Export of Goods & Services – Position under FTP, FEMA & GST (DGFT Notification No. 30/2026-27 dated 20 Aug 2026)

1. What the Notification Does

DGFT has re-written Paras 2.52 (Denomination of Export Contracts) and 2.53 (Applicability of FTP Schemes for INR Realisations) of FTP 2023 to catch the trade policy text up with the currency framework RBI had already put in place under FEMA since December 2023 (further eased in February 2025). For all countries other than ACU members, contracts/invoices may now be denominated, and proceeds realised, in any foreign currency or INR – without the earlier default rule requiring realisation in freely convertible currency, and without the earlier mandatory Vostro-account precondition for INR receipt. Para 2.53 generalises FTP-benefit parity: INR proceeds credited to a Rupee account of a person resident outside India (opened under the FEMA Deposit Regulations) through banking channels are now eligible for export incentives/EO fulfilment at par with forex realisation – for any country other than Nepal/Bhutan (their own dedicated regime) and Iran (parity subject to Para 2.19 sanctions compliance).

2. Important Clarification – What Actually Changes vs What Doesn’t

	Position
Ability to collect export proceeds in INR	Unchanged. RBI already permitted this under the FEMA Manner of Receipt and Payment Regulations, 2023 (as amended 2025) for non-ACU trade, through an SNRR account or a Vostro/SRVA account – well before this DGFT notification.
Speed / ease of collection	Unchanged. Nothing in this notification alters how fast payment clears, which banking channel is used, or what documentation the AD bank needs at the point of receipt.
Export-incentive eligibility (drawback, RoDTEP, EO fulfilment)	This is what changes. INR-realised exports now have unambiguous FTP-text support for incentive parity, closing the earlier gap where FTP text still said proceeds “must” be in convertible currency even though FEMA already allowed INR.
GST zero-rating / refund documentation risk	Indirectly assisted – a consistent FTP position reduces the risk of a field officer questioning an INR receipt under Section 2(6)(iv) IGST Act, but the exporter must still evidence the RBI-permitted channel used.

In short: this is a paperwork/incentive-eligibility fix, not a collection-mechanics change. Whether you can get paid in INR, and how, was already settled by FEMA.

3. How INR Is Actually Received – Mechanics

• A foreign bank cannot simply debit a rupee balance held “at home” – INR settlement happens only within the Indian banking system, via one of two routes:
• SNRR Account: the buyer (or his bank) opens a Special Non-Resident Rupee account directly with an Indian AD bank and pays you by debiting it.
• Vostro / SRVA Account: the buyer’s own bank holds a rupee account with an Indian correspondent bank; the buyer pays his bank locally, which settles with you via the Vostro balance (this is the route used for Russia and Iran trade).
• FTP/GST benefit parity is available only where the credit traces to such a FEMA-recognised account – an INR credit from an untraceable or informal channel will not qualify.

4. GST Position (Unchanged by This Notification)

Export of goods (Section 2(5) IGST Act) is zero-rated regardless of realisation currency – no change. Export of services (Section 2(6)(iv)) requires receipt in convertible forex or INR “wherever permitted by RBI”; CBIC Circular No. 202/14/2023-GST already confirms INR receipt via SRVA satisfies this. The DGFT amendment reinforces this position at the FTP-incentive level but does not itself alter the GST condition.

5. Practical Implications for Exporters

• Certainty on incentive claims: less risk of a drawback/RoDTEP/EO-fulfilment claim being questioned solely because realisation was in INR rather than forex.
• No change to onboarding: you still need to confirm, transaction by transaction, that your buyer’s bank has a working SNRR/Vostro relationship with an Indian AD bank before invoicing in INR – RBI “approval in principle” for a foreign bank does not guarantee an operating, funded account.
• 18-month (vs 15-month) realisation window continues for INR-invoiced exports – useful as a credit-term lever with buyers who prefer rupee settlement.
• Sanctioned-country corridors (Russia, Iran) are not affected by this notification: the real constraints there – whether a specific bank has an active Vostro account, whether it holds sufficient rupee liquidity, and whether your own AD bank is willing to process that counterparty – remain purely FEMA/RBI-approval and commercial-banking questions. For Russia, ample liquidity often exists because of the large oil-import-funded Vostro pool; for Iran, liquidity is thinner since oil purchases (the main funding source) have been minimal since 2019, and Para 2.19 sanctions-compliance checks apply on top of the currency question.

6. Note

Prepared for internal discussion based on DGFT Notification No. 30/2026-27, the FEMA (Manner of Receipt and Payment) Regulations, 2023 (as amended to Feb 2025), the FEMA (Export and Import of Goods and Services) Regulations, 2026 (effective 1 Oct 2026), Sections 2(5)/2(6)/16 IGST Act, and CBIC Circular No. 202/14/2023-GST. Not legal, tax or regulatory advice; test specific transactions against the buyer’s country/ACU status and the AD bank’s internal policy.