RBI Foreign Exchange Management Regulations, 2026: A Guide to the Export and Import of Goods and Services

India’s cross-border trade framework has undergone a significant regulatory change with the introduction of the Foreign Exchange Management (Export and Import of Goods and Services) Regulations, 2026 by the Reserve Bank of India (RBI). The new framework, which came into force on 1 October 2026, replaces the earlier regulatory structure and brings the regulation of exports, imports and merchanting trade within a more consolidated framework.

The 2026 framework aims to simplify foreign exchange compliance, promote ease of doing business and provide greater flexibility to businesses engaged in international trade, while maintaining appropriate regulatory oversight. For Indian companies involved in cross-border transactions, understanding these changes is essential for continued compliance with the Foreign Exchange Management Act, 1999 (FEMA).

1. A Unified Framework for Cross-Border Trade

A key feature of the 2026 framework is the consolidation of provisions relating to the export and import of goods and services, along with merchanting trade. This creates a more integrated regulatory structure for different forms of international commercial transactions.

The regulations are supplemented by RBI directions applicable to Authorised Dealer (AD) banks, which provide the operational framework for processing foreign exchange transactions. The principle-based approach gives AD banks greater flexibility in handling transactions and providing services to businesses.

As a result, businesses must place greater emphasis on their internal compliance systems, documentation and timely coordination with their AD banks.

2. Export of Goods and Services

Indian exporters are required to comply with FEMA requirements relating to the declaration of exports, documentation, realisation of export proceeds and repatriation of foreign exchange. The 2026 framework provides a more consolidated declaration and reporting framework for exports of goods, services and software. The extension of the Export Declaration Form (EDF) framework to service and software exports is particularly significant, as it seeks to streamline reporting requirements that were previously governed by different mechanisms.

For exports through Electronic Data Interchange (EDI) ports, export declarations are generally incorporated into the relevant shipping documentation. Exporters of services and software must follow the applicable declaration and reporting procedures within the prescribed timelines. These changes are particularly relevant to technology companies, software businesses, consultants, professional service providers and other Indian businesses receiving payments from overseas customers.

3. Realisation and Repatriation of Export Proceeds

Timely realisation and repatriation of export proceeds remain important FEMA compliance requirements. Following the September 2026 amendment, the standard period for realisation and repatriation of export proceeds is nine months. Where exports are invoiced and/or settled in Indian rupees, the applicable period is 12 months, subject to the conditions prescribed under the applicable RBI framework.

Exporters should maintain effective systems for monitoring outstanding receivables from overseas customers. Where export proceeds are not realised within the prescribed period, the exporter should coordinate with its AD bank and take appropriate steps, including obtaining an extension wherever permitted. Failure to monitor and regularise outstanding export proceeds may result in regulatory scrutiny and difficulties in future foreign exchange transactions.

4. Import of Goods and Services

The 2026 framework also provides a consolidated regulatory structure for imports of goods and services. One notable change is the removal of the earlier fixed six-month period for making payment towards imports. Under the new framework, the timing of import payments is generally linked to the terms agreed between the parties under the underlying commercial contract, subject to applicable FEMA provisions and RBI directions.

This provides businesses with greater flexibility when negotiating payment arrangements with overseas suppliers and service providers. However, contractual flexibility does not remove FEMA compliance obligations. Importers should maintain appropriate invoices, contracts, shipping and service-related documents, payment records and other supporting documents. Payments through banking channels should correspond with the underlying commercial transaction.

5. Role of Authorised Dealer Banks

AD banks continue to play a central role in implementing FEMA requirements relating to cross-border transactions. Businesses should therefore maintain effective communication with their designated AD banks. The 2026 framework gives greater importance to the internal policies and procedures followed by AD banks for matters such as documentation, extensions, adjustment of export values, set-off arrangements, third-party receipts and payments, advances and factoring transactions.

Businesses should ensure that their contracts, invoices, shipping documents, declarations and payment records are complete, accurate and readily available when required by their AD banks.

6. Merchanting Trade

The 2026 framework brings merchanting trade within the broader regulatory structure governing exports and imports. Merchanting trade generally involves an Indian entity purchasing goods from a person outside India and subsequently selling those goods to another person outside India, without the goods necessarily being imported into India.

Businesses undertaking merchanting trade must carefully examine the applicable FEMA requirements, particularly those relating to payment flows, documentation, permissible timelines, reporting requirements and AD bank procedures. Given the complexity of merchanting transactions, proper structuring and documentation are essential to ensure compliance with FEMA and the applicable RBI directions.

7. Transitional Provisions and Legacy Transactions

The 2026 framework also contains transitional mechanisms for certain transactions undertaken before 1 October 2026.A significant transitional provision enables AD banks to deal with specified legacy export, import and merchanting trade transactions, including certain matters that previously required RBI approval.

Businesses with outstanding or unresolved transactions originating before 1 October 2026 should review them with their AD banks and determine whether they can be regularised or processed under the transitional framework.

8. Key Compliance Considerations for Businesses

The revised framework makes it increasingly important for businesses engaged in international trade to establish robust foreign exchange compliance systems. Companies should:

• Maintain complete and accurate contracts, invoices, shipping documents and payment records.
• Monitor outstanding export receivables and ensure timely realisation and repatriation.
• Submit applicable declarations and supporting documents within prescribed timelines.
• Maintain regular communication with their AD banks.
• Ensure that third-party receipts and payments comply with applicable FEMA requirements.
• Maintain adequate records for audits and regulatory inspections.
• Review international contracts and payment terms in light of the revised framework.
• Identify and appropriately address outstanding legacy transactions.
• Periodically review internal FEMA policies and procedures.

For businesses with significant international operations, periodic FEMA compliance audits and legal reviews can help identify potential regulatory issues at an early stage and minimise the risk of penalties, disputes or banking difficulties.

Conclusion

The Foreign Exchange Management (Export and Import of Goods and Services) Regulations, 2026 represent an important development in India’s foreign exchange regulatory framework. By consolidating provisions governing exports, imports and merchanting trade and providing greater operational flexibility, the new regime seeks to facilitate international business while maintaining regulatory oversight.

Businesses engaged in cross-border trade should review their existing contracts, payment arrangements, internal procedures and foreign exchange compliance systems in light of the new framework. Particular attention should be given to delayed export realisation, third-party transactions, merchanting trade, complex payment structures and legacy transactions.

Professional legal and regulatory advice can assist businesses in structuring complex cross-border transactions and addressing FEMA compliance issues at an early stage. Ultimately, the 2026 framework reflects a move towards a more principle-based and flexible approach to foreign exchange regulation, while continuing to emphasise proper documentation, responsible compliance and effective coordination with AD banks.