Paragraphs 2 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.
If export proceeds are not realised within the time specified by the Reserve Bank, paragraph 2.54(a) of the Policy makes the exporter liable to return the benefits availed. Sub-paragraphs (b) and (c) give two relief routes, a write-off and insurance cover, and paragraph 2.55 describes the export credit agencies. The Handbook paragraphs 2.71, 2.72 and 2.74 give the procedure.
This article is based on the chapter-wise text of the Foreign Trade Policy, 2023 published on the DGFT website, as consulted on 2 October 2026; the copy carries no "updated up to" date. The procedure is taken from Chapter 2 of the Handbook of Procedures, 2023 as published on the DGFT website (file of July 2026), consulted on 2 October 2026. Later Notifications and Public Notices should be checked. If your question is about the realisation period itself, see our article on export declaration, realisation period and set-off under the 2026 Regulations; this article explains no foreign exchange regulation.
If an exporter fails to realise export proceeds within the time specified by the Reserve Bank, he is liable to return all benefits and incentives availed against those exports, without prejudice to any other liability or penalty, and to action under the Foreign Trade (Development and Regulation) Act, 1992 (paragraph 2.54(a)). Relief is available by write-off for reasons beyond his control, or by insurance cover (paragraph 2.54(b) and (c)). Offsetting needs specific approval of the Reserve Bank (paragraph 2.74 of the Handbook).
Paragraph 2.54 of the Policy
Paragraph 2.54(a): return of benefits
If an exporter fails to realise export proceeds within the time specified by the Reserve Bank, he is, without prejudice to any liability or penalty under any law in force, liable to return all benefits and incentives availed against such exports. He is also liable to action in accordance with the provisions of the Act, the Rules and Orders made under it, and the Policy. The paragraph states no period of its own; it points to the time the Reserve Bank specifies. The paragraph speaks only of benefits under the Policy and liability under other laws; if a GST refund on exports was also claimed on the shipment, that is a separate question under the GST law.
The Act's penalty and contravention provisions are covered in our articles on section 11 of the FTDR Act on contravention, penalty and settlement and section 11(5) to (9) on recovery of penalty, confiscation and redemption. The Policy as a whole rests on section 5; see our article on section 5 of the FTDR Act.
Paragraph 2.54(b): write-off
An exporter unable to realise the proceeds for reasons beyond his control (force majeure) may approach the Reserve Bank for writing off the unrealised amount, as laid down in paragraph 2.72 of the Handbook.
Paragraph 2.54(c): insurance cover
A payment realised through insurance cover is eligible for benefits under the Policy as per the procedure in paragraph 2.71 of the Handbook.
Paragraph 2.55: export credit agencies
Paragraph 2.55 is descriptive. Export Credit Agencies are policy instruments for the Government to support exports, by insurance cover and also direct lending. The Export Credit Guarantee Corporation of India Ltd. (ECGC) provides credit insurance support to exports and export credit lending. Covers issued by ECGC protect exporters against losses arising from payment failures due to insolvency or default of the buyers or due to political risks, and let exporters diversify markets. ECGC also supports medium and long term exports, including project exports. Exim Bank is described as the other agency lending for medium and long term exports and fronting the Government's line of credit.
Paragraph 2.55(ii) adds that ECGC indemnifies losses of exporters due to insolvency or default of the buyer, and losses due to political risk like war, sudden import restriction, or promulgation of a law or decree after the shipment has been effected. Some anti-dumping measures or non-tariff barriers introduced after a shipment come under political risk. This article states no premium, cover percentage or claim period, because none is printed. For a wider view, see our article on ECGC country risk classification and export credit insurance.
What the Handbook requires
Paragraph 2.71: payment through insurance cover
Payment through ECGC cover counts for benefits under the Policy. For payment through general or private insurance companies, the amount of insurance cover for transit loss by approved insurers in India is treated as payment realised for exports under the export promotion schemes. The applicant approaches the Regional Authority with the proof of payment issued by the insurance agency. After satisfying itself of the bona fides of the claim, the Regional Authority obtains approval of the Additional DGFT (EDI) and uploads the value, in place of the e-BRC value, in DGFT's EDI system. If the proof of payment shows the claim value in foreign exchange and in INR, the foreign exchange value is used; if only in INR, the Regional Authority converts it to US dollars at the exchange rate applicable on the date of settlement of the claim, as published by the Central Board named in the paragraph.
Paragraph 2.72: Reserve Bank write-off
Realisation of export proceeds is not insisted on under the Policy if the Reserve Bank, or an Authorised Bank authorised by the Reserve Bank for this purpose, writes off the requirement of realisation on merits, and the exporter produces a certificate from the concerned Foreign Mission of India about the fact of non-recovery from the buyer. This does not apply in self write-off cases.
Paragraph 2.74: offsetting of export proceeds
Subject to specific approval of the Reserve Bank, any payables or equity investment made by an authorisation holder under any export promotion scheme can be used to offset receipts of export proceeds. Offsetting is then equal to realisation. The exporter submits two additional documents: Appendix 2L in place of the Bank Realisation Certificate, and the specific permission of the Reserve Bank. Appendix 2L is named only.
| Paragraph | Route | Key requirement |
|---|---|---|
| Policy 2.54(a) | Failure to realise | Return of benefits; action under the Act |
| 2.54(b), Handbook 2.72 | Write-off | Reserve Bank or Authorised Bank; certificate of the Foreign Mission; not self write-off |
| 2.54(c), Handbook 2.71 | Insurance cover | Proof of payment; Regional Authority approval; EDI upload |
| Handbook 2.74 | Offsetting | Reserve Bank approval; Appendix 2L |
What happens in practice
The three relief routes are alternatives for different facts. A write-off needs the exporter to show that the loss was beyond his control and, under the Handbook, to hold a Foreign Mission certificate. Insurance needs an actual claim settled. Offsetting needs a payable or an equity investment of the authorisation holder, and Reserve Bank approval. None of them is available by default, so an exporter who has an overdue invoice should decide early which route fits and keep the documents, because the Policy's default is the return of benefits. Our article on section 15 of the FTDR Act on appeals is relevant if action under the Act follows.
A worked example
Rudra Textiles Private Limited, an invented exporter, shipped goods and claimed benefits under an export promotion scheme. The overseas buyer became insolvent and the proceeds were not realised within the time specified by the Reserve Bank. Under paragraph 2.54(a) Rudra is liable to return the benefits availed. If Rudra had ECGC cover and the claim is settled, paragraph 2.54(c) and paragraph 2.71 of the Handbook let the payment count. If instead the loss was beyond its control and it obtains a write-off from an Authorised Bank with a Foreign Mission certificate, paragraph 2.72 says realisation is not insisted on, but a self write-off would not do.
Need help with a refund tied to unrealised exports?
An unrealised export can also affect a GST refund claim. Our team can look at the position with you through our GST refund on exports service.
Key takeaways
- Failure to realise within the Reserve Bank's time means return of benefits and action under the Act (paragraph 2.54(a)).
- A write-off can be sought for force majeure; self write-off does not count (paragraph 2.54(b), Handbook 2.72).
- Insurance cover payments count for benefits through the Regional Authority (paragraph 2.54(c), Handbook 2.71).
- Offsetting needs Reserve Bank approval and Appendix 2L (Handbook 2.74).
- Paragraph 2.55 describes ECGC and Exim Bank; no premium or cover limit is printed.
Read next
- Paragraphs 2.52 and 2.53 of the Foreign Trade Policy, 2023: denomination of export contracts and rupee realisation
- Paragraphs 2.56 and 2.57 of the Foreign Trade Policy, 2023: export promotion councils and RCMC
- ECGC country risk classification and export credit insurance
- Section 6 of the FTDR Act: Director General of Foreign Trade
Disclaimer: Based on the chapter-wise text of the Foreign Trade Policy, 2023 and the Handbook of Procedures, 2023 published on the DGFT website, and on the later Notifications named in this article, as consulted on 2 October 2026. The copies carry no "updated up to" date. Notifications, Public Notices, Trade Notices, the ITC(HS) schedules, Appendices and forms change often; the current text on the DGFT website should be checked before acting. This article is general information, not legal advice; check the official text before acting.