Introduction
In a significant move to support India’s export sector amid global trade challenges, the Reserve Bank of India (RBI) has announced a comprehensive package of measures designed to ease compliance burdens and enhance operational flexibility for Indian exporters. These initiatives, unveiled by RBI Governor Sanjay Malhotra on October 1, 2025, come at a critical time when Indian businesses are navigating heightened tariff barriers and evolving international trade dynamics.
The announcement underscores the central bank’s commitment to strengthening India’s export competitiveness while maintaining regulatory oversight. Let’s explore these measures in detail and understand their implications for the export community.
Key Measures Announced by RBI
1. Extended Repatriation Timeline for IFSC Foreign Currency Accounts
What’s Changed: The RBI has extended the repatriation period for foreign currency accounts maintained by Indian exporters in the International Financial Services Centre (IFSC) from one month to three months.
Background: In January 2025, the RBI permitted Indian exporters to open foreign currency accounts with banks outside India for receiving export proceeds. Previously, exporters had to repatriate these funds within one month of receipt or use them for import payments.
Impact: This extension provides exporters with greater liquidity management flexibility. The additional time allows businesses to:
- Better manage their foreign exchange requirements
- Time their repatriations more strategically based on currency movements
- Reduce the urgency of forex conversions during unfavorable market conditions
- Encourage more exporters to utilize IFSC Banking Units
- Increase overall forex liquidity within the IFSC ecosystem
2. Enhanced Timeline for Merchandise Trade Transactions (MTT)
What’s Changed: The period for foreign exchange outlay in Merchandise Trade Transactions has been increased from four months to six months.
Why It Matters: This measure addresses a critical operational challenge faced by Indian merchants. International trade transactions often require extended timelines due to:
- Longer shipping and logistics cycles
- Customs clearance delays
- Payment processing complexities
- Supply chain disruptions
Benefits: The extended six-month window enables traders to:
- Complete transactions more efficiently without rushing settlements
- Maintain profitability by avoiding forced liquidations
- Better manage working capital requirements
- Navigate unexpected delays without compliance penalties
3. Simplified Reconciliation for Small-Value Transactions
What’s Changed: The RBI has simplified the reconciliation process in the Export Data Processing and Monitoring System (EDPMS) and Import Data Processing and Monitoring System (IDPMS) for transactions valued at Rs 10 lakh or less per bill.
New Procedure: Banks can now reconcile and close bills in EDPMS or IDPMS based on a simple declaration from the exporter or importer confirming that the amount has been realized. Banks can also reduce the realizable value of bills based on such declarations.
Who Benefits: This measure particularly helps:
- Small and medium enterprises (SMEs)
- Startups in the export sector
- Businesses dealing with frequent small-value transactions
- Companies with high transaction volumes
Advantages:
- Significantly reduced paperwork and documentation requirements
- Faster processing and closure of transactions
- Lower compliance costs for small exporters
- Enhanced ease of doing business
- Reduced administrative burden on both exporters and banks
4. Rationalization of FEMA Regulations
Future Initiatives: The RBI has announced plans to rationalize Foreign Exchange Management Act (FEMA) regulations concerning:
Non-Resident Business Presence: Streamlining regulations for non-residents establishing business operations in India, making India a more attractive destination for foreign investment and collaboration.
External Commercial Borrowing (ECB): Key provisions being rationalized include:
- Eligible borrowers criteria
- Recognized lenders parameters
- Borrowing limits
- Cost of borrowing norms
- End-use restrictions
- Reporting requirements
This rationalization aims to make it easier for Indian businesses to access global capital markets while maintaining prudent risk management.
Context: Responding to Global Trade Challenges
These measures come in response to significant global trade headwinds, particularly the imposition of 50% tariffs on Indian exports by the US administration. The RBI’s proactive approach demonstrates India’s commitment to supporting its export sector through:
- Regulatory flexibility
- Reduced compliance burden
- Enhanced operational efficiency
- Improved access to foreign exchange management tools
What This Means for Indian Exporters
Immediate Benefits
Improved Cash Flow Management: Extended timelines for repatriation and MTT provide exporters with better control over their working capital and foreign exchange positions.
Reduced Compliance Costs: Simplified reconciliation procedures mean less time and money spent on documentation and administrative processes, especially beneficial for smaller exporters.
Greater Operational Flexibility: The additional time windows allow businesses to focus on growth rather than constantly managing compliance deadlines.
Strategic Advantages
Competitive Edge: These measures help Indian exporters remain competitive in global markets despite tariff challenges by reducing operational friction.
Risk Management: Extended timelines provide more room to hedge forex risks and make informed decisions about currency conversions.
IFSC Ecosystem Growth: Encouraging the use of IFSC Banking Units strengthens India’s international financial services infrastructure and provides exporters with sophisticated banking solutions.
Implementation Timeline
The RBI has indicated that amendments to relevant regulations will be notified shortly. Exporters and importers should:
- Stay updated with their authorized dealer banks
- Review their operational procedures to leverage these new facilities
- Consult with trade advisors on how to best utilize these measures
- Prepare documentation systems to comply with simplified procedures
RBI Governor’s Vision
RBI Governor Sanjay Malhotra emphasized that “the export sector is a vital part of India’s economy,” highlighting the central bank’s recognition of exports as a key driver of economic growth. These measures reflect a broader strategy to:
- Strengthen the export sector’s resilience
- Enhance India’s trade competitiveness
- Support businesses navigating global uncertainties
- Promote ease of doing business
Conclusion
The RBI’s latest package of measures represents a significant step forward in supporting India’s export community. By addressing practical challenges around compliance, timelines, and forex management, these initiatives demonstrate responsive policymaking that balances regulatory requirements with business needs.
For Indian exporters, these measures offer tangible relief and operational flexibility at a crucial time. The focus on reducing compliance burden for small-value transactions and extending critical timelines shows the RBI’s understanding of ground-level challenges faced by businesses.
As global trade dynamics continue to evolve, such proactive regulatory support will be essential in maintaining India’s export competitiveness and ensuring sustainable growth for businesses of all sizes.
Action Points for Exporters
- Immediate: Contact your authorized dealer bank to understand implementation timelines
- Short-term: Review your forex management strategy to leverage extended repatriation windows
- Medium-term: Evaluate the benefits of opening IFSC foreign currency accounts
- Ongoing: Stay informed about upcoming FEMA rationalization measures
The export community should view these measures not just as compliance relief, but as strategic tools to enhance operational efficiency and competitiveness in global markets.
Stay tuned for further updates as the RBI notifies detailed amendments to the relevant regulations. For specific guidance on how these measures apply to your business, consult with your trade finance advisors and banking partners.
