Effective 1 October 2026 | A practical compliance guide for exporters, importers, MSMEs and service businesses

India’s foreign trade compliance framework has entered a new phase with the introduction of the Foreign Exchange Management (Export and Import of Goods and Services) Regulations, 2026, effective 1 October 2026. The new framework consolidates key requirements governing export declarations, realisation of export proceeds, import payments, third-party transactions, set-off arrangements and reporting through authorised dealer (AD) banks.

For businesses engaged in international trade, the changes bring a combination of procedural flexibility, simplified processes for eligible small-value transactions and greater emphasis on documentation, payment monitoring and bank-level compliance.

The regulations are particularly relevant for goods exporters, IT and IT-enabled services (IT/ITES) companies, software businesses, consultants, freelancers, SaaS providers, MSMEs, importers and merchanting trade operators.

1. Export realisation timelines: Understanding the applicable deadlines

One of the most important aspects of the new framework is the timeline for realising and repatriating export proceeds.

The January 2026 version of the regulations originally prescribed a 15-month period for ordinary exports and 18 months for qualifying exports invoiced or settled in Indian rupees. A September 2026 amendment revised these periods before the new framework became effective.

Under the amended framework applicable from 1 October 2026, the general position is:

• Goods exports: Export proceeds must ordinarily be realised within nine months from the date of shipment.
• Service exports: The period is generally nine months from the date of invoice.
• Goods sold from an overseas warehouse: The applicable period is generally nine months from the date of sale.
• Qualifying INR-invoiced or INR-settled exports: A 12-month period applies, subject to the relevant regulatory conditions.
• Project exports: The applicable payment terms are governed by the contract.

AD banks may extend the realisation period upon a reasoned request from the exporter, subject to the applicable requirements and the bank’s assessment.

What businesses should do: Review outstanding export invoices, update receivables trackers and configure accounting or treasury systems to calculate due dates from the correct triggering event. Warehouse exports require particular attention because the relevant date is the sale date rather than the shipment date.

2. Export Declaration Form (EDF): A major change for service exporters

The new framework introduces an Export Declaration Form (EDF) requirement for service exports, including software exports, subject to the applicable provisions.

Previously, software exports were handled through the SOFTEX framework, while many other service exports did not follow the same declaration process. The new framework changes this approach.

As a general rule, the EDF must be furnished within 30 days from the end of the month in which the service invoice is raised. For non-software services, the regulations provide an alternative route to file the declaration on or before receipt of payment. The applicable filing channel and requirements should be confirmed with the relevant AD bank or specified authority.

This change is especially relevant to:

• IT and ITES companies
• Software and SaaS businesses
• Consultants and professional service providers
• Freelancers and independent service exporters
• SEZ units and other eligible service-export businesses

What businesses should do: Establish a monthly invoice-to-EDF reconciliation process, assign responsibility for filing, maintain supporting contracts and invoices, and verify the applicable reporting process with the bank or designated authority.

3. EDPMS reporting and closure of small-value export entries

The Export Data Processing and Monitoring System (EDPMS) continues to be important for monitoring export transactions. Under the new framework, AD banks are required to record relevant service-export declarations and update or close entries in accordance with the prescribed process.

A significant simplification applies to eligible export transactions of up to ₹10 lakh. EDPMS entries may be closed based on the exporter’s declaration that the payment has been realised in full or otherwise. A quarterly declaration may also be submitted for bulk closure, subject to the regulatory requirements.

This provision can reduce administrative effort for businesses handling a large volume of relatively small export transactions.

What businesses should do: Identify eligible open entries, reconcile them against bank statements and invoices, and use the declaration-based closure process only where the transaction qualifies. The declaration must be accurate and supported by appropriate records.

4. Greater flexibility in export proceeds write-off and reduction

The new framework provides mechanisms for reducing export values or dealing with export proceeds that cannot be fully realised, subject to the relevant conditions and the authorised dealer’s assessment.

This may be useful where businesses face genuine commercial difficulties, including customer insolvency, disputes, deductions or other circumstances affecting recovery.

However, flexibility does not remove the need for evidence. Businesses should retain correspondence with customers, credit notes, settlement agreements, proof of recovery efforts and other relevant documents.

For eligible transactions up to ₹10 lakh, the framework also provides a simplified route for closure, reduction or non-realisation based on an exporter’s declaration, subject to the applicable provisions.

What businesses should do: Create a documented process for identifying bad debts and disputed receivables, assessing eligibility, obtaining internal approval and submitting the required evidence to the AD bank.

5. Set-off of export receivables and import payables

The regulations provide a framework for setting off export receivables against import payables, including qualifying transactions involving the same overseas party or group or associated entities. The rules also allow qualifying goods and services transactions to be considered under the prescribed conditions.

This can offer greater flexibility to businesses with two-way international trade flows.

For example, a company exporting services to an overseas group entity and importing eligible goods or services from a related entity may be able to explore a permitted set-off arrangement, subject to the applicable conditions and bank requirements.

What businesses should do: Maintain transaction-level reconciliations, establish the relationship between counterparties, document the commercial rationale and confirm that the proposed arrangement meets the regulatory and bank requirements before implementation.

6. Third-party receipts and payments

International trade transactions sometimes involve payments from, or payments to, a party other than the direct buyer or supplier. The new framework expressly addresses third-party settlement arrangements, allowing authorised dealers to consider genuine and properly documented transactions under the applicable requirements.

This is relevant to exporters receiving payments through group entities, international platforms or other approved commercial arrangements.

What businesses should do: Keep clear evidence of the contractual relationship, payment instructions, identity of the parties, commercial rationale and supporting invoices. Confirm acceptability with the AD bank before relying on a third-party payment arrangement.

7. Import payments and advance remittances

The framework also revises the approach to import payment timelines and advance payments.

Import payments are generally linked to the underlying contractual terms, with scope for the AD bank to consider extensions under the applicable rules. The framework also gives AD banks a greater role in setting limits and conditions for import advances.

Businesses should not assume that contractual flexibility removes the need for foreign exchange compliance. The underlying contract, payment milestones, supporting documents and bank requirements remain important.

What importers should do: Review purchase agreements and payment clauses, document advance payments, track settlement deadlines and coordinate with the AD bank when payments are delayed or an advance remains unsettled.

8. Unrealised export proceeds: A risk that needs early attention

Overdue export receivables require particular care. Under the new framework, where export proceeds remain unrealised for more than one year beyond the applicable due date or extended date, the exporter may face restrictions on making further exports except against full advance payment or an irrevocable letter of credit, as prescribed by the regulations.

This can affect working capital, customer relationships and the ability to accept new overseas orders.

What businesses should do: Maintain an ageing report for export receivables, escalate overdue balances well before the deadline, document recovery efforts and request extensions from the AD bank where justified. Do not wait until a receivable becomes seriously overdue to investigate the cause.

9. Authorised dealer banks: Greater responsibility and transparency

The new framework places greater operational responsibility on AD banks for monitoring export proceeds, processing declarations, updating EDPMS and IDPMS records and handling eligible requests.

Banks are also expected to maintain documented policies and procedures, including processes for relevant extensions and other permitted decisions. Publication of applicable policies and greater transparency around charges can help customers understand the bank’s process.

For businesses, this makes it important to know the applicable bank procedure, documentation requirements and escalation channels.

10. A practical compliance checklist for businesses

Businesses can take the following steps to prepare for the new framework:

1. Review export receivables: Identify overdue invoices and calculate applicable deadlines.
2. Update systems: Ensure due-date calculations reflect the correct shipment, invoice or warehouse-sale date.
3. Implement EDF controls: Set up monthly reporting for service exports and confirm the applicable filing channel.
4. Reconcile EDPMS and IDPMS: Investigate open entries and resolve mismatches with the bank.
5. Review small-value transactions: Identify eligible transactions up to ₹10 lakh for declaration-based closure.
6. Document exceptional cases: Maintain evidence for extensions, write-offs, reductions and non-realisation.
7. Review payment structures: Check set-off arrangements and third-party receipts or payments before processing them.
8. Update import contracts: Align payment terms, advances and settlement procedures with the applicable framework.
9. Monitor aged receivables: Escalate long-overdue export proceeds to avoid restrictions on future exports.
10. Coordinate with the AD bank: Obtain clarity on its published procedures, documentary requirements and timelines.

Conclusion

The Foreign Exchange Management (Export and Import of Goods and Services) Regulations, 2026 represent an important development in India’s cross-border trade compliance framework. They bring together several aspects of export and import transactions while providing procedural flexibility in selected areas.

For businesses, the central message is clear: simplified procedures must be accompanied by reliable documentation, accurate declarations and active monitoring of payment timelines.

Exporters, importers, finance teams, accountants and compliance professionals should review their current processes, identify gaps and coordinate with their authorised dealer banks to ensure that their procedures reflect the applicable regulations.

Disclaimer: This article is intended for general informational purposes and is not legal, tax or regulatory advice. The applicability of individual provisions depends on the transaction, the relevant regulatory text and any subsequent amendments or directions. Businesses should consult the applicable Reserve Bank of India notifications and obtain professional advice where required.