The Reserve Bank of India recently announced a series of supportive measures designed to help Indian exporters navigate the challenges arising from the U.S. administration’s imposition of 50% tariffs on Indian goods.
These new initiatives aim to significantly reduce the paperwork and overall compliance burden for both small-scale exporters and importers, making international trade more accessible.
These announcements follow discussions and decisions made during the RBI’s Monetary Policy Committee (MPC) meeting.
RBI Governor Sanjay Malhotra emphasized the crucial role of the export sector in India’s economy. He stated that these steps are intended to further strengthen the sector and improve the ease of doing business for traders nationwide.
A standout measure involves extending the timeframe for Indian exporters to repatriate funds held in their foreign currency accounts within International Financial Services Centres (IFSCs). This period has been significantly lengthened from one month to three months.
Previously, in January 2025, the RBI had given Indian exporters the green light to open foreign currency accounts with banks located outside India, specifically for receiving export proceeds.
Under the existing rules, funds in these overseas accounts could either be used for import payments or had to be repatriated by the end of the month following their receipt.
The RBI has now confirmed its decision to extend the repatriation period from one month to three months for foreign currency accounts held within IFSCs in India. This strategic move aims to encourage more Indian exporters to utilize IFSC Banking Units and, in turn, boost foreign exchange liquidity within these centers.
Official amendments to these regulations are expected to be formally notified in the near future.
Furthermore, the RBI has extended the permissible period for foreign exchange outlay in Merchandise Trade transactions (MTT) from four months to six months. This change is anticipated to greatly assist Indian merchants in efficiently completing their business dealings and safeguarding their profitability.
Elaborating on this, the RBI stated that while current guidelines allowed foreign exchange outlay for MTTs up to four months, this period will now be increased to six months.
To further simplify compliance for both exporters and importers, particularly those dealing with small-value goods and services, the RBI plans to streamline the reconciliation process within the Export Data Processing and Monitoring System (EDPMS) and Import Data Processing and Monitoring System (IDPMS).
Under the upcoming revised guidelines, banks will be able to reconcile and close bills in EDPMS or IDPMS based on a simple declaration from the exporter or importer. This applies to transactions where the realized amount is Rs 10 lakh per bill or less.
The RBI highlighted that this simplified procedure will also allow Authorized Dealer (AD) banks to reduce the realizable value of bills based on these declarations. The ultimate goal is to lessen the compliance burden on small-value exporters and importers, thereby improving the overall ease of doing business.
In other key announcements, Governor Malhotra revealed intentions to rationalize Foreign Exchange Management Act (FEMA) regulations concerning non-residents establishing their business presence within India.
Additionally, critical provisions within the External Commercial Borrowing (ECB) regulations, issued under FEMA, are slated for rationalization. These include aspects like eligible borrowers, recognized lenders, borrowing limits, cost of borrowing, end-use of funds, and reporting requirements.