RBI's Initiative To Enhance The Ease Of Doing Business: Promoting India's Export Framework For Goods, Software And Services

I. Introduction

In the context of ongoing global trade disturbances, alterations in international purchasing patterns, and the emerging challenges encountered by Indian exporters, the Reserve Bank of India (RBI) has introduced a series of forward-thinking regulatory initiatives designed to augment operational adaptability and enhance liquidity for export-focused enterprises. These reforms are aimed at simplifying compliance, minimizing procedural barriers, and fortifying India's competitive edge in the exportation of goods, software, and services.

The most recent initiatives have been enacted through the Foreign Exchange Management (Export of Goods and Services) (Second Amendment) Regulations, 2025, in conjunction with the RBI (Trade Relief Measures) Directions, 2025. Collectively, these measures represent a significant shift towards a more supportive and responsive foreign exchange regulatory framework aligning regulatory protocols with the requirements of contemporary exporters and the overarching trade-growth aspirations of India.

II. Background: Pressures on the Export Sector and Policy Justifications

In recent years, India's export sector has shown remarkable resilience, however, it still faces a number of structural and external obstacles. The main pressures include:

1. Increased tariff barriers, particularly the substantial tariff hikes imposed by the US on certain Indian goods.
2. Lengthy purchase cycles and prolonged payment periods common in international trade dealings.
3. Financial constraints and restricted access to affordable credit, especially impacting export-driven MSMEs.

These global and regional trends, particularly the rise of U.S. tariffs on Indian shipments, have heightened financial and operational strain on exporters. In response, the Reserve Bank of India has implemented specific regulatory measures aimed at stabilizing the export landscape, reducing compliance challenges, and facilitating sustained export growth.

III. Key Regulatory Amendment

1. Extension of Export Proceeds Realisation Timeline to 15 Months

A significant amendment made by the RBI is the extension of the timeframe within which export proceeds from goods, software, and services must be realised and brought back to India.

1. Earlier Requirement: Realisation within 9 months
2. Revised Requirement: Realisation within 15 months

This extension grants exporters greater flexibility in managing foreign receivables, especially in markets where payment cycles have become prolonged due to macroeconomic uncertainties. It also alleviates compliance burdens under the Foreign Exchange Management Act (FEMA) by providing a more feasible timeframe for the settlement of export transactions.

Notably, the updated 15-month timeline now applies consistently across all export categories, including Special Economic Zone (SEZ) units, Export Oriented Units (EOUs), status-holder exporters, and recognised export infrastructures such as Software Technology Parks (STPs) and Electronic Hardware Technology Parks (EHTPs). This standardisation represents a major simplification of India's export regulatory framework.

2. Improved Flexibility for Shipments on Advance Payments

The RBI has broadened the allowable timeframe for finalizing export shipments when advance payments have been made by international buyers.

1. Previous Requirement: Shipment must be completed within 1 year from the receipt of advance
2. New Requirement: Shipment can be finalized within 3 years, or within the duration specified in the respective export contract, whichever is later

This adjustment is particularly beneficial for exporters involved in intricate, high-value, or extended-duration projects, such as tailored manufacturing, capital goods, extensive engineering contracts, or multi-year technology and software service agreements. By allowing a more extended execution period, the amendment significantly boosts operational flexibility and harmonizes regulatory timelines with the practical realities of long-cycle export transactions.

3. Export Credit Extensions under the Trade Relief Measures

The RBI's Trade Relief Measures Directions, 2025 bring about notable relaxations in export credit regulations to tackle the liquidity challenges and prolonged order cycles encountered by exporters.

1. Extended Credit Tenure: The allowable duration for both pre-shipment and post-shipment export credit has been raised from 270 days to 450 days for credit facilities issued until 31 March 2026. This extension provides exporters with a considerably larger financing window to navigate production, shipment, and payment realization timelines.
2. Flexible Liquidation of Packing Credit: Exporters who have utilized packing credit but cannot fulfill the initially planned shipment may now regularize and close their export credit accounts through acceptable alternative methods, such as legitimate domestic sales or substitute export orders.

These relaxations collectively seek to enhance the liquidity position of exporters, offer relief to businesses facing delayed purchase cycles, and ensure the continuity of operations amid fluctuating global trade conditions.

4. Debt Moratorium and Loan Repayment Relief

In order to alleviate the pressure on exporters caused by unfavourable global trade conditions, the RBI has implemented specific relief initiatives concerning debt servicing and working capital management.

1. Moratorium on Repayment Obligations: Banks are now authorized to provide a moratorium on the repayment of term loans and to defer interest payments on working capital facilities for qualifying borrowers from September to December 2025. This provisional assistance aims to stabilize exporters' cash flows and avert unnecessary strain on their credit standings.
2. Reassessment of Working Capital Limits: Lending institutions have also been empowered to reevaluate and adjust working capital drawing power in accordance with the updated operating cycle of exporters. This adaptability allows banks to synchronize credit limits with the prolonged production and receivable timelines currently encountered by numerous export-oriented businesses.

Collectively, these initiatives are designed to ease the financial strain on sectors that have been most impacted by global trade upheavals, thus fostering business sustainability and enhancing the resilience of India's export ecosystem.

IV. Significance and Expected Impact

1. Improved Liquidity Management The extension of timelines for export realization, paired with longer export credit periods, grants exporters greater flexibility in managing their cash flows. This facilitates more effective negotiations of payment terms with international buyers an especially vital advantage given the ongoing global supply chain disruptions and lengthy settlement cycles.

2. Enhanced Operational Flexibility Permitting a three-year period for completing shipments against advance payments, along with extended credit durations, aids exporters engaged in long-lead or intricate projects. Industries such as pharmaceuticals, engineering goods, capital equipment, software, and technology services are poised to gain significantly from this regulatory flexibility.

3. Strengthened Export Competitiveness By synchronizing India's export-compliance timelines with global standards, these reforms empower domestic exporters to engage more confidently in long-term, high-value international contracts. The revised framework boosts India's appeal as a dependable and responsive trading partner.

4. Advancement of Ease of Doing Business Through the integration of trade-related guidelines and the alleviation of crucial timelines, the RBI has solidified its commitment to minimizing administrative burdens on exporters. These initiatives foster a more streamlined, predictable, and supportive regulatory landscape for cross-border trade.

V. Broader Policy Alignment

The trade-relief initiatives implemented by the RBI are closely aligned with the broader export-promotion strategy of the Government of India, which includes the efforts made under the Export Promotion Mission to offer financial incentives, support for market development, and institutional assistance to Indian exporters. Given the rising external tariff pressures and changing global trade dynamics, this coordinated policy measures aim to expand India's export markets, enhance resilience against external disruptions, and fortify the nation's position within global value chains.

VI. Conclusion

The regulatory reforms initiated by the RBI in 2025, which include prolonged realization timelines, increased credit flexibility, and focused assistance for export-oriented enterprises, mark a pivotal advancement towards a more accommodating, adaptable, and resilient export framework for India. By simplifying foreign exchange compliance, bolstering liquidity support, and synchronizing operational timelines with global trade dynamics, these initiatives are anticipated to boost export competitiveness and offer essential stability for businesses navigating an increasingly unpredictable international landscape. The regulatory reforms initiated by the RBI in 2025, which include prolonged realization timelines, increased credit flexibility, and focused assistance for export-oriented enterprises, mark a pivotal advancement towards a more accommodating, adaptable, and resilient export framework for India. By simplifying foreign exchange compliance, bolstering liquidity support, and synchronizing operational timelines with global trade dynamics, these initiatives are anticipated to boost export competitiveness and offer essential stability for businesses navigating an increasingly unpredictable international landscape.

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