The Reserve Bank of India (RBI) notified the Foreign Exchange Management (Export and Import of Goods and Services) Regulations, 2026, vide notification FEMA 23(R)/2026-RB dated 13 January 2026, followed by a directions circular issued on 16 January 2026. The new regulations comprehensively overhaul the framework governing export and import trade transactions under the Foreign Exchange Management Act, 1999, and are set to come into force on 1 October 2026.
Background
India's export-import trade has been governed by a patchwork of FEMA notifications, circulars, and master directions that have accumulated over the past two decades. The existing framework, built around the earlier FEMA regulations on export and import of goods and services, had become increasingly unwieldy as India's trade volumes expanded and the complexity of cross-border commercial arrangements grew.
The RBI undertook a comprehensive review of the regulatory architecture for trade transactions, with the objective of simplifying compliance, aligning regulatory requirements with contemporary trade practices, and providing greater operational flexibility to Authorised Dealer (AD) banks. The resulting FEMA 23(R)/2026-RB consolidates the regulatory framework into a single, modernised instrument that addresses the full lifecycle of export and import transactions.
Key Provisions
The new regulations introduce several significant changes to the existing export-import framework:
Extended repatriation period: The mandatory repatriation period for export proceeds has been extended from 9 months to 15 months. This change provides exporters with substantially greater flexibility to manage receivables, particularly in sectors characterised by extended payment cycles such as capital goods, project exports, and turnkey contracts.
Realisation timeline linked to date of sale: In a notable departure from the earlier framework, the timeline for realisation of export proceeds is now linked to the "date of sale" rather than the date of shipment. This change aligns the regulatory framework with commercial reality, recognising that the sale transaction — not the physical movement of goods — is the more appropriate trigger for monitoring repatriation compliance.
Enhanced AD bank flexibility: The regulations grant greater operational autonomy to Authorised Dealer banks in processing trade transactions, reducing the instances where specific RBI approval is required. AD banks are empowered to exercise discretion in a wider range of trade-related matters, subject to regulatory guidelines and internal risk management frameworks.
Consolidated regulatory instrument: The 2026 Regulations replace and consolidate multiple existing notifications and circulars into a single regulatory instrument, simplifying the compliance landscape for exporters, importers, and their banking partners.
Effective date: The regulations come into force on 1 October 2026, providing a transition period of approximately eight and a half months for market participants and AD banks to align their systems and processes with the new requirements.
Implications for Practitioners
The extended repatriation period from 9 to 15 months represents the most immediately impactful change for export-oriented businesses. Trade finance counsel and compliance teams should review existing export contracts and receivables management policies to assess how the longer timeline affects working capital planning and regulatory reporting obligations.
The shift from shipment date to date of sale as the trigger for the realisation timeline will require significant adjustments to internal monitoring systems at both exporter and AD bank levels. Compliance officers should initiate a review of existing tracking mechanisms and ensure that trade documentation adequately records the date of sale for each export transaction.
AD banks should commence a comprehensive assessment of the enhanced discretionary powers conferred by the new regulations and develop internal guidelines for exercising this expanded authority within their risk appetite frameworks. Given the 1 October 2026 effective date, institutions have a defined window to complete system upgrades, staff training, and process documentation before the new regime becomes operational.