RBI's New Export-Import Regulations 2026 — What Foreign Subsidiaries Must Do Differently From October 2026

There is a hard deadline on the calendar that most foreign-owned Indian subsidiaries are not treating with the urgency it deserves.

On 1 October 2026, the Reserve Bank of India's Foreign Exchange Management (Export and Import of Goods and Services) Regulations, 2026 — notified vide Notification No. FEMA 23(R)/2026-RB on 13 January 2026 — come into force. On the same date, the 2015 regulations they replace, along with 167 associated circulars and both Master Directions on Export and Import of Goods and Services, are entirely superseded.

This is not an incremental update. It is the first time India's cross-border trade framework has been consolidated under a single regulatory instrument covering goods, services, and software simultaneously. For a foreign company with an Indian subsidiary that exports services to the parent, imports raw materials or equipment, or receives and makes intercompany payments — the way these transactions are documented, reported, and settled changes materially from October 2026 onwards.

The 2026 Regulations were developed through two years of public consultation — a draft was released in July 2024 and revised in April 2025 — before final notification. That consultation timeline is also what explains why much of the market is behind on preparation. The notification happened in January. Implementation is October. The window is narrowing.

WHAT THE 2026 REGULATIONS ACTUALLY REPLACE

The starting point is understanding the scope of what is being overwritten.

The Foreign Exchange Management (Export of Goods and Services) Regulations, 2015 governed export transactions. Import transactions were handled through a separate Master Direction. Both sat alongside over 160 standalone circulars that AD banks, exporters, and importers had been navigating — and interpreting differently — for over a decade.

The practical result: inconsistency. Different AD banks took different views on the same fact pattern. Service exporters and goods exporters operated under different documentation standards. SOFTEX forms for software exports existed as a category distinct from the Export Declaration Form used for goods. Companies doing both goods and services exports ran parallel reporting workflows to satisfy what were essentially two regulatory silos.

From 1 October 2026, that changes. A single set of regulations covers the full scope. One Export Declaration Form format applies across goods, services, and software. Import payments and export realisation sit within the same regulatory instrument for the first time.

THE CHANGE THAT MATTERS MOST FOR FOREIGN SUBSIDIARIES — THE NEW EDF FRAMEWORK

For foreign-owned Indian subsidiaries that provide services to the parent company — software development, IT services, back-office operations, engineering support — the new Export Declaration Form (EDF) requirements are the most directly operational change in the 2026 Regulations.

Under the old framework, software exports filed a SOFTEX form. Services exports used a different process. Both had their own timelines, their own submission authorities, and their own AD bank interpretations of what was acceptable documentation.

Under the 2026 Regulations, the SOFTEX form is abolished. A single consolidated EDF applies to all exports — goods, services, and software — with a single set of submission requirements.

For service and software exports specifically, the EDF must be submitted within 30 days from the end of the month in which the invoice was raised. One EDF can cover all service and software exports for the entire month. For goods exports, the EDF is submitted as part of the shipping bill at the EDI port — the existing process continues.

For a typical GCC or software subsidiary invoicing the US or UK parent company monthly, this means a monthly EDF filing cycle is now codified in the regulations rather than handled through informal AD bank practice. The submission goes to the relevant specified authority — AD Bank, STPI, or SEZ authority depending on the entity's registration — and the corresponding entry is created in EDPMS (Export Data Processing and Monitoring System).

The practical implication: foreign subsidiaries that previously managed software export reporting on an ad hoc or quarterly basis need to establish a monthly reporting workflow. The 30-day window from the month-end is firm.

THE IMPORT PAYMENT CHANGE — THE 6-MONTH RULE IS GONE

The 2015 framework had a fixed 6-month timeline for import payments. Foreign companies importing goods into India were required to settle the import payment within 6 months of the date of shipment, regardless of what the commercial contract said.

This created significant friction for companies with payment cycles that did not align with the regulatory timeline — particularly for capital goods imports on extended commercial credit terms.

The 2026 Regulations remove the fixed 6-month deadline entirely. Import payment timelines must now be aligned with the agreed contractual terms between the importer and the overseas supplier. AD banks assess the bona fide nature of the payment timeline and approve or monitor accordingly based on their own internal policies.

This is a genuine liberalisation for foreign subsidiaries importing equipment, components, or goods from the parent company or group entities. The transfer pricing benchmarking of the intercompany payment terms already requires commercial justification — that justification now also serves the FEMA compliance purpose, since the payment timeline flows from the contract terms.

The caveat: greater AD bank discretion also means greater AD bank variation. One bank's internal policy on what constitutes a reasonable extended payment timeline may differ from another's. Foreign subsidiaries should confirm their specific AD bank's framework for extended import payment timelines before relying on contractual terms that significantly exceed the old 6-month standard.

EDPMS, IDPMS, AND FETERS — WHY THE DIGITAL REPORTING BACKBONE NOW HAS LEGAL TEETH

Three digital monitoring systems sit at the core of the RBI's trade reporting infrastructure: EDPMS for exports, IDPMS for imports, and FETERS for foreign exchange transactions related to services.

Under the 2015 framework, these systems existed and AD banks used them. But the obligation to use them was embedded in Master Directions and circulars rather than in the principal regulation itself.

The 2026 Regulations change this by codifying EDPMS and IDPMS reporting as a formal regulatory obligation within the regulation itself. AD banks must enter EDF data into EDPMS within five working days of receipt from non-EDI ports. They must update, mark off, and close entries in both systems against specific timelines. FETERS reporting for all foreign trade transactions is now expressly required under the consolidated regulation.

For foreign subsidiaries, this means the data trail on every export invoice and every import payment is now formally embedded in a system that the RBI can monitor and enforce against — rather than relying on AD bank practices that varied by institution. The non-compliance surface area is cleaner to define, and the enforcement visibility from the RBI's side is substantially higher.

Companies that have been loose about EDPMS entry timing — particularly those where the India finance team raised invoices but the AD bank received documentation days or weeks later — need to tighten the internal workflow to ensure the 5-day EDPMS entry window is consistently met.

THE PRAVAAH PORTAL REQUIREMENT — ALL REFERENCES TO RBI NOW GO DIGITAL

One change that affects every company that has, at some point, sought a special RBI permission or clarification on a cross-border trade matter: the 2026 Regulations require all references from AD banks to the RBI to be routed through the PRAVAAH portal — Platform for Regulatory Application, Validation and Authorisation.

This is part of the broader digital-first direction of the RBI's regulatory framework. PRAVAAH was launched in May 2024 for various categories of regulatory applications. From October 2026, its use for FEMA EXIM-related references to the RBI becomes mandatory under the consolidated regulations.

For foreign subsidiaries, the practical impact is indirect — it is the AD bank that routes the reference through PRAVAAH, not the company directly. But it means that companies whose cross-border trade situations require AD bank escalation to the RBI — unusual payment structures, unrealised exports seeking write-off, special permission requests — will need their AD bank to use PRAVAAH, and the expected response timelines should account for that system.

WHAT STAYS THE SAME — AND WHY THAT MATTERS

The 2026 Regulations explicitly retain several features of the existing framework that foreign subsidiaries rely on:

Export realisation timeline: The 15-month window for realization of export proceeds — from the date of shipment for goods, from the date of invoice for services — is unchanged. Foreign subsidiaries invoicing the parent company on payment terms that fall within this window do not face any change to their existing realization framework.

Set-off arrangements: Export receivables can still be set off against import payables with the same overseas counterparty or a group entity. This is directly relevant to foreign-owned subsidiaries that both receive service fee payments from the parent and make payments to the same group for goods or other services. The netting arrangement remains permissible subject to AD bank satisfaction — it is now codified in the regulation itself rather than sitting in a circular.

Third-party payments: The ability to receive export proceeds from a third party — common in group structures where the parent's treasury centre pays on behalf of an affiliate — remains permissible under the 2026 Regulations.

Advance payments: The existing framework for advance receipts for exports and advance payments for imports is retained, with AD banks continuing to exercise discretion on approval.

Project exports: The framework is retained, with the specific addition that project exporters can deploy temporary cash surpluses earned abroad in short-term investments of up to one year maturity — treasury bills or bank deposits outside India — under AD bank monitoring. The Memorandum of Instructions on Project and Service Exports, 2014 is repealed from 1 October 2026.

THE PRACTICAL CHECKLIST FOR FOREIGN SUBSIDIARIES BEFORE OCTOBER 2026

The 2026 Regulations represent a shift from fragmented, circular-driven compliance to a unified, digitally monitored framework. For foreign-owned Indian subsidiaries, the preparation is operational as much as regulatory. Here is what needs to happen before 1 October 2026:

• Identify all export and import transactions. Map every category of cross-border transaction the Indian subsidiary conducts — service exports to the parent, goods imports, intercompany service receipts and payments, advance payments, third-party settlements. Each category needs to be reviewed against the new EDF, EDPMS, and import timeline frameworks.

• Replace SOFTEX workflow with the new monthly EDF cycle. If the subsidiary currently uses the SOFTEX form for software exports, that form no longer exists from October 2026. The finance and accounts team needs to be briefed on the monthly EDF process, the 30-day submission window, and the submission route relevant to the entity — AD bank, STPI, or SEZ.

• Review import payment terms. Any import agreements with contractual payment terms beyond 6 months need to be confirmed with the AD bank as acceptable under their internal policy framework. Do not assume that the removal of the 6-month rule means extended terms are automatically permitted — confirm with the specific bank.

• Audit EDPMS and IDPMS compliance history. Before October 2026, pull the current state of EDPMS and IDPMS entries for all open export and import transactions. Any unmatched entries, delayed closures, or missing mark-offs should be resolved with the AD bank before the new regulations impose the codified timelines.

• Align intercompany contracts with the new framework. Transfer pricing agreements, intercompany service agreements, and master supply agreements with the foreign parent should be reviewed to ensure payment terms, set-off arrangements, and any third-party payment structures are documented in a way that satisfies the AD bank's bona fide assessment under the 2026 Regulations.

• Train the finance team. The 2026 Regulations represent a significant enough change to the daily compliance workflow — particularly for service export reporting — that a briefing session for the India CFO and finance team before October is not a nice-to-have. The transition from SOFTEX to EDF, the new EDPMS timelines, and the removal of the import payment fixed deadline all require the team to operate differently from day one.
  

HOW ACCORP PARTNERS HELPS FOREIGN SUBSIDIARIES PREPARE

For foreign-owned Indian subsidiaries managing the October 2026 transition, Accorp Partners provides FEMA compliance support across the full range of obligations — from reviewing intercompany transaction structures against the new EDF and EDPMS requirements to advising on import payment terms and coordinating with AD banks on set-off and third-party payment frameworks.

For subsidiaries that have existing EDPMS or IDPMS backlogs — unresolved entries, delayed closures, or historic reporting gaps — Accorp's team works with the AD bank to regularise these before the new framework makes the reporting obligations formally enforceable at the regulatory level.

Learn more about Accorp Partners' India incorporation and compliance services here: https://accorppartners.com/services/incorporation/india-incorporation

Frequently Asked Questions

Q: Does the new EDF requirement apply to Indian subsidiaries that only provide software services to their foreign parent company?

A: Yes. Software exports are now covered under the same Export Declaration Form framework as goods and other services. The SOFTEX form, which was the previous filing mechanism for software exports, is abolished from 1 October 2026. Indian subsidiaries providing software services to overseas group entities must shift to the monthly EDF process — one form per month covering all software and service exports in that month, submitted within 30 days from the end of the month in which invoices were raised.

Q: The Indian subsidiary imports capital equipment from the parent company on 12-month credit terms. Is this still permitted under the 2026 Regulations?

A: The 2026 Regulations remove the mandatory 6-month import payment timeline that existed under the 2015 framework. Payment timelines must now align with contractual terms. Whether a 12-month credit term is acceptable under the new framework depends on the specific AD bank's internal policy, which each bank is required to formulate under the 2026 Regulations. Confirm with your AD bank before the October 2026 deadline that the contractual payment timeline is consistent with their policy.

Q: The Indian subsidiary nets export receivables against import payables with the parent company. Does this continue to be allowed?

A: Yes. The 2026 Regulations explicitly retain the set-off arrangement — export receivables against import payables with the same overseas counterparty or a group entity — as a permissible settlement mechanism, subject to the AD bank's satisfaction that the arrangement is genuine and properly documented. The set-off needs to be supported by the underlying contracts and an AD bank confirmation.