India’s new FEMA trade rules give authorised dealer banks wider powers over approvals, documentation and settlement, while shortening the standard export realisation period to nine months.
India’s foreign exchange rulebook for exporters and importers has changed in ways that will be felt in day-to-day trade finance, especially in how banks handle approvals, documentation and settlement timelines. The Reserve Bank of India notified the Foreign Exchange Management (Export and Import of Goods and Services) Regulations, 2026 on 13 January 2026, then amended them on 22 September before the framework took effect on 1 October. According to PwC, the new regime replaces the 2015 export regulations and related master directions, with a stated aim of making trade processing quicker and easier, particularly for smaller businesses.
The most important shift is that more judgement now sits with Authorised Dealer banks rather than the central bank. Under the previous system, many exceptions had to be tested against conditions set by the RBI. Now banks can decide whether to extend the export realisation period, allow set-off arrangements and approve third-party payments under their own policies. That should speed up routine cases, but it also means exporters may face different outcomes from one bank to another, depending on internal controls and risk appetite.
Regulation 19 requires each bank to publish its own policy and standard operating procedures, including the documents it wants, the timelines it follows, the charges it applies and the levels of approval involved. In practice, that could create a more flexible but less uniform market, with the same transaction accepted by one bank and refused by another. The new rules also require an escalation path and an internal appeal process, giving customers a formal route to challenge a rejection.
For exporters that regularly ship samples, replacements or gifts, the rules around free-of-cost consignments have also been simplified. Where goods are sent without consideration, the export value may now be declared as nil in the Export Declaration Form. That removes the need for a separate waiver process in each case, provided the shipping bill and declaration correctly identify the transaction and describe it accurately. This is likely to matter most to businesses that send warranty replacements, exhibition goods or promotional samples on a frequent basis.
The new framework also gives banks more room to permit netting-off between money owed on exports and money payable on imports, including where the other party is a related overseas group or associate company. Financial Express reported that the regulations now let banks approve set-off where the transactions are within the relevant export realisation period, or any extension granted by the bank. That could reduce unnecessary back-and-forth cash movements for companies that buy from and sell to the same overseas counterparty.
Third-party receipts and payments have been loosened as well. Instead of hard-coded conditions, the bank can now approve these arrangements if it is satisfied the trade is genuine and the paperwork is sound. That may help where payment comes from a financier, affiliate or other commercial partner rather than the named buyer. At the same time, the compliance burden has shifted onto the exporter to know each bank’s documentation standards in advance, because some lenders may still insist on tripartite agreements while others may accept a simpler explanation.
The tighter rule on export proceeds is another change businesses will want to watch closely. The realisation period is now nine months for most shipments and 12 months for exports invoiced or settled in rupees, after the September amendment shortened the timeline from the longer periods originally proposed in January. The new regime also removes a fixed deadline for import payments, instead tying payment to the underlying contract, with banks allowed to grant extensions. India Briefing and other legal and trade advisories say the broader architecture is meant to streamline cross-border compliance, but the practical effect will depend heavily on how individual banks implement their new discretion.
Disclaimer: This article is intended to inform and educate, not to recommend or endorse any financial product, investment or strategy. Please consider your own financial circumstances and seek professional advice where appropriate before making financial decisions.
