The new Foreign Exchange Management Act (FEMA) helps consolidate and modernise India's entire trade regulation framework — effective 1 October 2026.
If you purchase goods from India, read to find out how you’re impacted.
Pros for buyers of Indian exports:
Payment timelines got longer Export realization timeline: the mandatory period within which an exporter must receive payment for goods or services and repatriate those foreign exchange earnings back to their home country
Under FEMA, this timeline was extended from 9 months to 15 months. For exports invoiced or settled in Indian Rupees, an additional 3 months is provided, making it 18 months.
For buyers of Indian goods, this means Indian exporters can give buyers more time to pay without compliance issues, which means less payment pressure on both sides.
Overseas warehousing is now more flexible Indian traders can now store goods overseas for more than 15 months without collecting payment — because the clock now starts from the sale date, not the shipment date.
Goods can now sit longer in bonded storage without triggering repatriation obligations on the Indian seller's side.
Merchanting Trade Transactions (MTT) got simpler Merchanting Trade Transactions are an international business model where an intermediary in one country buys goods from a foreign supplier and sells them to a buyer in another foreign country
MTT payments can now go through a third party (like an intermediary or group entity) — useful for complex cross-border deals.
For Singapore-based freight forwarders and trading intermediaries, this removes a significant friction point when handling India-origin cargo triangulated through ASEAN featuring many touchpoints.
Paperwork is being consolidated FEMA 2026 takes over all other trade frameworks and export regulations, replacing them with a single consolidated rulebook.
Practically: fewer forms, less interpretational ambiguity, and more consistent handling across Authorised Dealer Banks.
Cons for buyers of Indian exports:
Authorised Dealer Bank discretion has increased. Banks now have more power to close pending export data entries for under- or non-realised invoices — and exporters can no longer self-write-off receivables.
Practically, this means: - Compliance exposure now depends on which bank your Indian counterpart uses, and how strictly that bank applies the new rules - For clients importing from India, payment confirmation timelines may be affected
Concerning FTA: India is separately reviewing its ASEAN free trade agreements to narrow its trade deficit. If those talks tighten market access, it could offset some of the flexibility FEMA 2026 offers ASEAN exporters selling into India.
Documentation: With the 1 October effective date approaching, expect Indian shipper/exporter clients to start presenting the new unified EDF forms from Q4.
Action for SW Logistics clients:
Our clients should also consider renegotiating payment terms to a longer payment period with Indian suppliers when moving significant volume. With FEMA, buyers of Indian goods have more time to pay without compliance issues which helps with cash flow too.
Longer overseas warehousing is now allowed under FEMA 2026. If you handle India-origin cargo, talk to us about bonded storage options at our Jurong Zero-GST bonded warehouse.
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