Regulations 9 to 12 explained: this guide covers what it means, who it applies to, the step-by-step process, documents required, fees, due dates and penalties in India — so you can stay compliant with confidence and avoid costly mistakes.
The second half of the Regulations covers the import side and the duties of Authorised Dealers: when an import must be paid for, how advances are handled, what happens when an import does not materialise, special rules for gold and silver, project exports, merchanting trade, and how the dealer reports in EDPMS and IDPMS.
This is the Foreign Exchange Management (Export and Import of Goods and Services) Regulations, 2026 (Notification No. FEMA 23(R)/2026-RB, January 13, 2026), as per the text on the Reserve Bank's site, amended up to September 22, 2026, in force from October 01, 2026. Import payment must be made within the period specified in the underlying contract, and the Authorised Dealer may extend it on reasons cited. Interest on export advances or delayed import payments must not exceed the all-in-cost ceiling of trade credit under the Borrowing and Lending Regulations, 2018. No advance remittance is permitted for import of gold or silver. Merchanting trade legs must close within six months, extendable on reasons.
Authority and status
The preamble cites "Section 7, Section 8, sub-section (6) of Section 10 and sub-section (2) of Section 47" of the Foreign Exchange Management Act, 1999. See the Act articles on section 8 on realisation and repatriation, section 10 on authorised persons and sections 47 and 48. The Regulations supersede the Export of Goods & Services Regulations, 2015 and come into force from October 01, 2026. Regulation 20 (powers to Authorised Dealers) was inserted by the amendment of September 22, 2026. Later amendments and circulars should be checked. The export side is in our first article on these Regulations. For import payment advice, see our FEMA advisory service.
Regulation 9: time period for making import payment
An Authorised Dealer shall monitor its IDPMS entries and follow up with the importer for making payment for imports within the period specified in the underlying contract. The proviso lets the Authorised Dealer, on the importer's request citing reasons for the delay, allow extension of time beyond the contract period, if satisfied of the reasons. The Regulations print no fixed outer limit for import payment.
Regulation 10: advances and delayed payment
| Sub-regulation | What it says |
|---|---|
| 10(1) | An exporter routes an advance receipt and realisation of export proceeds through the same Authorised Dealer, or through another if both dealers are told of the change |
| 10(2) | An importer routes an advance payment and subsequent payments through the same Authorised Dealer, or through another if both dealers are told of the change |
| 10(3) | An Authorised Dealer may permit advance remittance for import after satisfying itself of the genuineness of the requirement, and may consider specifying thresholds beyond which a standby Letter of Credit or a guarantee is required |
| 10(4) | Interest payable on an advance received for export, or on delayed payment for imports, shall not exceed the all-in-cost ceiling of trade credit under the Borrowing and Lending Regulations, 2018, as amended |
The trade credit ceiling is in Schedule II of the Borrowing and Lending Regulations and the Master Direction on trade credit, where the two texts are read together. This article does not state a figure.
Regulation 11: gold and silver
Save as otherwise provided in the Act, Rules, Regulations or Directions, and notwithstanding the Regulations, no advance remittance shall be permitted by an Authorised Dealer for the import of gold or silver.
Regulation 12: import not materialised
If an importer cannot import within the contract period, or the extended period, the importer shall repatriate the advance payment made, if any. If the advance is not repatriated within the contract period or extended period, or the IDPMS entry has not been marked off under regulation 18(1)(j), any future advance payment for imports by the importer shall require an unconditional, irrevocable standby Letter of Credit or a guarantee from an international bank of repute, or a guarantee of an Authorised Dealer in India issued against a counter-guarantee of an international bank of repute.
Regulation 14: State credits
For the inter-banking arrangement, an Authorised Dealer follows the Reserve Bank's instructions on export of goods and services against repayment of State credits granted by the erstwhile Soviet Union.
Regulation 15: project export
An Authorised Dealer may permit receipts and payments for project exports as per the underlying contract after satisfying itself of the genuineness of the project. Subject to monitoring by the Authorised Dealer, a project exporter may deploy temporary cash surplus generated outside India from such exports for investment in short-term instruments (original or residual maturity of one year or less), including treasury bills and bank deposits, outside India.
Regulation 16: merchanting trade transactions (MTT)
A person undertaking merchanting trade in accordance with the Foreign Trade Policy shall ensure that:
- the period between the outward remittance and inward remittance, or vice versa, does not exceed six months (extendable by the Authorised Dealer on request citing reasons, if satisfied);
- outward remittances go only to the overseas seller and inward remittances come only from the overseas buyer (the Authorised Dealer may, on reasons cited, allow receipts from or payments to a third party); and
- documents evidencing the MTT are given to the Authorised Dealer to establish genuineness.
The Authorised Dealer credits or debits the account for a cross-border MTT only after satisfying itself of genuineness, closes or updates the EDPMS and IDPMS entries simultaneously, and monitors that both legs are completed within the period and manner specified. Our guide on merchanting trade covers the practice side.
Regulation 17: rupee invoicing and settlement
For international trade invoicing and settlement in Indian Rupees, the Authorised Dealer may be guided by the extant guidelines on the broad framework as well as the instructions the Reserve Bank issues from time to time. The Regulations print no further conditions.
Regulation 18: reporting by the Authorised Dealer
The dealer shall enter in EDPMS or IDPMS, within five working days of receipt, the EDF details received from a non-EDI port, the EDF of service received from an exporter, the import details received from a non-EDI port and the documents for import of service as declared by the importer (regulation 18(1)(a) to (d)). It enters inward and outward remittances for all exports, imports and MTT, monitors outstanding entries, marks off an export entry after ensuring the export value has been realised and an import entry after ensuring payment has been made. It may, on the customer's request citing reasons and on being satisfied of their genuineness, close an export advance entry where no export has been made and refund is not possible; close an import advance entry where no import has taken place and repatriation is not possible; and close an IDPMS entry where the import was settled at a reduced value. For an MTT it closes or updates the entries after both legs. Regulation 18(2) requires reporting of all foreign trade transactions in the Foreign Exchange Transaction Electronic Reporting System (FETERS) under the Reserve Bank's guidelines.
Regulation 19: internal policy and standard operating procedure
An Authorised Dealer must put in place a separate, comprehensive, well-documented policy and SOP for export, import and MTT transactions, covering at least documents, timelines and charges; extension of time for realisation and import payment; adjustment of export proceeds; advance receipts and payments; delegation of powers; and export and import factoring. The responsibility for approving transactions must be clearly delegated, with a grievance escalation process and an appeal to a higher internal level. Charges must be reasonable and proportional to the services rendered, and the dealer shall not levy any charge or penalty on its constituent for any regulatory delay or violation by the constituent. The policy and the main features of the SOP must be disclosed on the dealer's website.
Regulation 20: powers to Authorised Dealers
Authorised Dealers shall handle transactions undertaken before October 01, 2026 which hitherto required the Reserve Bank's approval, under the arrangements the regulation names.
Example
Quill Instruments Pvt Ltd, an invented importer, pays a supplier an advance for machinery. The machinery is not shipped within the contract period. Under regulation 12 the company must repatriate the advance. If it does not, its next import advance requires an unconditional, irrevocable standby Letter of Credit or a bank guarantee as described, unless its dealer has marked off the IDPMS entry under regulation 18(1)(j) on reasons it finds genuine. Separately, the company buys goods abroad from one supplier and sells them to another buyer abroad without the goods entering India: both remittance legs must be completed within six months, with the money going out only to the seller and coming in only from the buyer, unless the dealer allows a third party on reasons.
Our guides on import payment under FEMA and advance payment from a foreign buyer add practical detail. Later amendments and circulars should be checked.
Need help with import payments or merchanting trade?
Advances, extensions and merchanting legs all turn on documents your Authorised Dealer accepts. Our FEMA advisory team can prepare the requests and the supporting file.
Key takeaways
- Import payment is due within the contract period; the dealer may extend it on reasons cited.
- Interest on delayed import payment or export advances must not exceed the trade credit all-in-cost ceiling.
- No advance remittance for gold or silver imports.
- Unrepatriated import advances lead to a standby Letter of Credit or bank guarantee for future advances.
- Merchanting trade: both legs within six months, remittances only to the seller and from the buyer unless the dealer allows otherwise.
- Authorised Dealers must keep EDPMS and IDPMS up to date, report in FETERS and maintain a published policy and SOP.
Read next
- Export declaration, realisation period and set-off: regulations 1 to 8 and 13
- Trade credit for imports: Schedule II
- Import payment under FEMA
- Merchanting trade: rules and RBI guidelines
Disclaimer: Based on the rules, regulations and Reserve Bank Master Directions under the Foreign Exchange Management Act, 1999 that this article names, each in the version and up to the date stated in the article, as consulted on 2 October 2026. Some texts are third-party copies or older prints and are identified as such. Limits, forms and time limits change by amendment and circular; later changes should be checked on the Reserve Bank and Gazette sites. This article is general information, not legal advice; check the official text before acting.