• Introduction:

The Reserve Bank of India (“RBI”) on 16^th January 2026, issued the Foreign Exchange Management (Export and Import of Goods and Services) Regulations 2026 (“Proposed Regulations”). The Proposed Regulations will come into effect from 1^st October 2026 and will cover exports and imports of goods, services, software and merchanting trade, superseding the fragmented framework spanning: (a) the Master Direction – Import of Goods and Services 2016; (b) the Master Direction – Export of Goods and Services 2016 (“Current MD”); (c) the Foreign Exchange Management (Export of Goods and Services) Regulations 2015 (collectively, the “Current Regulations”); (d) all other circulars and directions mentioned in the Annex to the notification no. RBI/2025-26/194 dated 16^th January 2026; and (e) Merchanting Trade Transactions (MTT) – Revised Guidelines, 2020. Through this article, we shed light on the major changes introduced vide the Proposed Regulations.

• Key changes introduced:
• Definitions:
• The definition of ‘authorised dealer’ (“AD”) has been amended. Under the Current Regulations, AD includes a person carrying on business as a factor and authorised as such under the Foreign Exchange Management Act, 1999 (as amended). The Proposed Regulations do not include specific reference to a factor.
• The definition of ‘project export’ has been introduced, with the meaning ascribed to it under Chapter 11 of the Foreign Trade Policy, 2023 (“FTP”).
• Under the Current Regulations, ‘software’ is included under the definition of export and implied to be a ‘good’ as per the definition. The Proposed Regulations have clarified that ‘software’ forms part of ‘services’.
• Delegation of power to AD: ADs have been provided with increased oversight under the Proposed Regulations and can now exercise full discretion to grant reasonable extensions on export realizations, approve write-offs, and digitally close cases via Export Data Processing and Monitoring System (“EDPMS”) and Import Data Processing and Monitoring System (“IDPMS”), all without prior RBI reference or approval. Although this reduces central intervention, it calls for rigorous monitoring by ADs.
• Advances: Under the Current Regulations and the Current MD, upon the approval of an AD, exporters having a minimum of 3 (three) years’ satisfactory track record can receive advance payment for a tenor of up to 10 (ten) years. However, the Proposed Regulations do not expressly mention this. Given that Proposed Regulations will supersede the Current MD as well, there is no clarity as regards whether the RBI will issue a fresh set of directions which will provide for advance payment for longer tenors (in excess of 3 (three) years).
• Interests: For advance export payments or delayed import payments, any interest charged or paid must not surpass the all-in-cost ceiling for trade credit, as per the Foreign Exchange Management (Borrowing and Lending) Regulations, 2018 (as amended). Further, exporters must route advance receipts and subsequent export proceeds through a single AD. However, they can now route such payments through another AD by intimating both ADs involved of the change.
• Set-off: Under the Proposed Regulations, set-off flexibility has been introduced for set-off of export receivables against import payables from / to the same overseas buyer or supplier, or with their overseas group or associate companies. Generally, non-default related set-off are not common under the Indian foreign exchange norms.
• Reporting: Reporting is now fully digital and anchored in EDPMS and IDPMS, with uniform, shorter, and stricter timelines that overhaul the scattered deadlines across the Current Framework. ADs are now required to upload: (i) export declaration forms (“EDF”) / shipping bills for goods and services exports (including non-electronic data interchange ports); and (ii) import bills of entry / service details (for real-time tracking of inward / outward remittances) to EDPMS and IDPMS respectively. Further, under the Current Regulations, reporting of export of computer software and audio / video television software is to be completed by way of SOFTEX. Pursuant to Proposed Regulations, reporting is to be completed by way of EDFs within 30 (thirty) days from the end of the month in which invoice for services have been raised.
• Unrealized exports and immaterialized imports: Under the Proposed Regulations, ADs may, pursuant to being satisfied about reasonability of exporter’s / importer’s delay to realise the export / import proceeds, extend the timeline for such realisation. This is, however, subject to the following considerations:
• Imports: Failure to repatriate import advances within the stipulated time or mark off IDPMS entries requires future import advances to be backed by an unconditional, irrevocable standby letter of credit, a guarantee from an international bank of repute, or an AD guarantee backed by a counter-guarantee from an international bank of repute.
• Exports: For unrealized export proceeds beyond 1 (one) year from the due date or the extended timeline by the AD, the exporter must undertake future exports only against full advance payment or an irrevocable letter of credit.
• Merchanting Trade Transactions (“MTT”): The Proposed Regulations permit third party payments under MTT upon the AD being satisfied by the reasons cited by the customer involved. The period between outward and inward remittances must not exceed 6 (six) months, or the time period as extended by the AD upon its satisfaction. Further, third parties involved must provide MTT documents to the AD for the purpose of evidencing genuineness of the transaction. The AD must: (i) verify transactions before crediting / debiting customer accounts; (ii) update systems like EDPMS / IDPMS; and (iii) monitor to confirm both legs are completed on time.
• Project Exports: Project export related payments are permitted by ADs, subject to the underlying contract. A project exporter may invest temporary cash surpluses generated from exports outside India into short-term instruments (original or residual maturity of 1 (one) year or less), such as treasury bills or bank deposits abroad, subject to monitoring by an AD.
• Standard Operating Procedure (“SOP”): The Current MD provides details provisions in relation to export and import factoring. However, under the Proposed Regulations, ADs are advised to put in place a comprehensive SOP for handling transactions as contemplated thereunder. The list of requirements to be included under the policy include, inter alia: (i) documentation, timelines, and charges for approvals; (ii) extensions for realization of import payments; (iii) adjustment of export proceeds to be realized; (iv) advances related to export and imports; (v) delegations; and (vi) factoring.
• Conclusion and Next Steps:
• Impact on businesses: Businesses engaged in imports and exports must now follow a streamlined reporting process, with exports centralised via EDPMS and imports via They also gain greater flexibility to amend advance remittances for exports and import remittances, as well as to handle delayed import payments or exports, all without prior RBI approval, and instead obtaining approvals directly from their relevant AD.
• Impact on banks: ADs now enjoy greater discretion over reporting, approvals for delays in exports and import advances, and associated timelines. This reduces the burden of constantly seeking RBI approvals, thereby empowering ADs with decision-making authority subject to their investigation, due diligence, and internal SOPs.

ADs and other relevant stakeholders shall be required to do the following pursuant to the Proposed Regulations:

• Preparing and / or updating internal policy(ies) and SOPs;
• increasing correspondence with ADs for clarifications required regarding their standard of reasonability regarding procedure and documentation requirements;
• re-drafting and re-aligning all standard internal documentation in accordance with the Proposed Regulations; and
• updating internal management / teams on the digital reporting requirements.

Authors:

Ankit Sinha

Partner, Juris Corp

Email: ankit.sinha@juriscorp.in

Pranav Rattan

Senior Associate

Email: pranav.rattan@juriscorp.in

Sangha Nath

Associate, Juris Corp

Email: sangha.nath@juriscorp.in

The authors have been assisted by Ms. Vaishnavi Panyam, a Junior Associate with the Firm, in the preparation of this article.

Disclaimer: 

This article is intended for informational purposes only and does not constitute a legal opinion or advice. Readers are requested to seek formal legal advice prior to acting upon any of the information provided herein. This article is not intended to address the circumstances of any particular individual or corporate body. There can be no assurance that the judicial / quasi-judicial authorities may not take a position contrary to the views mentioned herein.