How forex rule confusion is delaying service payments to individuals

Weeks following the Reserve Bank of India's (RBI) new foreign exchange regulations for exporting and importing goods and services, individuals and micro, small, and medium enterprises (MSMEs) are facing delays in receiving payments for their services. Banks are requiring these entities to complete a complex five-page export declaration form (EDF) before crediting payments.

According to the RBI, starting October 1, service exporters must submit a declaration outlining the full value of services within 30 days of the invoice's issue date. However, individuals, such as freelancers and consultants, are not exempt from this requirement, even though banks are still requesting the form from them. This situation suggests that the implementation of the Foreign Exchange Management (Export and Import of Goods and Services) Regulations, issued on January 13, has been inconsistent.

In response, the India SME Forum requested urgent intervention from the RBI, highlighting the challenges faced by MSMEs and digital-first exporters in complying with the EDF requirements.