DGFT Revises Rules for Export Contracts and INR Realisation
DGFT Revises Rules for Export Contracts and INR Realisation
The Directorate General of Foreign Trade (DGFT), through Notification No. 30/2026-27, has amended Paragraphs 2.52 and 2.53 of the Foreign Trade Policy (FTP) 2023) with immediate effect.
The changes primarily simplify the rules governing the currency in which export contracts may be denominated and clarify when export proceeds received in Indian Rupees (INR) will qualify for benefits and fulfilment of export obligations under the FTP.
1. Revised rules for denomination of export contracts
For exports other than those involving Asian Clearing Union (ACU) member countries, export contracts and invoices may now be denominated in either:
- Foreign currency; or
- Indian Rupees.
Further, export proceeds may be received either in foreign currency or Indian Rupees.
2. Transactions involving ACU countries
Export contracts with ACU member countries, except Nepal and Bhutan, are required to be denominated in a currency prescribed by the ACU.
However, such transactions may alternatively be denominated and settled in accordance with the applicable Reserve Bank of India (RBI) directions.
3. Exports to Nepal and Bhutan
Export contracts involving Nepal and Bhutan may be denominated and settled in:
- Indian Rupees; or
- Any other manner permitted under the applicable RBI directions.
Export contracts and invoices covered under EXIM Bank/Government of India Lines of Credit may also be denominated in Indian Rupees.
4. Eligibility of INR export realisations for FTP benefits
The amended provisions provide that export proceeds realised in Indian Rupees through banking channels, in accordance with the applicable foreign exchange regulations, can qualify for:
- Export benefits and incentives; and
- Fulfilment of export obligations under the FTP.
This brings the FTP framework in line with the provisions governing permissible INR-based international trade transactions.
5. Special provision for exports to Iran
The earlier special treatment for exports to Iran has been retained.
INR export realisations relating to exports to Iran can qualify for applicable FTP benefits, incentives and fulfilment of export obligations, subject to compliance with the relevant provisions of Para 2.19 of the FTP.
6. What has changed?
The amendment represents a shift from the earlier framework, under which export proceeds were generally required to be realised in freely convertible currency, subject to specified exceptions.
The revised framework provides greater flexibility by expressly recognising INR realisation of export proceeds and linking eligibility for FTP benefits to compliance with the applicable foreign exchange regulations.
Key Takeaway
The amendment provides greater clarity and flexibility for exporters by allowing export contracts and invoices, in most cases, to be denominated in foreign currency or INR, while also recognising eligible INR-denominated export realisations for FTP benefits and fulfilment of export obligations.
The revised provisions have been introduced to align the FTP with the Foreign Exchange Management (Manner of Receipt and Payment) Regulations, 2023.
Effective Date: Immediate effect
Notification: DGFT Notification No. 30/2026-27
Relevant FTP Provisions: Para 2.52 and Para 2.53
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