Context:
- Exporters from India are facing global trade disruptions, particularly due to a steep 50% tariff imposed by the U.S. on Indian shipments, effective 27 August 2025.
- The tariff has impacted cash flow and timely repatriation of export proceeds.
Key Measures Announced:
- Regulatory Amendment:
- The change is made through the Foreign Exchange Management (Export of Goods & Services) (Second Amendment) Regulations, 2025.
- Notification issued on 13 November 2025 by RBI Regional Director Rohit P. Das.
- Extended Export Realisation Timelines:
- Exporters now have 15 months (up from 9 months) to repatriate export proceeds.
- Advance payments from overseas buyers can now be settled within 3 years instead of 1 year.
- Loan Moratoriums and Credit Support:
- Exporters holding standard export credit as of Aug 31 can avail a 4-month moratorium (Sept–Dec 2025) on loan installments and interest.
- Interest accrues as simple interest, with the option to convert into a separate loan repayable between April–Sept 2026.
- Working Capital Flexibility:
- Banks may reduce margins and recalculate drawing power, allowing exporters up to 450 days for pre- and post-shipment credit repayment.
- Exporters unable to ship goods may repay packing credit via domestic sales or proceeds from other export orders.
- Prudential Safeguards:
- These relaxations won’t be treated as restructuring, protecting exporters’ credit histories.
- Banks are required to maintain a 5% general provision on such accounts.
Significance:
- Provides liquidity relief to exporters struggling due to external trade shocks.
- Helps mitigate financial stress arising from delayed payments and steep foreign tariffs.
- Supports India’s export competitiveness amid global trade tensions.
