Note on ‘FEMA Export & Import of Goods & Services Regulations 2026 effective from 1st Oct 2026’, CS Anita Patil, Sr. Advisior, Bizsolindia Services Pvt Ltd. (October 2026)

Bizsol Thinkline / By

Foreign Exchange Management (Export and Import of Goods and Services) Regulations, 2026 including amendments thereof effective from 1st Oct 2026:

  1. Time period for realization of exports:
Particulars FEMA Realization Period
  Prior to 1st Oct 2026 w.e.f. 1st Oct 2026
Export of Goods 15 Months 9 Months: from the date of shipment in case of goods (other than goods exported to a warehouse outside India)
Export of Services 15 Months 9 Months from the date of invoice
Goods exported to a warehouse outside India 15 Months 9 Months from the date of sale of goods from the warehouse
Project exports As per the payment terms of the contract. As per the payment terms of the contract.
INR-invoiced / INR-settled exports 18 Months 12 Months
     

 

  1. Declaration of Exports: 
  • This is one of the most significant operational changes. The revised framework introduces a common Export Declaration Form (EDF) covering for Export of Goods, Services; and Software. This replaces the separate SOFTEX-based reporting architecture for software exports. 
  • This EDF requirement applies to the export invoices dated on or after 1st Oct 2026.
  • The declaration to be furnished tot eh Authorized Dealer (AD) Bank. For Software exports from DTA to the STPI as specified authority.
  • For Export of Goods: An 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, Provided that the EDF will be deemed to be submitted as part of shipping bill for goods exported through Electronic Data Interchange (EDI) port;

In the case of a non-EDI port for export of goods; or 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.

  • For Export of Services: An exporter of services shall furnish to the specified authority, a declaration in EDF specifying the amount representing the full export value of services, within 30 days from the end of month in which invoice for services has been raised, provided that:
  1. the exporter of services who has exported services to one or more recipients in a month, may submit a single EDF for all such exports;
  2. the exporter of services other than software, may submit an EDF on or before the date of receipt of payment;
  3. the Authorised Dealer may, on a 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.
  1. EDPMS & IDPMS (Export & Import Data Processing and Monitoring System ) greater operational flexibility: EDPMS & IDPMS continues to be important. But the 2026 framework gives AD banks more authority to deal with outstanding transactions. For example, AD banks may deal with:
  • Reduction in export value;
  • Under-realization;
  • Non-realization adjustments;
  • Closure of certain advance transactions; and
  • Other permitted EDPMS matters.

For export invoices & BOEs for imports up to ₹10 lakh per shipping bill/invoice/BOEs, the AD bank may permit reduction based on a self-declaration by the exporter/ Importer subject to the applicable conditions and bona fides.

  1. Reduction in the export realization:

An Authorised Dealer (AD) Bank may, on request from the exporter citing reasons for under-realization or non-realization of full export value, allow reduction in realization of export value, provided the Authorised Dealer is satisfied of the reasons cited:

Provided that where the export value is up to ₹10 lakh (or its equivalent in foreign currency) per shipping bill (for goods) or invoice (for services), the reduction of export value (including non-realization of full export value) may be permitted based on a declaration from the exporter.

 

  1. Set off of export receivables against import payables:

An Authorised Dealer (AD) Bank may allow set-off of export receivables against import payables from/to the same overseas buyer or supplier or with their overseas group or associate companies, within the stipulated period for realization of export proceeds or extended period, if any, allowed by the Authorised Dealer.

 

  1. Third party receipts and payments.-

An AD Bank may permit third party (other than the parties undertaking export and import) receipts and payments for export and import transactions provided that the Authorised Dealer Bank is satisfied with the bonafides of the transactions.

 

  1. Time period for making import payment.-

An Authorised Dealer Bank shall monitor its IDPMS entries and follow up with the respective importer for making payment for its imports within the period specified in the underlying contract. Which was earlier as within six months from the date of imports.

Provided that the Authorised Dealer may, on request from the importer citing reasons for the delay, allow extension of time for making payment, beyond the period specified in the contract, if the Authorised Dealer is satisfied of the reasons cited.

 

  1. Advance payment for exports and imports and delayed payment for imports:

An exporter shall, in case of advance receipt for export, or Advance Payment for Imports route the advance amount, and realization of export proceeds, if any, through the same Authorised Dealer. However, an exporter /importer may route the transactions through any other Authorised Dealer provided the exporter / importer has intimated the change to both the Authorised Dealers.

An Authorised Dealer may permit advance remittance for import after satisfying itself of the genuineness of the requirement for advance remittance. The Authorised Dealer may consider specifying thresholds for advance payment, beyond which, the payment may require a standby Letter of Credit or a guarantee.

An exporter, or an importer, as the case may be, shall ensure that interest payable, if any, on advance payment received for export, or on delayed payment for imports, shall not exceed the all-in-cost ceiling of trade credit in terms of the Foreign Exchange Management (Borrowing and Lending) Regulations, 2018, as amended from time to time.

  1. Import of gold and silver.-

No advance remittance shall be permitted by an Authorised Dealer Bank for the import of gold or silver. 

  1. Import not materialized:

Where an importer is unable to import within the contract period, or the extended period, the importer shall repatriate the advance payment made, if any.

If the advance payment is not repatriated by the importer within the contract period or extended period, if any, allowed by the Authorised Dealer or where the IDPMS entry has not been marked-off in terms of Regulation 18(1)(j), any future advance payment for imports by the importer 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, which is issued against a counter-guarantee of an international bank of repute. 

  1. Unrealized Exports:

If the export proceeds of an exporter remain unrealized for a period beyond one year from the due date of realization or extended period, if any, allowed by an Authorised Dealer, the exporter shall undertake further exports only against receipt of full advance or an irrevocable Letter of Credit. The September 2026 amendment inserts a specific transitional proviso into Regulation 13 clarifying that an exporter who is on the Caution List as on 30 September 2026, pursuant to an RBI order under Regulation 16 of the 2015 Regulations, continues to be governed by that order until removal from the Caution List. 

  1. Project Export:
  2. An Authorised Dealer may permit receipts/ payments for project exports as per the underlying contract, after satisfying itself of the genuineness of the project.
  3. Subject to monitoring by an Authorised Dealer, a project exporter may deploy temporary cash surplus, generated outside India, from such exports, for investments in short-term instruments (with original or residual maturity of one year or less) including in treasury bills and in deposits with banks, outside India.
  1. Merchanting Trade Transactions (MTT)

Under the new provisions, an MTT must be completed with the outward and inward remittances occurring within six months of each other. The AD Bank may extend this period if the customer provides satisfactory reasons for the delay. Payments should ordinarily be made only to the overseas seller and received only from the overseas buyer; however, third-party payments may be permitted by the AD Bank where justified and accepted. The customer must provide adequate documents to establish the genuineness of the MTT. The AD Bank is responsible for verifying the transaction, updating/closing the relevant EDPMS/IDPMS entries, and monitoring the transaction to ensure that both legs are completed within the prescribed period.

  1. Powers to Authorised Dealer (AD) Bank:

For transactions relating to exports, imports and merchanting trade carried out before 1 October 2026, where RBI approval was earlier required under the old FEMA Regulations/Master Directions, the Authorised Dealer (AD) Bank can now handle and process such matters directly. In simple terms, pending/legacy transactions under the old regime do not necessarily need to be referred to RBI for approval; the AD Bank can deal with them as per the applicable FEMA requirements and its internal procedures.

  1. Internal Policy and Standard Operating Procedure (SOP) for handling transactions by AD Bank:

AD Banks role becomes much more important, RBI has shifted several operational decisions toward AD banks. The RBI Directions require AD banks to establish internal policies/SOPs covering, among other things as documentation; timelines; charges; export-realization extensions; import-payment extensions; export-value reductions; set-off; third-party payments; export/import advances; factoring arrangements etc. within the framework of instant guidelines.

Therefore FEMA compliance from 1 October 2026 becomes more bank-policy dependent at the operational level. Companies should not look only at the bare Regulations. They should also obtain their AD bank’s October 2026 FEMA Trade SOP’s / Internal Polities for smooth functioning and all required compliances.

 

********