New FEMA Framework Effective 1 October 2026: Export-Import Regulations Consolidated

Indian exporters, importers, and the professionals advising them should take note: a significant overhaul of the FEMA cross-border trade framework comes into force on 1 October 2026, replacing a regime that had been built up through 167 separate circulars over more than a decade.

The Principal Regulation

The Foreign Exchange Management (Export and Import of Goods and Services) Regulations, 2026 were notified via Notification No. FEMA 23(R)/2026-RB dated 13 January 2026. These regulations consolidate the earlier FEMA (Export of Goods & Services) Regulations, 2015, along with the relevant Master Directions and RBI circulars issued over the years, into a single, unified rulebook superseding the 2015 Regulations (subject to the applicable savings provision for pending matters). The consolidation also repeals the Memorandum of Instructions on Project and Service Exports (PEM), 2014 and supersedes the Merchanting Trade Guidelines, 2020, folding both into the new regime.

Key Substantive Changes

1. Export Realisation Timeline: the standard period for realising export proceeds moves to 15 months (up from the shorter interim period that had applied), with 18 months for certain INR-denominated trade - unless RBI specifies otherwise for a particular category. Notably, a temporary amendment on 5 June 2026 had reverted the realisation period to 9 months in the interim; that interim rule stays in force only until 1 October 2026, when the new 15/18-month standard under the 2026 Regulations takes over.
2. Merchanting Trade Transactions (MTT): the profitability requirement - previously a mandatory condition under the 2020 Merchanting Trade Guidelines - has been omitted in the new regulations, reflecting the increasingly blended nature of goods-and-services cross-border trade, including warehouse exports with add-on fulfilment services from overseas counterparts.
3. Third-Party Receipts and Payments: the framework has been realigned to better accommodate commercial realities of modern trade structures where payment doesn't flow directly between the named exporter and importer.

The September 2026 Amendment - Issued Before the Principal Regulations Even Took Effect

In an unusual sequencing, RBI notified a further amendment - the Foreign Exchange Management (Export and Import of Goods and Services) (Amendment) Regulations, 2026, dated 22 September 2026 - amending the very regulations that hadn't yet come into force, with both the principal regulations and this amendment taking effect together on 1 October 2026. Key features:

• New Regulation 20 empowers Authorised Dealer (AD) banks to directly handle transactions relating to exports, imports, and merchanting trade undertaken before 1 October 2026 that previously required specific RBI approval - effectively delegating legacy case clean-up to the AD-bank level rather than requiring fresh RBI reference.
• Amendment to Regulation 5(1) adjusts specific operative provisions governing realisation and reporting (exporters should check the exact sub-clause changes against their category of trade).

What Doesn't Change

Exporters already on the RBI's 'Caution List' as of 30 September 2026 continue to be governed by their existing orders/restrictions until formally removed - the new framework doesn't automatically reset their status.

Practical Compliance Checklist for CA/CS Professionals

1. Re-map client export realisation timelines - confirm whether each client's trade falls under the new 15-month (or 18-month INR-trade) standard from 1 October, rather than the temporary 9-month rule that applied until then.
2. Revisit merchanting trade structures - clients with MTT arrangements no longer need to demonstrate profitability as a standalone compliance condition; review existing MTT documentation accordingly.
3. Flag legacy pending approvals - any client with export/import/merchanting trade transactions from before 1 October 2026 that were stuck awaiting RBI approval should now be routed to their AD bank directly under the new Regulation 20 delegation.
4. Check Caution List status before assuming a client's past restrictions have lapsed under the new regime.
5. Verify directly on rbi.org.in before finalising any compliance position - given the regulation was amended just days before its own commencement, further clarificatory circulars are plausible in the early weeks after 1 October.

Why This Matters

This is one of RBI's most significant trade-compliance consolidations in years moving from a fragmented, circular-by-circular framework to a single rulebook, while simultaneously loosening specific commercial conditions (like the MTT profitability test) that had constrained legitimate trade structures. For professionals advising export/import clients, 1 October 2026 is a genuine before-and-after compliance marker, not a routine administrative update.