Export proceeds received into foreign currency accounts with IFSC, to be used within three months

The period is calculated from the date of receipt of the funds, after adjustment for future obligations

Exporters can keep the foreign exchange earnings in a Foreign Currency Account with the International Financial Services Center (IFSC) for three months. However, for accounts opened in another jurisdiction, the time limit for using the proceeds remains one month.

The Reserve Bank of India has amended the Foreign Exchange Management (Foreign Currency Accounts by a Person Resident in India) Regulations, 2015 to facilitate the change. Experts say this will be a big help for India’s high-end export industries, especially the gems and jewelery sector.

The notice read: “The funds in this account may be used by the exporter to pay for his imports into India or may be repatriated to India within a period not exceeding three months in the case of accounts with banks in an International Financial Services Centre; or next month for all other jurisdictions.” The period is calculated from the date of receipt of the funds, after adjustment for future obligations.

Moksh Kalyanram Abhiramula, Managing Partner, La Mintage Legal LLP said after this that exporters can easily open and manage foreign exchange accounts abroad or with IFSCs for export proceeds, with defined repatriation timelines, thereby increasing operational flexibility and global competitiveness. “Going forward, India should focus on increasing regulatory clarity for evolving trade practices, strengthening monitoring mechanisms to prevent abuses, and promoting awareness among exporters about these compliance options for maximizing benefits under FEMA’s progressive regime,” he said.

Exporters said this resolved a long-standing problem. Siddharth Sipani, CFO at Skygold & Diamonds, said the previous regulatory structure, including the existing Exchange Earners’ Foreign Currency (EEFC) chart of accounts, mandated rapid conversion of our earnings into foreign currencies, typically by the end of the following month. “This forced us into a cycle of frequent and often unoptimized conversions to the rupee, resulting in significant operational costs, increased risk of currency fluctuations and a significant workload on the finance department,” he said.

With the help of new provisions, gem and jewelry exporters can now better match their dollar receivables from exports of finished jewelry with dollars payable on raw material imports, significantly reducing the need for costly and risky spot currency conversions. A three-month horizon provides the necessary flexibility to implement better hedging strategies and protect against volatile exchange rate movements. “By reducing the frequency of conversions, we immediately reduced transaction costs and compliance overhead,” said Sipani.

However, experts also have a warning. Vishal Gehrana, Partner Designate at Karanjawala & Co believes that those using accounts outside the IFSCs will have to ensure tighter cash flow management to meet the shorter one-month repatriation timeline. The change also strengthens the role of IFSCs as India’s own international financial centres, offering an alternative to holding funds abroad.

At the same time, compliance obligations remain strict. “Exporters should ensure that these accounts are used only for export-related receipts, that all transactions are properly documented and that the funds can be linked to genuine trade transactions. They should also maintain complete KYC records and audit trails. Any misuse or delay beyond the permitted timeline may attract regulatory action,” he advised.

Published on October 10, 2025