Amendments to Foreign Trade Policy 2023: Denomination of Export Contracts and Realization Procedures

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Dated: 21.08.2026

Amendments to Foreign Trade Policy 2023: Denomination of Export Contracts and Realization Procedures

The Government of India has recently announced significant amendments to the Foreign Trade Policy (FTP) 2023, specifically targeting the denomination of export contracts and the procedures for export realization. These changes, effective immediately, are designed to align the FTP with the latest Foreign Exchange Management (Manner of Receipt and Payment) Regulations, 2023. Below is a detailed overview of the key updates and their implications for exporters and stakeholders.

Key Amendments at a Glance

1. Denomination of Export Contracts (Para 2.52)

General Rule for Export Contracts: All export contracts and invoices, except those involving member countries of the Asian Clearing Union (ACU), must be denominated either in foreign currency or Indian Rupees. Export proceeds can now be realized in any foreign currency or in Indian Rupees.
Contracts with ACU Member Countries: For exports involving ACU member countries (excluding Nepal and Bhutan), contracts must be denominated in a currency determined by the ACU. Settlement can also follow directions issued by the Reserve Bank of India (RBI).
Exports to Nepal and Bhutan: Contracts and settlements for exports to Nepal and Bhutan must be in Indian Rupees or as per RBI directions.
EXIM Bank/Government of India Lines of Credit: Export contracts and invoices under these lines of credit may also be denominated in Indian Rupees.

2. Export Realization and FTP Benefits (Para 2.53)

Eligibility for FTP Benefits: Exports to any country (other than Nepal and Bhutan) where proceeds are realized in Indian Rupees through banking channels—specifically, credited to Indian Rupee accounts of persons resident outside India—are now eligible for export benefits, incentives, and fulfillment of export obligations under the FTP, at par with exports realized in foreign currency.
Special Provisions for Iran: Exports to Iran, where proceeds are realized in Indian Rupees, remain eligible for FTP benefits, subject to compliance with specific FTP provisions.

Practical Implications for Exporters

Greater Flexibility in Currency Denomination
- Exporters can now denominate contracts in Indian Rupees for a wider range of countries, simplifying transactions and potentially reducing currency conversion costs.
Expanded Access to FTP Incentives
- Realization of export proceeds in Indian Rupees (through approved banking channels) now qualifies for FTP incentives, making Indian Rupee trade more attractive.
Alignment with RBI and FEMA Regulations
- The amendments ensure that FTP provisions are consistent with the latest RBI and Foreign Exchange Management Act (FEMA) regulations, reducing compliance risks.

Summary Table: Revised Provisions

Export Destination	Contract Denomination	Settlement Currency	FTP Benefits Eligibility
ACU Members (except Nepal/Bhutan)	ACU-determined currency	As per ACU/RBI directions	Yes
Nepal and Bhutan	Indian Rupees or as per RBI	Indian Rupees	No (for INR realization)
Other Countries	Foreign currency/INR	Foreign currency/INR	Yes (if INR via approved channels)
EXIM Bank/GOI Lines of Credit	Indian Rupees	Indian Rupees	Yes

Conclusion

These amendments mark a progressive step towards facilitating international trade by providing exporters with more options for contract denomination and export realization. By aligning with current financial regulations, the policy aims to streamline export operations and enhance India’s competitiveness in global markets.

In case you face any issues related to Indirect Tax-Customs, GST, Foreign Trade Policy (FTP), Arbitration matters and Central Licensing and related advisory matters in India then please feel free to get in touch with SJ EXIM Services.

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Source: DGFT

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