New FEMA Rules for Indian Exporters from 1 October 2026

If you export agricultural commodities from India — or buy from Indian exporters — the rules that govern how export payments are collected, adjusted and reported change on 1 October 2026, when the new FEMA export and import regulations take effect.

The direction of the rewrite, as reported by Business Standard (T.N.C. Rajagopalan’s Chatroom column, 29 September 2026), is greater commercial flexibility for businesses, with more scrutiny and extension powers placed in the hands of authorised dealer (AD) banks.

Here is what the new rules mean in practice, based on that reporting. Confirm each point with your AD bank before acting on it.

1. INR-Invoiced Exports Get 12 Months for Realization

Old rule: export proceeds had to be realized within 9 months.

New rule: exports invoiced or settled in Indian rupees get 12 months for realization. The same 12-month window applies to service exports settled in INR.

For agri-commodity exporters selling on open-account or extended credit terms into markets that settle in rupees, this is direct working-capital relief — three extra months before an overdue entry becomes a compliance problem.

2. Promotional Samples Get Simpler

The old GR-waiver procedure for nil-value promotional samples is dispensed with. Shipping free product samples to prospective buyers — a routine part of winning agro-export business — no longer needs the waiver paperwork it used to attract.

3. Set-Off: Export Receivables Against Import Payables

AD banks can now allow exporters to set off export receivables against import payables. The reported scope is wider than before:

• Cross-category adjustment is permitted — goods export receivables can be adjusted against service import payables, and vice versa.
• Set-off is explicitly allowed for transactions with overseas group companies or associate entities.

For trading houses that both export and import, this reduces the need to route two full payment legs through the banking system for offsetting amounts.

4. Import Advance Payments: The $200,000 Guarantee Threshold Goes

Old rule: import advance payments above a fixed statutory threshold of USD 200,000 required an unconditional standby letter of credit or bank guarantee.

New rule: the rigid threshold is removed. Whether a guarantee is needed is now decided by each AD bank under its own board-approved credit policy.

One important counterweight: if an earlier import advance remains unadjusted and the amount cannot be repatriated, all subsequent advance remittances by that importer will mandatorily require an unconditional, irrevocable standby LC or bank guarantee. Keeping past advances squared away now matters more, not less.

5. Merchanting Trade Loses Its 9-Month Cap

Merchanting trade — buying goods abroad and selling them abroad without the goods entering India — previously had to be completed end-to-end within 9 months.

• The 9-month overall completion limit is abolished.
• The gap between the outward and inward remittance legs must not exceed 6 months, in either sequence — but AD banks can extend this on request.
• Both legs must be reported and closed across both EDPMS and IDPMS, and third-party receipts or payments are permitted subject to AD-bank review.

6. Service Exporters Move to EDF — and Service Imports Join IDPMS

• Non-software service exports come under mandatory Export Declaration Form (EDF) reporting for the first time. A single consolidated EDF can cover one month’s service exports, submitted by the payment receipt date.
• Software exporters will file an EDF instead of the old SOFTEX form, within 30 days after month-end.
• Service imports are formally integrated into IDPMS reporting, with supporting documents submitted to the AD bank. Interest on delayed payment for imported services is capped at the all-in-cost ceiling for trade credit.
• The overdue-receivables restriction — 100% advance or LC required for future exports if proceeds stay overdue for over a year — now applies equally to service exporters.

7. Bullion Rules Tighten and Loosen at Once

Advance remittances for importing gold and silver are strictly prohibited, while the old 90-day credit-period restriction on gold imports is removed. Not directly relevant to agri trade, but worth knowing for groups with bullion exposure.

What Exporters Should Do Before 1 October

• Meet your AD bank early. Extensions, set-offs and advance-payment terms now run through bank discretion and board-approved policies — your bank’s interpretation is the rule that applies to you.
• Review invoicing currency. The 12-month realization window attaches to INR invoicing and settlement. Where your buyers can settle in rupees, the cash-flow benefit is real.
• Clean up EDPMS. With set-offs and extensions bank-driven, old open entries and unadjusted advances will decide how much flexibility your bank offers.
• Simplify sample shipments. Brief your logistics team that nil-value promotional samples no longer need GR-waiver handling.
• Merchant traders: re-check leg gaps against the new 6-month rule and the dual EDPMS/IDPMS reporting requirement.

The Bottom Line

The October 2026 FEMA regulations trade rigid thresholds for bank-supervised flexibility: longer rupee realization, simpler samples, receivable set-offs and an end to the merchanting-trade clock — balanced by sharper consequences for stale advances and overdue receivables.

This article is based on press reporting of the new regulations (Business Standard, 29 September 2026) and is general information, not legal or compliance advice. The operative text is the RBI notification itself — confirm the details and your bank’s own policy before changing how you invoice, settle or report.