Understanding the New Export and Import Trade Policy under FEMA

Under the Foreign Exchange Management Act (FEMA), the Reserve Bank of India (RBI) released an alarming draft plan to revamp the country’s export-import regulatory system. A change in India’s cross-border trade policy is already visible in the new FEMA regulations, which place a stronger focus on digital compliance, flexibility of doing business, and increased independence of operations for banks.

These adjustments are intended to update the system, harmonize trade regulations that apply to goods and services, and improve the efficiency of India’s international trade. The RBI released the revisions in July 2024, which are available for public comment until September 1, 2024.

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Table of Contents

Major Highlights of the New FEMA Proposals

The new framework proposes several bold moves:

Key Changes for Exporters & Importers:

Area	Existing Process	New Draft Proposal
Export Declaration	Multiple forms	Unified export declaration for goods, services, software
Import Settlement Time	Capped at 6 months	To be governed by contractual terms
Export Realisation	9–15 months	Uniform 9 months for all shipments
Self-Write-off	Allowed for status holders	Discontinued entirely
Sample Export Exemptions	Permitted	Revoked
SOFTEX Form	Mandatory for software	Merged with export declaration

RBI now empowers banks as the primary compliance agents and facilitators for international trade transactions, with less central interference.

Simplification of Compliance: One Form for All Exports

One of the major proposals is the introduction of a unified export declaration form (EDF), covering:

Goods exports
Services exports
Software exports

This is a massive simplification that aligns India with international best practices. Exporters no longer need to fill out different forms or navigate various portals.

Banks in Focus: From Compliance Watchdogs to Trade Facilitators

Authorized Dealer (AD) banks are now central to FEMA execution. They will be expected to

Develop internal board-approved trade policies
Certify export value declarations
Decide on time extensions for late payments or document delays
Allow up to 100% write-offs of export proceeds with justification

However, the responsibility now falls on the bank to frame clear internal protocols, potentially causing some differences in trade processing across banks.

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Importers: Contractual Flexibility Gains Ground

Increased Contractual Flexibility Importers now have more flexibility. The new draft states:

Import settlement has no time limit unless contracts specify otherwise.
Sectoral quantitative ceilings on advance payments are removed; unpaid advance payments will be regarded as foreign borrowing.

Exporters Lose Self Write-Off Privileges

Previously, exporters—especially status holders—could independently write off export receivables.

Now:

Banks must approve every write-off, regardless of amount
Any write-off over 25% must be placed before the bank’s board for ratification

This shift indicates the RBI’s growing confidence in banks but a cautious stance toward exporters.

Key Impact for Software & Services Exporters

Previously, services exporters followed SOFTEX form procedures. Now:

SOFTEX form has been discontinued
Date of invoice will substitute shipment date for such exports
Banks must now report service export documents via EDPMS

Banks will also decide on extensions for service export realization delays without RBI involvement.

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For MSMEs and Startups: Opportunities and Cautions

While the regulatory framework becomes more bank-centric, it could be challenging for:

Start-ups with limited banking relationships
MSMEs unfamiliar with policy framing
Exporters in dispute or refund situations

However, those who comply will benefit from faster approvals, fewer RBI interactions, and broader flexibility.

NPCS: Guiding Startups through Trade & Compliance Reforms

At Niir Project Consultancy Services (NPCS), we understand that evolving policy environments require expert guidance. That is why we support:

Entrepreneurs
MSMEs
New Industrial Startups

With customized market survey cum techno-economic feasibility reports that include:

Manufacturing process
Flow diagrams
Machinery & raw material details
Market research
Complete financial projections

We are your go-to industrial consultants for setting up new business projects.

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Suggested Reads from NPCS Blog:

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Way Forward: What Stakeholders Should Do

For banks:

Frame comprehensive trade policies
Train forex teams for documentation review
Implement EDPMS/IDPMS efficiently

For exporters & importers:

Review contracts for settlement terms
Align ERP/invoicing systems with new export forms
Anticipate early changes post-implementation

Utilizing Opportunities in a Changing Trade Environment

The RBI’s proposed FEMA regulations take an active position, stressing convenience over enforcement. This is a great chance for importers and exporters, particularly MSMEs, to expand—if they continue to be flexible, technologically savvy, and in sync with their banking partners. By providing professional project reports, market insights, and customized investment advice, NPCS is dedicated to assisting companies in flourishing in this dynamic trade climate and making sure you’re always one step ahead in the international marketplace.

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Tags: Export and Import Policy Policy