1.Introduction
On January 13, 2026, the Reserve Bank of India (the “RBI”) issued the Foreign Exchange Management (Export and Import of Goods and Services) Regulations, 2026 (Notification No. FEMA 23(R)/2026-RB; the “Regulations”). The Regulations are scheduled to take effect on October 1, 2026; upon their implementation, the previous regulations—the Foreign Exchange Management (Export of Goods & Services) Regulations, 2015—will be superseded by the Regulations. In connection with this, both the Master Direction – Export of Goods and Services and the Master Direction – Import of Goods and Services, as well as the 96 export-related and 71 import-related circulars (167 in total) listed in the annex, will likewise be superseded.
The Regulations were issued following two rounds of public consultation and represent a structural revision of the RBI’s foreign exchange regulations governing trade. Previously, exports and imports were regulated under separate legal frameworks, with the applicable requirements dispersed across numerous circulars and Master Directions. By bringing exports and imports of goods, services and software under a single regulatory framework and adopting a principles-based approach, the Regulations seek to reduce regulatory fragmentation and enhance the ease of doing business.
Shortly before their scheduled entry into force, the Regulations were partially amended by Notification No. FEMA 23(R)/(1)/2026-RB dated September 22, 2026. This article outlines the key changes introduced by the Regulations, as amended, and discusses their practical implications for Japanese companies.
2.Key Changes Introduced by the Regulations
(1) Introduction of a Unified Export Declaration Form
Under the Previous Regulations, different reporting forms applied to different types of exports: the Export Declaration Form (the “EDF”) applied to exports of goods, while SOFTEX applied to exports of software. The Regulations unify these reporting requirements and require all exports of goods, services and software to be declared using a single EDF (Regulation 3).
One particularly significant change is the introduction of an EDF filing obligation for service exporters, who were not subject to a declaration requirement under the Previous Regulations. Service exporters must submit an EDF within 30 days from the end of the month in which the relevant invoice was raised. Consolidated reporting is permitted where services are exported to multiple overseas customers during the same month.
(2) Changes to the Time Period for Realisation of Exports
The time limit for realisation and repatriation of export proceeds was amended several times under the Previous Regulations and stood at nine months immediately before the Regulations were scheduled to come into force.
The Regulations were also amended following their issuance. The applicable time limits as of their scheduled effective date are set out below.
|
Type of export |
Previous Regulations |
Regulations as originally issued |
Regulations as amended |
|
Export of goods |
Nine months from the date of shipment |
15 months from the date of shipment |
9 months from the date of shipment |
|
Goods exported to a warehouse outside India |
15 months from the date of shipment |
15 months from the date of sale of goods from the warehouse |
9 months from the date of sale of goods from the warehouse |
|
Export of services |
9 months from the date of export |
15 months from the date of invoice |
9 months from the date of invoice |
|
Exports invoiced and/or settled in Indian Rupees |
— |
18 months |
12 months |
|
Project exports |
Separately prescribed |
As per the payment terms of the contract |
Same as originally issued |
As shown above, the time limit for ordinary exports of goods and services remains nine months under both the Previous Regulations, as in effect immediately before the Regulations come into force, and the Regulations as amended.
For goods exported to a warehouse outside India, however, the Previous Regulations prescribed a period of 15 months from the date of shipment. When originally issued, the Regulations prescribed a period of 15 months from the date of sale of the goods from the warehouse. Following the amendment, this period has been shortened to nine months from the date of sale of the goods from the warehouse.
The Regulations also introduce a separate 12-month period where exports are invoiced and/or settled in Indian Rupees, which is three months longer than the period applicable to exports denominated in foreign currencies. This separate treatment may be viewed as reflecting India’s policy of promoting the internationalisation of the rupee.
In addition, although project exports were previously governed by separate circulars, the Regulations now address them within the principal regulatory framework by providing that the applicable time limit is to be determined as per the payment terms of the contract.
An Authorised Dealer (an “AD Bank”) may, at the request of an exporter citing the reasons for the delay, allow an extension of the time for realisation and repatriation of export proceeds beyond the specified period if the AD Bank is satisfied with those reasons.
(3) Greater Flexibility in Payment Deadlines for Imports and Set-Off of Export Receivables Against Import Payables
Under the previous framework, payments for imports were generally required to be made within six months from the date of shipment. The Regulations abolish this fixed time limit and instead provide that the payment deadline for imports will be determined in accordance with the contractual terms applicable to the relevant import transaction (Regulation 9).
The Regulations also permit export receivables to be set off against import payables with the same overseas buyer or supplier, or their overseas group or associate companies, with the approval of an AD Bank (Regulation 7).
The principal changes under the new framework are the removal of the requirements that the set-off be completed within the same calendar year and that there be a written agreement governing the set-off. The Regulations also permit amounts relating to goods to be set off against amounts relating to services. Any set-off must be completed within the stipulated period for realisation of export proceeds, or any extended period allowed by the Authorised Dealer.
(4) Measures Relating to Unrealised Export Proceeds and Imports That Do Not Materialise
The Regulations clarify the measures applicable to unrealised export proceeds and imports that do not materialise. Where export proceeds remain unrealised for more than one year beyond the due date for realisation, the exporter may undertake further exports only against full advance payment or an irrevocable letter of credit (Regulation 13). Where an import does not materialise, the importer is required to repatriate any advance payment, and failure to do so will result in a requirement that any future advance payments for imports be supported by a bank guarantee or similar instrument (Regulation 12(2)).
(5) Enhanced Role of AD Banks
The Regulations position AD Banks as central actors in the foreign exchange compliance framework and require them to establish and disclose internal policies and SOPs for handling export and import transactions (Regulation 19).
The Regulations also introduce other changes, including the express provision for Merchanting Trade Transactions (Regulation 16) and the formal integration of international trade invoicing and settlement in Indian Rupees into the regulatory framework (Regulation 17).
3.Implications for Japanese Companies
The entry into force of the Regulations may have several practical implications for Japanese companies engaged in international transactions in India.
The consolidation of the export and import regulations, together with the rationalisation and consolidation of the relevant reference materials, should help simplify compliance frameworks. At the same time, companies should be aware that the adoption of a principles-based approach may result in differences in practice among AD Banks.
The introduction of the EDF reporting requirement for service exporters is likely to be particularly significant for Japanese companies. Japanese companies with subsidiaries in India should assess how the new requirement may affect their existing operational workflows.
For ordinary exports of goods and services, the time limit for realisation and repatriation of export proceeds will remain nine months, as under the Previous Regulations. Exports of goods to a warehouse outside India require separate attention, however, because the starting point for calculating the period has changed to the date of sale of the goods from the warehouse, rather than the date of shipment, and the applicable period has been shortened.
The relaxation of the requirements for the set-off of export receivables against import payables may also be a beneficial development from the perspective of intra-group cash management.
The Regulations are scheduled to come into force on October 1, 2026. Companies should continue to monitor the development of AD Banks’ internal policies and SOPs, as well as any additional circulars or guidance issued by the RBI.
TMI Associates, India Practice Group
Masaya Hirano／ Satoshi Ogawa／Ippei Shimizu
info.indiapractice@tmi.gr.jp
Under the regulatory framework currently in force in India, the entry of foreign law firms into the Indian market and the provision of advice on Indian law by foreign law firms are restricted. This article is intended solely to provide general market information to clients in Japan and outside India and does not constitute legal advice on Indian law.