations, 2026 Explained

The foreign exchange rules that govern how Indian businesses receive payment for exports and make payment for imports are new from 1 October 2026. From that date, the Foreign Exchange Management (Export and Import of Goods and Services) Regulations, 2026 apply to every export of goods, services and software, every import, and every merchanting trade transaction. For the first time, a single set of regulations under the Foreign Exchange Management Act, 1999 (FEMA) covers both exports and imports.

The Reserve Bank of India (RBI) issued the Regulations by notification dated 13 January 2026, published in the Official Gazette on 15 January 2026. They replace the Foreign Exchange Management (Export of Goods & Services) Regulations, 2015. The Directions that RBI issued with them (A.P. (DIR Series) Circular No. 20 dated 16 January 2026) supersede Master Direction – Export of Goods and Services, Master Direction – Import of Goods and Services and 167 circulars issued between 2000 and 2025.

From 1 October 2026:

• The export realisation period is nine months from shipment (goods) or invoice (services), and twelve months where the export is invoiced or settled in Indian rupees. Nine months has been the general period under the 2015 Regulations since June 2026, so for most shipments the deadline does not change on 1 October; rupee-invoiced exports and goods sent to overseas warehouses are the exceptions.
• Authorised Dealer (AD) banks, the banks that RBI authorises to deal in foreign exchange, now decide most matters that were earlier subject to RBI approval or to fixed limits in the Master Directions. Each bank must publish its policy.
• Every exporter of services, and not only software exporters, now files an Export Declaration Form.
• A bank may close an entry of up to ₹10 lakh in its export or import monitoring system on the exporter's or importer's own declaration; RBI introduced this facility by circular in October 2025, and Regulation 4(2) now contains it.

The Foreign Exchange Management (Export and Import of Goods and Services) Regulations, 2026 are regulations made by the Reserve Bank of India under the Foreign Exchange Management Act, 1999 (FEMA). They govern how exporters and importers in India declare trade, receive and pay money across borders, and report those transactions through their banks. RBI issued them as Notification No. FEMA 23(R)/2026-RB dated 13 January 2026. They were published in the Official Gazette on 15 January 2026 and are in force from 1 October 2026.

RBI made the Regulations under Sections 7, 8, 10(6) and 47(2) of FEMA. Section 7 requires every exporter to furnish a declaration of the export. Section 8 requires a person resident in India to take all reasonable steps to realise and repatriate foreign exchange due to that person, within the period and in the manner RBI specifies. Section 10(6) treats as a contravention the failure of a person who bought foreign exchange for a declared purpose to use it for that purpose or to surrender it within the specified period; the duty in Regulation 12 to repatriate an unused import advance corresponds to this provision. Section 47(1) authorises RBI to make regulations, and Section 47(2) lists matters they may cover, including the manner and form of the export declaration and the period within which and the manner in which foreign exchange is to be repatriated under Section 8.

The new framework consists of three instruments:

The Regulations contain almost all the substantive rules, in 20 regulations and one annexed form. The Directions require Authorised Dealer banks to comply with FEMA and the Foreign Trade Policy, to submit every reference to RBI through its PRAVAAH portal, and to report doubtful transactions to the Directorate of Enforcement. Their principal legal effect is to supersede the old Master Directions and circulars. RBI issued the Directions under Sections 10(4) and 11(1) of FEMA; they bind Authorised Dealer banks, not exporters and importers directly, and apply without prejudice to any permission or approval required under any other law. The September amendment amends Regulations 5 and 13 and inserts Regulation 20, with effect from 1 October 2026.

RBI stated in its press release of 16 January 2026 that the Regulations are "primarily principle based" and are intended to promote ease of doing business, especially for small exporters and importers, and to enable Authorised Dealer banks to give quicker service. In practice, the Regulations specify the required outcome and permit the bank to decide most individual cases, whereas the Master Directions prescribed each procedure.

Exports had their own regulations. The Foreign Exchange Management (Export of Goods & Services) Regulations, 2015 (Notification No. FEMA 23(R)/2015-RB, dated 12 January 2016), made under Sections 7(1)(a), 7(3) and 47(2) of FEMA, prescribed the principal duties: declare the export, realise the money within the prescribed period, and bring it to India. RBI's operational instructions to banks were contained in Master Direction No. 16/2015-16 – Export of Goods and Services, which was last updated on 17 July 2026. 96 export-related circulars supplemented it on write-offs, set-off, third-party payments, SOFTEX, EDPMS, caution listing and project exports.

Imports, until 1 October 2026, had no regulations of their own. Paying for an import is a current account transaction. Under Section 5 of FEMA, any person may draw foreign exchange from an authorised person for a current account transaction unless the Central Government restricts it. The restrictions are contained in the Foreign Exchange Management (Current Account Transactions) Rules, 2000 (the CAT Rules), which list prohibited payments (Schedule I), payments needing Government approval (Schedule II) and payments needing RBI approval above specified limits (Schedule III). Import payments were therefore permitted by default. Master Direction No. 17/2016-17 – Import of Goods and Services, which RBI issued to banks under Sections 10(4) and 11(1) of FEMA, prescribed the detailed requirements. It prescribed the six-month period for import payments, the advance-payment guarantee thresholds, evidence-of-import checks and the merchanting-trade conditions.

The old framework consisted of instructions issued over 25 years. Circulars from 2000 applied together with instructions issued for EDPMS in 2014 and for rupee trade settlement in 2022. Many routine decisions still required a reference to an RBI regional office. Exports and imports were also governed by instruments of different kinds: exports by regulations, and imports by directions to banks.

RBI announced the rationalisation in its Statement on Developmental and Regulatory Policies of 7 June 2024. RBI stated that it would rationalise export and import regulations "in line with the changing dynamics of cross-border trade transactions globally" and give Authorised Dealer banks greater operational flexibility. RBI then released two public drafts. The first was released on 2 July 2024, with comments invited until 1 September 2024. A revised draft was released on 4 April 2025, with comments until 30 April 2025; in it, RBI included most bank-level processes in the regulations. RBI issued the final text in January 2026, together with its response to the comments.

The old Master Directions prescribed write-off percentages, extension caps, USD thresholds and calendar-year limits. The new, principle-based Regulations mostly permit the bank to allow something once it is satisfied of the genuineness of the transaction or of the reasons cited. The bank now decides these matters on the facts of each case.

In its statement on the feedback received on the drafts, RBI accepted some stakeholder requests and rejected others:

From 1 October 2026 the realisation period is nine months. For goods it runs from the date of shipment. For services it runs from the date of invoice. For goods sent to a warehouse outside India, it runs from the date the goods are sold from that warehouse. Where the export is invoiced or settled in Indian rupees, the period is twelve months. For project exports, the payment terms of the contract govern. Regulation 5(1), as amended on 22 September 2026, prescribes these periods.

"Realise" means receiving payment. "Repatriate to India" is defined in Section 2(y) of FEMA: bringing the realised foreign exchange into India and either selling it to an authorised person in India for rupees or holding it in an account with an authorised person in India to the extent RBI notifies; it includes using the realised amount to discharge a debt or liability denominated in foreign exchange. Payment into an account abroad satisfies the rule only where receipt into that account is itself permitted. Under the Foreign Exchange Management (Foreign currency accounts by a person resident in India) Regulations, 2015, an exporter may hold a foreign-currency account with a bank outside India to receive export proceeds and advances; the funds must be used for the exporter's imports or brought into India by the end of the next month (three months for an account with a bank in an International Financial Services Centre). Set-off under Regulation 7 is treated as realisation.

The realisation period has been set four times in ten months, although the period actually in force changed only twice: from nine to fifteen months in November 2025, and back to nine months in June 2026.

1. November 2025. By Notification No. FEMA 23(R)/(7)/2025-RB dated 13 November 2025, announced on 14 November 2025 as a trade relief measure to "mitigate the impact of trade disruptions on exports arising on account of global headwinds", RBI extended the period under the 2015 Regulations from 9 to 15 months.
2. January 2026. The new Regulations, notified while that relief applied, provided 15 months, or 18 months for rupee trade.
3. June 2026. In his monetary policy statement of 5 June 2026, the RBI Governor listed restoring the nine-month period among five measures "to attract foreign capital" and "strengthen our balance of payments". The Governor noted net outflows of foreign portfolio investment of US$13.7 billion in 2026-27 up to 2 June, with foreign exchange reserves at US$682.3 billion on 29 May 2026. The 2015 Regulations were amended the same day by Notification No. FEMA 23(R)/(8)/2026-RB.
4. September 2026. Without a further amendment, Regulation 5(1) would have prescribed a 15-month period from 1 October 2026. The amendment of 22 September 2026 substituted nine months, and twelve for rupee trade.

The period determines when export proceeds must be received in India, not how much is exported: under a shorter period, exporters must bring foreign exchange into India sooner, whether they convert it into rupees or hold it in an Exchange Earners' Foreign Currency (EEFC) account with a bank in India.

What about shipments made before 1 October 2026? The 2026 Regulations supersede the 2015 Regulations "except in respect of things done or omitted to be done before such supersession". In its statement on feedback, RBI recorded that it accepted a request to apply the Regulations uniformly to transactions in process as well as fresh transactions. That statement is RBI's administrative explanation, and the Regulations contain no express transitional provision for outstanding bills. Obtain your bank's written confirmation of the due date it has recorded in EDPMS, particularly for shipments made between November 2025 and June 2026, when the period was 15 months.

The exporter's day-to-day steps are largely unchanged; the bank now decides exceptions, and an entry of up to ₹10 lakh may be closed on the exporter's own declaration.

The Export Declaration Form. The annexed EDF is one form for goods and services. It requires the Importer-Exporter Code (IEC), GSTIN and PAN, the consignee, any third party that will pay and its relationship to the exporter, the mode of realisation (including transfer to a bank account maintained overseas), invoice-level details and HSN or SAC codes. The exporter undertakes to deliver the full value to the bank within the realisation period. Under the 2015 Regulations, gifts up to ₹5 lakh, trade samples and certain re-exports were listed as exempt from declaration. The 2026 Regulations do not repeat that list. The only exclusion in the text is a traveller carrying personal effects. RBI's statement on feedback records that it declined to continue the old EDF waivers because Section 7 of FEMA makes declaration of exports mandatory. The form permits the export value to be shown as nil where goods are sent without consideration.

Advance receipts. An export advance, and any later realisation, must be received through the same bank. The exporter may change banks if it informs both banks. The 2015 Regulations required goods to be shipped within a fixed period after an advance: one year, raised to three years in November 2025. The 2026 Regulations prescribe no fixed shipment period. The bank monitors the advance under its policy and may close the EDPMS entry if no export takes place and a refund is not possible (Regulation 18(1)(i)). Interest paid to the buyer on an advance cannot exceed the trade-credit all-in-cost ceiling under the Foreign Exchange Management (Borrowing and Lending) Regulations, 2018 (Regulation 10(4)).

Set-off. Regulation 7 permits the bank to allow export receivables to be set off against import payables with the same overseas party or with its overseas group or associate companies, within the realisation period. Group set-off was already possible under Master Direction – Export of Goods and Services. The Regulations do not repeat the old conditions: one bank only, the same calendar year, no set-off of goods against services, and the exclusion of ACU trade. The change is relevant to groups with two-way trade, such as a component exporter that also imports tooling from the buyer's sister company. The Regulations do not specify how the bank closes the related IDPMS entry after a set-off; ask your bank. Para 2.74 of the Handbook of Procedures under the Foreign Trade Policy 2023 still refers to specific approval of RBI for offsetting export proceeds against payables; exporters holding authorisations under Foreign Trade Policy schemes should confirm the position with the Directorate General of Foreign Trade (DGFT) and their bank.

Third-party payments. Regulation 8 permits the bank to accept a payment from someone other than the buyer if it is satisfied the transaction is genuine. The EDF contains a field for the third party's name and relationship. Declare it at the start rather than explaining it later.

EEFC accounts. Under Schedule I of the Foreign Exchange Management (Foreign currency accounts by a person resident in India) Regulations, 2015, an exporter may credit 100 per cent of its foreign exchange earnings, including advances received against exports, to an Exchange Earners' Foreign Currency (EEFC) account with a bank in India. The 2026 Regulations do not state how a credit to an EEFC account is recorded against the EDPMS entry, so ask your bank. The Foreign Currency Accounts Regulations still refer to the 2015 Export Regulations, which are superseded on 1 October 2026.

From 1 October 2026, every exporter of services files an Export Declaration Form, and this includes software. Under the 2015 Regulations only software exporters declared, on the SOFTEX form certified by STPI or an SEZ. Other service exporters (consultants, designers, BPO providers, professional firms) filed no declaration at all, though they still had to realise the money. Master Direction – Export of Goods and Services and the circulars on single and bulk SOFTEX forms prescribed the SOFTEX procedure. All of them are superseded on 1 October 2026, and the 2026 Regulations contain no SOFTEX form.

What counts as software. Regulation 2(1)(e) defines software as "any computer programme, database, drawing, design, audio/video signals, any information by whatever name called in or on any medium other than in or on any physical medium". The definition matters for two rules: software exporters in the Domestic Tariff Area may file the EDF with their bank or with Software Technology Parks of India (STPI), and only exporters of services other than software may file on or before the date of payment. Drawings, designs and databases delivered in non-physical form fall within the definition.

Regulation 3(2) sets out the rules for the services EDF:

The authority to which the EDF is furnished depends on where the exporter operates and what it exports. The "specified authority" is defined in Regulation 2(1)(f):

Worked example: a Pune software company raises invoices on 5, 18 and 27 November 2026 for three clients in the US, Germany and Singapore. It files one EDF covering all three by 30 December 2026, which is 30 days after 30 November. Each invoice must then be realised within nine months of its own date, so the first by 5 August 2027.

When a parent company pays. Where a client's parent or group company pays, that is a third-party payment (Regulation 8). Part 1 of the EDF has a field for a third party and its relationship to the exporter, but Part 2B, which lists clients in a monthly EDF, has no column for the payer. Where different clients pay through different group companies, ask your bank whether to use the Remarks column or separate EDFs.

STPI units. Regulation 2(1)(f)(iii) permits a software exporter in the Domestic Tariff Area to file the EDF with its bank or with STPI. Confirm any reporting requirements under the STPI scheme with STPI.

EDPMS stands for Export Data Processing and Monitoring System. IDPMS stands for Import Data Processing and Monitoring System. RBI operates these two databases to match each export or import with the payment for it. Every shipping bill (from Customs), every EDF and every export receipt is recorded in EDPMS. Every Bill of Entry and every import payment is recorded in IDPMS. An entry remains "open" until the corresponding payment has been received or made, and the exporter's or importer's bank is responsible for closing it.

Banks use EDPMS and IDPMS to monitor compliance with Sections 7 and 8 of FEMA. Under Regulation 4(2), a bank may credit or debit an account only after satisfying itself that the transaction is genuine, and must update EDPMS or IDPMS at the same time. Regulations 5(2) and 18(1)(f) require banks to monitor open entries and follow up with the exporter or importer, and the Directions require banks to report doubtful transactions to the Directorate of Enforcement.

The banks' EDPMS and IDPMS reporting duties are now set out in Regulation 18 of the 2026 Regulations:

Closing an entry, termed "mark-off" in the Regulations, takes place in five situations:

• Normal case. The bank marks off the EDPMS entry once the export value is realised, and the IDPMS entry once the import payment is made.
• Small value (up to ₹10 lakh). Under Regulation 4(2), an entry for a shipping bill, services invoice or Bill of Entry of up to ₹10 lakh (or its foreign currency equivalent) may be closed on the exporter's or importer's declaration that payment has been realised or made, "either in full or otherwise". The declarations can be given quarterly for bulk closure. RBI introduced this facility by circular on 1 October 2025; Regulation 4(2) now contains it.
• Advance with no trade. Where an advance was received but no export took place and a refund is not possible, the bank may close the entry on the exporter's request with reasons. The same applies to an import advance where no import took place and the money cannot be brought back.
• Import settled at a lower value. The bank may close the IDPMS entry on request if it is satisfied with the reasons.
• Merchanting trade. The bank closes both entries once both legs are complete.

Open entries have consequences outside FEMA. DGFT receives export realisation details from RBI's EDPMS and electronic Bank Realisation Certificate (e-BRC) data from banks (Handbook of Procedures, para 1.04), and the Customs Act, 1962, the GST law and the Foreign Trade Policy each make a benefit conditional on realisation, in most cases within the period allowed under FEMA. Where an entry remains open after payment has been received, EDPMS does not show the bill as realised, and a refund or incentive that depends on realisation may be delayed. Reconcile open entries with your bank every quarter.

For importers, rules previously contained in directions to banks are now contained in regulations, and fixed thresholds are replaced by the bank's judgement. Payments are still made through an Authorised Dealer bank in a permitted currency under the FEM (Manner of Receipt and Payment) Regulations, 2023. Payments on the prohibited or restricted lists of the CAT Rules remain barred or need approval; for example, Schedule III requires prior RBI approval for remittances for consultancy services above USD 1 million per project (USD 10 million per project for infrastructure projects).

No fixed advance threshold. Under Master Direction No. 17, any advance above USD 200,000 for goods needed a standby letter of credit or a guarantee from an international bank. A bank could waive this up to USD 5 million for importers with a good track record. The 2026 Regulations do not contain that fixed threshold. Regulation 10(3) provides that the bank "may consider specifying thresholds" in its own policy. Different banks are likely to specify different thresholds; ask yours for its figure.

Gold and silver. Unless FEMA or the rules, regulations or directions under it provide otherwise, banks may not permit any advance remittance for importing gold or silver (Regulation 11). "Gold" is not defined in the Regulations, and the bar applies only to advance remittance. Whether it extends to gold jewellery or findings is a question to put to your bank. The gold-specific instructions in Master Direction – Import of Goods and Services (para C.11) are superseded, and the import policy under the Foreign Trade Policy continues to apply.

Import not materialised. If the goods do not arrive within the contract period (or the extended period), the importer must repatriate the advance (Regulation 12). If the importer does not, or if the advance entry in IDPMS has not been marked off under Regulation 18(1)(j), every future import advance the importer makes will need an unconditional, irrevocable standby letter of credit or a guarantee from an international bank of repute, or a guarantee of an Authorised Dealer bank in India issued against a counter-guarantee of an international bank of repute. Regulation 12(2) sets no end date for this requirement; ask your bank how it will apply it.

Interest on delayed payments. Interest on delayed import payments, like interest on export advances, cannot exceed the trade-credit all-in-cost ceiling (Regulation 10(4)). RBI's Master Direction on External Commercial Borrowings, Trade Credits and Structured Obligations currently sets that ceiling at the benchmark rate plus 300 basis points for new foreign-currency trade credit, and plus 250 basis points for rupee trade credit.

Evidence of import. Under Master Direction – Import of Goods and Services (para C.7), banks followed up for evidence of import, usually the Bill of Entry. Eligible importers could give a certificate from the chief executive or auditor in place of the Bill of Entry for remittances below USD 1 million, and a chartered accountant's certificate for imports not in physical form. The 2026 Regulations contain no equivalent provision; each bank's SOP now sets the documents and timelines.

Imports of services. Payments for software subscriptions, consultancy and other services are now entered in IDPMS "as declared by the importer" (Regulation 18(1)(d)). The ₹10 lakh declaration facility covers service invoices as well as Bills of Entry (Regulation 4(2)). The format of the declaration is for your bank to specify.

Four provisions of the 2026 Regulations apply where a buyer becomes insolvent, a shipment is rejected, or a supplier fails to deliver against an advance.

1. Reduction or non-realisation (Regulation 6). If the exporter cannot realise the full export value, it asks the bank to allow a reduction, giving reasons. The bank decides under its policy. For exports of up to ₹10 lakh per shipping bill or invoice, the bank can allow the reduction, including full non-realisation, on the exporter's declaration alone. The old regime had fixed limits instead. Exporters could self-write-off up to 5% of the previous calendar year's realisations (10% for Status Holders), banks could write off another 10%, and the amount had to have been outstanding for more than one year. Invoice value could be reduced by up to 25% (with no ceiling for exporters in business over three years whose outstanding was 5% or less). From October 2025 a circular also permitted reductions on declaration for bills up to ₹10 lakh. Regulation 6 retains declaration-based reduction; the 2026 Regulations do not contain the percentage limits. A reduction under FEMA does not determine the position under the Foreign Trade Policy. Para 2.54 of the Foreign Trade Policy 2023 makes an exporter who fails to realise export proceeds within the time specified by RBI liable to return all benefits availed against those exports, and para 2.72 of the Handbook of Procedures waives realisation for FTP purposes only where RBI or an authorised bank writes off the requirement on merits and the exporter produces a certificate from the Indian Mission; it does not apply to self write-off. Check these consequences before declaring non-realisation.

2. Restriction on further exports (Regulation 13). If export proceeds stay unrealised for more than one year after the due date (or any extended date the bank allowed), the exporter may make further exports only against full advance payment or an irrevocable letter of credit. This replaces the old mechanism under which RBI placed exporters on a "caution list" on their bank's recommendation. Under the old regime, RBI could also caution-list an exporter who had come to the adverse notice of the Enforcement Directorate, CBI or DRI; Regulation 13 applies solely by reference to the time elapsed after the due date. Example: for a shipment on 10 October 2026, the due date is 10 July 2027; if the proceeds are still unrealised after 10 July 2028, further exports must be against full advance or an irrevocable letter of credit. The one-year period runs from the due date or the "extended period, if any, allowed" by the bank, so seek an extension or a reduction early; until the bank allows an extension, the original due date applies.

3. Existing caution-listed exporters. The September 2026 amendment inserted a proviso to Regulation 13. Exporters on the RBI caution list as on 30 September 2026 stay governed by the RBI orders made under Regulation 16 of the 2015 Regulations until they are removed from the list. Inclusion in the list does not cease on 1 October 2026. The Regulations do not specify how or by whom removal from the list will take place after that date.

4. Import advances not repatriated (Regulation 12). If an advance is not repatriated, or an advance entry in IDPMS has not been marked off, every future advance needs a standby letter of credit or a guarantee.

What is the penalty for getting it wrong? A person who contravenes FEMA or these Regulations is liable, upon adjudication, to a penalty under Section 13 of up to three times the sum involved where the amount is quantifiable, or up to ₹2 lakh where it is not; for a continuing contravention, a further penalty of up to ₹5,000 for every day after the first day during which it continues. Under Section 15, a contravention may, on an application by the person concerned, be compounded within 180 days from receipt of the application by officers of the Directorate of Enforcement or RBI. The Foreign Exchange (Compounding Proceedings) Rules, 2024 do not permit compounding of a similar contravention committed within three years of an earlier compounding. Regulation 19(3) restricts bank charges only; it does not affect liability under Section 13. The Regulations also attach commercial consequences: exports restricted to advance or letter-of-credit terms (Regulation 13) and security for future import advances (Regulation 12). Under other laws, export benefits depend on realisation of the proceeds.

What about GST, drawback and export incentives? Realisation of export proceeds is a condition under several other laws, in most cases within the FEMA period:

• Services and GST export status. Under Section 2(6) of the Integrated Goods and Services Tax Act, 2017, a supply of services is an "export of services" only if, among other conditions, payment is received in convertible foreign exchange or in Indian rupees wherever permitted by RBI.
• Services exported under a Letter of Undertaking (LUT). An LUT permits export without payment of integrated tax. Under Rule 96A(1)(b) of the Central Goods and Services Tax Rules, 2017, if payment is not received, the exporter is bound to pay the tax with interest within fifteen days after the expiry of one year, or of the period allowed under FEMA including any extension permitted by RBI, whichever is later, from the date of the invoice, or such further period as the Commissioner may allow. The one-year GST period for services under Rule 96A therefore continues to apply despite the nine-month FEMA period.
• Goods: GST refunds. Under the proviso to Section 16(3) of the IGST Act and Rule 96B of the CGST Rules, a refund received on exports of goods must be paid back with interest, to the extent of non-realisation, within 30 days after the period allowed under FEMA, including any extension. Under the proviso to Rule 96B(1), the refund is not recovered where the Reserve Bank of India writes off the requirement of realisation on merits; the rule does not state whether a reduction allowed by a bank under Regulation 6 qualifies.
• Goods: duty drawback. Under the second proviso to Section 75(1) of the Customs Act, 1962, drawback is deemed never to have been allowed if the sale proceeds are not received within the time allowed under FEMA, except as the Central Government specifies by rule.
• Foreign Trade Policy benefits. Para 2.54 of the Foreign Trade Policy 2023 makes the exporter liable to return all benefits availed against exports whose proceeds are not realised within the time specified by RBI.

Master Direction – Export of Goods and Services required surrender of proportionate export incentives on write-off. The 2026 Regulations contain no such requirement, so each of those laws now determines the consequences.

Merchanting trade is buying goods from one foreign country and selling them to another without the goods passing through India. For example, an Indian trader buys steel coils in South Korea and sells them to a buyer in the UAE. The Foreign Trade Policy 2023 (para 2.39) permits merchanting trade, including shipment of goods within one foreign country with an Indian intermediary, subject to RBI guidelines and except for goods covered by CITES or SCOMET. Regulation 16 now prescribes those rules.

Some facilities in Master Direction – Import of Goods and Services are not repeated in Regulation 16: holding export-leg receipts in an EEFC account until the import leg falls due, opening a letter of credit for the import leg against a confirmed export order, and supplier's or buyer's credit for the import leg. Confirm with your bank how it will treat these.

Example: a merchant trader pays the Korean supplier on 1 November 2026. The UAE buyer's payment must be received by 1 May 2027, unless the bank extends the period. Merchanting trade may also be settled through Special Rupee Vostro Accounts: para 4 of A.P. (DIR Series) Circular No. 19 permits settlement of all permissible current and capital account transactions through them, and RBI confirms the point for merchanting trade in its frequently asked questions (Q19), which state RBI's administrative position.

Project exports means civil construction, turnkey engineering, process and engineering consultancy, and project construction items, as defined in the Foreign Trade Policy. Their realisation is governed by the payment terms of the contract (Regulation 5). The bank permits receipts and payments after satisfying itself that the project is genuine (Regulation 15). A project exporter may invest temporary cash surpluses held abroad in short-term instruments of one year or less, such as treasury bills and bank deposits, under the bank's monitoring. Under the old regime, post-award approval was governed by the Memorandum of Instructions on Project and Service Exports (PEM). In its statement on feedback, RBI declined requests to retain the PEM, stating that banks can handle project exports under their internal policy. The project-export circulars issued between 2003 and 2016 are among the instructions superseded on 1 October 2026.

Rupee invoicing. Regulation 17 provides that the bank may be guided by RBI's framework for invoicing and settling international trade in Indian rupees. RBI established that framework by A.P. (DIR Series) Circular No. 10 of 11 July 2022, which provided for Special Rupee Vostro Accounts (SRVAs), and consolidated it in A.P. (DIR Series) Circular No. 19 of 17 July 2026. Circular No. 19 permits AD banks to open SRVAs of overseas banks and contains no requirement of prior RBI approval. An Indian importer's rupee payment is credited to the SRVA of the overseas bank, and an Indian exporter is paid from the balance in that account. Para 2.52(d) of the Foreign Trade Policy 2023 also permits invoicing, payment and settlement of exports and imports in INR through SRVAs. Any export invoiced or settled in rupees has a 12-month realisation period under the 2026 Regulations.

Under the new framework, Authorised Dealer Category-I banks take decisions that previously required RBI approval, and the Regulations impose additional duties on them. Regulation 19 requires every bank to adopt a separate, documented internal policy and Standard Operating Procedure (SOP) for export, import and merchanting transactions, including how it reports them.

Banks also send any matter needing RBI's attention through the PRAVAAH portal. They report doubtful transactions to the Directorate of Enforcement. Under Regulation 20, inserted in September 2026, they handle legacy export, import and merchanting transactions from before 1 October 2026 that used to need RBI approval under the 2015 Regulations or the two Master Directions. The Regulations do not state how applications already lodged with RBI will be dealt with.

Because each bank writes its own policy, thresholds, documentation and turnaround times may differ from bank to bank. On this reading, four features of the Regulations limit the scope for inconsistent treatment. An advance and its realisation or later payments must be received or made through the same bank, and a change of bank must be notified to both banks (Regulations 10(1) and 10(2)). The consequences under Regulations 12(2) and 13 attach to the exporter or importer, not to a particular bank. Every bank must publish its policy and the main features of its SOP (Regulation 19(4)), and EDPMS and IDPMS are common systems across banks. The duties of exporters and importers under Sections 7 and 8 of FEMA do not change. Read your bank's published policy, and keep your documents in a form that any bank would accept.

The 2026 Regulations consolidate the principal trade rules but do not contain every applicable rule. They cross-refer to several other instruments, and further instruments apply concurrently.