The Reserve Bank of India (RBI) on January 13, 2026, notified the Foreign Exchange Management (Export and Import of Goods and Services) Regulations, 2026, under its powers in the Foreign Exchange Management Act, 1999 (FEMA). These Regulations which will be effective from October 1, 2026, will supersede the 2016 regime and govern cross-border trade in goods and services.
They impose detailed obligations on exporters and importers and elaborate the duties of Authorised Dealers (ADs) i.e., banks licensed under FEMA Section 10(1) in monitoring and processing export‐import transactions. The 2026 rules must be read alongside FEMA and other subordinate regulations (e.g. the FEMA (Manner of Receipt and Payment) Regulations, 2023 and FEMA (Borrowing and Lending) Regulations, 2018) to ensure full compliance.
Export Declarations and EDF Filing
Under Regulation 3, exporters must furnish an Export Declaration Form (EDF) to the specified authority, detailing the full export value of the shipment or service. For goods, the EDF is filed at the time of export (automatically deemed submitted via the shipping bill for exports through EDI ports). For services, the EDF must be submitted within 30 days of the month of invoicing. A single EDF may cover all services exported to various recipients in each month, and non-software service exporters may even file the EDF by the date of payment receipt.
The AD may extend the EDF filing deadline on reasonable request. Importantly, personal effects carried by travelers are exempted from “exporter” status under these rules. Where export documents originate at a non-EDI port or the specified authority is not an AD, the authority must forward the authenticated EDF to the relevant AD. These declarations form the basis of monitoring under the FEMA compliance systems.
Payment Receipt, AD Verification and EDPMS/IDPMS
Regulation 4 binds all export/import payments to the FEMA (Manner of Receipt and Payment) Regulations, 2023. In practice, an Authorised Dealer must verify the genuineness of each export receipt or import payment before crediting or debiting the exporters or importer’s account. Simultaneously, the AD is required to close or update the corresponding entry in RBI’s monitoring systems (Export Data Processing and Monitoring System – EDPMS, or Import Data Processing and Monitoring System – IDPMS).
For small transactions i.e., shipping bills or invoices up to ₹10 lakh or equivalent, the Regulations ease reporting: an exporter/importer can submit a periodic declaration of realization or payment (quarterly is allowed) to AD, enabling bulk closure of EDPMS/IDPMS entries. Otherwise, every export or import must be tracked in EDPMS/IDPMS until the payment leg is complete. Authorised Dealers must establish robust systems to follow up with customers and ensure compliance with these reporting requirements.
Realisation and Repatriation Timelines
Under Regulation 5, exporters must realise and repatriate the full export value within specified periods. As a general rule, receipts for goods must be realised within 15 months of shipment, and for services within 15 months of invoicing. Project exports follow their contract terms. Significantly, if export invoicing or settlement is in Indian Rupees, these periods are extended to 18 months, aligning with RBI’s broader push for INR trade settlement. Where an exporter anticipates delay, the AD may grant an extension beyond the prescribed period after assessing the reasons. The RBI expects ADs to implement monitoring systems to track overdue realizations and prompt exporters, per Regulation 5(2).
Reduction of Export Proceeds and Set-off
Regulation 6 allows an AD to permit under-realisation of export proceeds if the exporter demonstrates genuine reasons. The AD must be satisfied that shortfall or non-realization is bona fide before agreeing to a reduced realization amount. For exports below ₹10 lakh per shipping bill or invoice, a simpler process applies: a signed declaration by the exporter suffices to adjust or waive realisation. Regulation 7 further permits set-off of export receivables against import payables and vice versa with the same overseas counterparty or their group, provided the set-off occurs within the normal realization period including any extension. This provision enables exporters with simultaneous import obligations to net flows, subject to AD oversight.
Third-Party Receipts and Merchanting Trade
Regulation 8 explicitly acknowledges third-party payment arrangements: an AD may allow an export/import receipt or payment involving a party other than the principal buyer or seller, so long as the transaction’s bonafides are established. In other words, third‑party transactions are permissible but require heightened scrutiny by the AD. Separately, Regulation 16 addresses Merchanting Trade Transactions (MTT) (exports followed by imports without the goods entering India). MTT must be completed promptly: the interval between outward and inward remittances cannot exceed six months.
The AD may extend this on a case-by-case basis for valid reasons. Normally, outward remittances go only to the foreign seller and inward remittances only from the foreign buyer; however, the AD may allow exceptions on justification. The person undertaking MTT must furnish supporting documents to prove the transactions’ genuineness. Throughout, the AD must satisfy itself of genuineness before crediting/debiting accounts for any MTT-related flows, and must update EDPMS/IDPMS once both legs of the trade are complete. The AD must also proactively monitor MTT entries to ensure compliance with these rules.
Advance Payments and Import Defaults
The Regulations impose strict rules on trade-related advances. Exporters receiving advance payments must route both the advance and all subsequent export payments through the same AD; if the exporter switches banks, it must inform both institutions. Similarly, importers must route advances and follow-up import payments via the same AD or notify both ADs if changing banks. An AD may allow import advance remittance only after due diligence of the import requirement. Interest on trade advances and delayed payments is capped: any interest charged on an export advance or on delayed import payment cannot exceed the all-in-cost ceiling for trade credit prescribed in FEMA (Borrowing and Lending) Regulations, 2018.
Notably, Regulation 11 prohibits any advance remittance for import of gold or silver. If an import contract fails to materialize within the agreed or extended period, the importer must immediately repatriate any advance. Failure to do so bars the importer from unsecured future advances: subsequent advance imports will require an unconditional standby Letter of Credit or bank guarantee with international bank counter-guarantee. Conversely, if an exporter’s proceeds remain unrealized beyond one year after the due date or extension, that exporter may undertake new exports only on full advance payment or under an irrevocable LC. These provisions ensure trade credits are carefully guarded against default.
Regulation 15 deals with Project Exports. Here the AD may permit payment receipts and remittances in line with the underlying contract, once it is satisfied of the project’s genuineness. Earnings (surplus cash) generated abroad from project exports may, with AD monitoring, be invested overseas in short-term instruments (maturity ≤ one year), such as treasury bills and bank deposits outside India. This facilitates temporary deployment of foreign currency surpluses while remaining under RBI’s supervision.
EDPMS/IDPMS Reporting and Compliance
Regulation 18 codifies reporting protocols under the Export Data Processing and Monitoring System (EDPMS) and Import Data Processing and Monitoring System (IDPMS). Authorised Dealers must enter all non-EDI export data (goods) into EDPMS within five working days of receiving the shipping documents, and similarly enter non-EDI import data into IDPMS. Service exports/imports are treated analogously – ADs must enter EDFs for service exports or invoices for service imports within five working days of receipt. All outward and inward remittances including those for exports, imports and MTT must be captured in EDPMS/IDPMS.
ADs are responsible for diligently monitoring outstanding entries. An export entry in EDPMS may be “marked-off” only after the full export value is realized, and an import entry in IDPMS only after the import payment is made. The regulations allow narrow exceptions: on convincing grounds, an AD may close an advance-export entry where no shipment followed and refund is impossible, or an advance-import entry where no import materialized and refund cannot be made.
Likewise, an AD may permit closure of an IDPMS entry for an import settled at a reduced value, again after verifying the reason. For completed MTT, the AD must close both the EDPMS and IDPMS entries once both legs are fully executed. Finally, all export/import transactions must be reported through the Foreign Exchange Transaction Electronic Reporting System (FETERS) as per RBI’s directions. These layered requirements create a compliance framework forcing transparency at every stage of cross-border trade finance.
International Invoicing in Indian Rupees
Regulation 17 acknowledges the RBI’s evolving policy on INR settlement. It directs ADs to follow the existing broad framework and RBI instructions for international trade invoicing and settlement in rupees. This aligns with RBI’s AP (DIR Series) Circular (11.07.2022) and recent DGFT policy amendments that expressly permit exports and imports to be denominated, invoiced and settled in Indian Rupees. Under this arrangement, exports to partner countries can be invoiced in INR and payments received in INR, promoting bilateral trade without foreign currency conversion. ADs should therefore be guided by RBI’s circulars (e.g. on Special Rupee Vostro Accounts) and DGFT notifications when processing INR‐denominated trade transactions.
Conclusion
The 2026 Export-Import FEMA Regulations impose rigorous obligations on exporters, importers and Authorised Dealers. They reaffirm RBI’s mandate under FEMA, 1999 especially Section 47 to regulate cross-border trade, emphasizing verification of genuineness, strict timelines, and accurate monitoring. Legal and compliance teams should meticulously adapt processes, contract terms, payment clauses, AD relationships, and IT reporting systems to meet these requirements.
Non-compliance e.g. delays in realization or reporting failures can lead to disallowed transactions and tightened conditions on future trades. In practice, exporters and importers must liaise closely with their ADs to ensure all export/import values, timelines and documentation are reconciled in RBI’s systems. This regime reflects RBI’s dual goals of facilitating orderly external trade and preventing foreign exchange leakages, with a growing emphasis on rupee‐based settlement.
These 2026 export–import rules are an application of the broader Foreign Exchange Management Act (FEMA) Regulations for Cross-Border Transactions governing cross-border payments and settlements.