In a world where global trade has become increasingly unpredictable, businesses constantly look for regulatory breathing space that helps them manage real cash flows without falling foul of compliance rules. This is why the Reserve Bank of India’s latest move—extending the timelines for realisation and repatriation of export proceeds—matters far beyond the limited text of an official notification. At first glance, an amendment to the Foreign Exchange Management (Export of Goods and Services) Regulations might seem like yet another compliance update. But when we understand the environment in which exporters operate today—volatile markets, supply chain disruptions, geopolitical tensions, and ever-tightening credit cycles—the significance becomes much clearer.

The RBI’s Foreign Exchange Management (Export of Goods and Services) (Second Amendment) Regulations, 2025 introduces two major relaxations for exporters: the period for realising export proceeds is stretched from nine months to fifteen months, and the overall time allowed for write-off of unrealised export value is extended from one year to three years. These may look like simple numerical changes, but in practice, they shift the way Indian exporters negotiate contracts, manage liquidity, and even structure their risk strategies.

To appreciate the depth of this change, we must step back and consider how the export ecosystem functions today.

The Global Backdrop: Why Timing Matters More Than Ever

Before the pandemic, most global shipments followed relatively predictable timelines. Goods moved steadily, banks processed payments quickly, and disruptions were rare. But the last few years have changed the rules of international trade.

Shipping costs have fluctuated dramatically. Port congestion—from Los Angeles to Shanghai—has become common. Payments between cross-border partners now face delays for reasons ranging from sanctions to liquidity crunches to sheer administrative backlogs.

For an Indian exporter, this means one thing: the journey between shipping goods and receiving payment has become much more uncertain. When the original nine-month limit for realising export proceeds was introduced, the trade environment was far more stable. But today, expecting a foreign buyer to always complete payment within nine months can be unrealistic, particularly for industries like engineering goods, textiles, petrochemicals, or capital equipment where long gestation periods are common.

With this new amendment, the RBI seems to be acknowledging a basic truth—that exporters need flexibility in today’s trade climate.

Understanding the Core Amendment: What Exactly Has Changed?

The heart of the amendment lies in two regulations: Regulation 9 and Regulation 15 of the Principal Regulations.

Regulation 9 (Realisation and Repatriation of Export Proceeds) The allowed period has increased from nine months to fifteen months for the exporter to bring home the full value of the goods or services exported. This is a major shift because the timeline directly affects working capital cycles. Exporters often rely on bank financing—packing credit, post-shipment finance, and invoice discounting. Banks, in turn, evaluate compliance with FEMA timelines before extending or renewing credit.

A fifteen-month window cushions exporters against forced reminders, rushed negotiations, or penalty-driven settlements with buyers. It gives them space to breathe.

Regulation 15 (Write-off of Unrealised Export Value) The second change is even more telling. The period within which exporters can request a write-off—where part or all of the export value is deemed non-recoverable—is increased from one year to three years.

A write-off is not granted lightly. It typically appears in situations where: • the foreign buyer becomes insolvent, • there is a dispute that cannot be settled, • the goods are damaged or lost in transit, or • long credit terms were inherent to the commercial arrangement.

Increasing the window to three years acknowledges the complexities of such cases. Legal battles abroad often take time. Insolvency procedures can stretch on for years. International commercial arbitration is rarely concluded quickly.

The earlier one-year period simply did not reflect these realities.

Why These Changes Matter: A Practical View

Regulatory timelines do not exist in isolation—they shape business decisions. To understand the real-world effect of this amendment, imagine a mid-sized Indian manufacturer exporting machinery to South America. The shipment itself may take eight to ten weeks. Installation may take another three. Payment terms could depend on commissioning or inspection. So even without any dispute or delay, receiving full payment may stretch well beyond nine months.

Under the older rules, such exporters found themselves constantly racing against the clock. Banks, too, were under pressure to monitor compliance and classify overdue receivables with greater caution. This entire cycle created unnecessary strain in an already complex international trade environment.

With the new fifteen-month period, exporters can plan contracts more realistically and avoid artificially aggressive timelines that were previously included only to satisfy FEMA rules.

Another scenario is in the pharmaceutical sector. Exporters often supply medicines to countries where government procurement bodies act as the primary buyers. Payment cycles in such cases can be notoriously long, sometimes crossing a year due to bureaucratic approvals. Again, the extended window brings Indian exporters closer to ground realities.

Alignment with Global Trade Practices

Interestingly, the RBI’s amendment is not an isolated policy shift. Many global regulators—especially in emerging markets—have been revisiting their foreign exchange and trade rules to allow exporters more operational flexibility. The trend is driven by rising global uncertainty, the slow restructuring of supply chains, and greater geopolitical fragmentation.

Export credit agencies in Europe and Asia have been lengthening coverage periods, banks are extending credit insurance tenures, and governments are offering relaxed compliance norms to keep trade flowing smoothly. India’s move is in step with this global recalibration.

Impact on Small and Medium Exporters

Larger exporters often have stronger financial backbones. They can negotiate better terms with buyers and banks. But small and medium exporters, who form a huge part of India’s export economy, frequently struggle with delayed payments. For them, even a 30-day delay can have a ripple effect on salaries, supplier payments, and bank interest costs.

The extension to fifteen months eases some of this pressure. It gives SMEs more flexibility in negotiating terms and managing cash flows. They can now avoid the additional compliance burden of seeking extensions, providing declarations, or justifying delayed receipts to their authorised dealer banks.

For many MSMEs, this change could be the difference between maintaining steady liquidity and slipping into a credit crunch.

A Boost for Service Exporters

While export rules are often discussed in the context of goods, India has become a powerhouse in services—IT, consulting, engineering design, financial services, and more. For service exporters, especially in project-based work, realisation timelines are often tied to deliverables, milestones, or outcome-based payments.

Longer timelines align better with the rhythm of such projects. It makes it easier for Indian service providers, particularly in consulting and engineering, to bid for long-duration international projects without worrying about FEMA-related hurdles mid-way.

The Write-Off Relief: Why It’s More Important Than It Appears

A write-off is not simply a compliance action—it is a crucial financial reality for exporters. When payment is genuinely irrecoverable, companies need to close their books, finalise their accounts, claim insurance if applicable, and move forward.

The previous one-year window forced exporters to push through write-off requests even when the foreign situation was not fully resolved.

Consider the case of a buyer entering insolvency proceedings abroad. It is entirely possible that the process may stretch to 18–24 months before a definitive outcome emerges. A premature write-off may cause complications, especially if partial recovery becomes available later.

By extending the timeline to three years, the RBI allows exporters to follow natural commercial timelines rather than artificial regulatory deadlines. It is a small but meaningful step toward aligning foreign exchange rules with practical business realities.

How Banks Are Likely to Respond

Banks play a central role in enforcing FEMA compliance. Every export transaction passes through authorised dealer banks, who examine documents, monitor realisation, and ensure repatriation happens within time.

With extended timelines, banks now have more room to accommodate exporters without frequent follow-ups or escalations. It reduces administrative friction, particularly for branches that deal with high export volumes.

Banks may also review their internal credit policies. Post-shipment credit tenure and overdue classifications may see refinements to reflect the longer FEMA timeline. This could indirectly ease interest burdens for exporters, especially those using Export Credit in Foreign Currency (ECFC) or other trade finance instruments.

Will This Change Encourage Riskier Payment Terms?

One natural question is whether exporters may now feel encouraged to offer more lenient credit terms to foreign buyers since they have more time to receive the payment.

While the extension gives more flexibility, businesses must still evaluate their commercial risks carefully. A longer realisation period does not change the reality that buyers in certain markets may delay payments or default. Instead, the extension simply reduces regulatory pressure—it does not change the fundamental principles of good credit discipline.

Exporters will still need to ensure proper due diligence, credit insurance where necessary, and realistic payment terms. The amendment should be seen as a support mechanism, not a signal to relax risk controls.

A Step Toward Making India More Export-Friendly

India has set itself ambitious goals: becoming a global manufacturing hub, increasing exports to USD 2 trillion, and embedding itself deeper in global supply chains. For this vision to materialise, exporters need a regulatory environment that complements their commercial reality.

The extension of timelines may appear like a procedural update, but it represents an important shift in approach. It tells exporters that the regulator understands the environment they operate in—a world shaped by supply chain uncertainty, volatile foreign markets, and geopolitical pressures.

From a policy standpoint, this is a welcome move. It aligns FEMA norms with India’s broader push to make cross-border trade smoother, more flexible, and more business-friendly.

Looking Ahead: What Businesses Should Keep in Mind

Even though the amendment provides relief, exporters should take this opportunity to strengthen their internal processes. Strong documentation, updated contract terms, and regular follow-up with foreign buyers remain essential. Banks will continue to seek evidence in delayed realisation cases, and exporters must maintain transparency with their authorised dealers.

Companies should also revisit their treasury policies. With longer timelines, foreign currency exposure naturally extends. Hedging decisions, insurance coverage, and internal credit controls may require recalibration.

In industries with long gestation export cycles—engineering goods, EPC projects, and large machinery—contract structures may now be more flexible, allowing milestone-based or deferred payment terms without regulatory challenges.

Conclusion: A Timely Adjustment for a Changing Trade World

The RBI’s updates to the export realisation and write-off timelines come at a moment when global trade is undergoing seismic shifts. Logistics uncertainties, geopolitical tensions, and slower payment cycles have become part of the new normal. In such an environment, rigid regulatory timelines can burden exporters who are already navigating difficult terrain.

By extending the realisation period from nine to fifteen months and widening the write-off window from one year to three years, the RBI has brought much-needed flexibility into India’s foreign exchange framework. This is not just a procedural relaxation; it is a recognition that exporters need time, space, and regulatory support to operate confidently in today’s global economy.

As India aims to strengthen its export ecosystem, such thoughtful adjustments create a more supportive environment for businesses of all sizes—from MSMEs to large corporates. The amendment does more than change numbers on paper; it allows exporters to focus on what they do best: building global relationships, expanding markets, and driving India’s growth story forward.