RBI brings services under unified Fema, eases import-export compliance

New Delhi: The Reserve Bank of India overhauled decade-old foreign exchange rules, bringing exports and imports of goods and services under a unified regulation to simplify procedures, ease compliance for smaller exporters, and strengthen monitoring through digital systems.

The new Foreign Exchange Management (Export and Import of Goods and Services) Regulations, 2026 (Fema), notified on 13 January and set to come into force after nine months in October 2026, supersede the 2015 export regulations. The RBI released the order on Friday.

The overhaul follows two rounds of public consultation and nearly two years of deliberation. Given the well-developed foreign trade policy, customs laws and other sector-specific rules, the RBI has now placed greater responsibility on authorized dealer banks to manage day-to-day trade-related matters based on their internal policies and assessment of the bona fides of each transaction, according to experts.

“This marks a shift in how trade regulation is administered. With banks now having wider discretion — and being closer to their customers — the process is expected to become more streamlined, supporting ease of doing business,” said Sunil Kumar, partner—tax and regulatory services, EY India. “One significant change is the requirement for service exporters to come within the formal reporting system. This adds transparency and brings services in line with how exports of goods are already handled under Fema.”

According to Kumar, the framework also tightens discipline around the realisation of export proceeds. “If an exporter’s dues remain outstanding for more than a year beyond the allowed realisation period, including any extension approved by the bank, further exports may only be carried out against full advance payment or under an irrevocable letter of credit,” he said.

As per the RBI notification, exporters of goods will continue to declare shipment values through the Export Declaration Form (EDF) embedded in shipping bills at EDI ports. Service exporters will now have a defined 30-day window from invoice issuance to file declarations, with flexibility for consolidated monthly filings and bank-approved extensions. Software exports have been explicitly brought under the definition of services, with authorised dealers and Software Technology Parks of India (STPI) recognised as specified authorities.

EDI, or Electronic Data Interchange, ports are those where customs clearance and trade documentation are processed electronically rather than through manual paperwork.

STPI is a government organisation under the ministry of electronics and information technology that supports and regulates software and IT-enabled services exports.

The RBI has retained the existing 15-month timeline for realisation and repatriation of export proceeds for goods and services, but extended the window to 18 months where exports are invoiced or settled in Indian rupees.

The regulations also codify existing flexibilities, such as under-realisation of export value, set-off of export receivables against import payables, and third-party receipts and payments, subject to bank satisfaction on the genuineness of transactions.

Merchanting trade transactions involving intermediaries must now be completed within six months between inward and outward remittances, though banks may grant extensions. Advance remittances for imports will continue to be permitted, but advance payments for gold and silver imports are prohibited.

According to the notification, if export payments remain unpaid for more than a year after the due date, exporters will be allowed to make future shipments only against full advance payment or an irrevocable letter of credit.

For exporting companies, the revised framework introduces greater procedural clarity, particularly for service exporters, software exporters and smaller firms. Defined timelines for filing export declarations, along with the option of consolidated monthly filings, are expected to reduce compliance uncertainty and dependence on varying bank practices.

Under the earlier framework, Fema regulations and RBI directions governed import payments, advance remittances and reporting, but they were handled largely through RBI circulars, master directions and banking practice, rather than through a single, consolidated regulation.

Meanwhile, the new provision allowing closure of export monitoring entries for transactions of up to ₹10 lakh through self-declaration, including quarterly bulk submissions, is likely to ease documentation requirements for small-value exporters.

At the same time, exporters will be subject to closer monitoring by authorised dealer banks, with mandatory follow-up on delayed realisation of export proceeds and restrictions on further exports in cases of prolonged non-realisation.

The RBI has also directed authorised dealers to put in place detailed internal policies and standard operating procedures, disclose charges transparently, and ensure customers are not penalised for regulatory delays, signalling a sharper focus on process discipline within banks alongside easier compliance for genuine exporters and importers.

“For individuals dealing with foreign exchange, including students, tourists and those sending or receiving money abroad, the impact is indirect,” said Abhash Kumar, a trade expert. “The regulations primarily govern trade in goods and services rather than personal remittances. However, stronger monitoring and standardised bank processes could lead to smoother cross-border transactions overall.”

India’s total merchandise exports during April–December 2025 (FY26) rose to $330.29 billion from $322.41 billion a year earlier, while imports increased to $578.61 billion, resulting in a trade deficit of $248.3 billion.

In December 2025 alone, exports rose to $38.51 billion from $37.80 billion a year earlier, while imports climbed to $63.55 billion from $58.43 billion, pushing the monthly trade deficit to $25.04 billion, compared with $24.53 billion in November 2025 and $20.63 billion in December 2024, according to commerce ministry data.