The Reserve Bank of India (RBI) has notified the Foreign Exchange Management (Borrowing and Lending) (First Amendment) Regulations, 2026 (Notification No. FEMA 3(R)(5)/2026-RB, dated February 9, 2026, and published in the Official Gazette on February 16, 2026).
Key Highlights of the Amendments
1. Expanded Eligible Borrowers and Recognized Lenders • Broader inclusion of entities (e.g., any person resident in India except individuals, subject to incorporation/registration under applicable laws). • Enhanced recognition of foreign lenders to increase funding options.
2. Revised Borrowing Limits • Eligible borrowers can now raise ECBs up to the higher of: • USD 1 billion (outstanding ECBs), or • Total outstanding borrowings (external + domestic) up to 300% of net worth (based on the last audited standalone balance sheet).
3. Removal of Cost of Borrowing Restrictions • All-in-cost ceilings (previously benchmark + margin) have been removed. • Pricing is now fully market-driven. • For refinancing, the earlier requirement of lower cost/credit spread has also been eliminated.
4. Rationalized Minimum Average Maturity Period (MAMP) • Uniform MAMP of 3 years for most ECBs. • Manufacturing sector borrowers: MAMP between 1–3 years, subject to outstanding ECB ≤ USD 150 million. • Longer maturity requirements (e.g., 5/7/10 years in older tracks) have been streamlined or removed.
5. Refinancing Provisions • Refinancing (full or partial) of existing ECBs by fresh ECB is permitted. • Safeguard: Refinancing must not result in failure to meet the MAMP requirement applicable to the original borrowing (or weighted outstanding maturity for multiple borrowings). • This allows flexibility in rollovers while preventing undue shortening of the original maturity profile.
6. Strengthened End-Use Restrictions (New Regulation 3A) • Detailed prohibitions/restrictions introduced to prevent misuse, including: • Investment in chit funds, Nidhi companies. • Real estate business (with limited exceptions, e.g., clarified for land/immovable property in permitted cases). • Capital market transactions (except certain strategic corporate actions). • On-lending restrictions in some cases. • Repayment of certain restricted domestic loans or NPAs. • End-uses now more tightly monitored for productive purposes.
7. Simplification of Reporting and Compliance • Streamlined requirements (e.g., updated forms, event-based reporting via ECB-2). • Enhanced clarity on security creation, conversion to non-debt instruments, corporate actions.
The basic tax slabs for individual and HUF remain unchanged in the old and new regime.
Corporate tax rates remain unchanged
MINIMUM ALTERNATE TAX (‘MAT’)
Rate of MAT reduced from 15 to 14 per cent.
No credit for tax paid under MAT for domestic companies under old
regime.
Accumulated MAT credit available for set-off up to 15 years for
domestic companies under new regime. Utilization restricted to 25
per cent of normal tax liability.
No impact on foreign companies.
INTERNATIONAL TAXATION
Tax holiday until 2047 for income earned by a foreign company from providing cloud services using data center services procured from India. Income attributable to Indian customers is also eligible for tax exemption provided such services are routed through an Indian reseller entity.
Income of a foreign company from supply of capital goods, equipment or tooling to an Indian contract manufacturer of electronic goods based in a custom bonded area, eligible for tax exemption for a period of five years.
Overseas income of a non-resident individual providing specified services in India under a notified scheme, is exempt from tax for a period of five years.
FOREIGN ASSETS OF SMALL TAXPAYERS DISCLOSURE SCHEME, 2026 (FAST-DS 2026)
TYPE OF ASSETS OR INCOME
TAX AMOUNT PAYABLE
CONDITIONS
No disclosure in tax return
Aggregate of the below 30 per cent of FMV of the asset as on March 31, 2026, 30 per cent of undisclosed foreign income as tax, and 100 per cent of the above
Aggregate of undisclosed foreign income and FMV of undisclosed foreign assets ≤ ₹10 million
a. No disclosure in tax return but taxes paid b. No disclosure upon becoming a resident but assets acquired as non-resident
Fee of ₹0.1 million
FMV of undisclosed foreign assets
IT Sector Tax Incentives Unified Safe Harbour Framework
Software development, IT enabled services, KPO, and contract R&D services clubbed under single category with common 15.5% safe harbour margin. Threshold enhanced from ₹300 crore to ₹2,000 crore. Automated rule-driven approval process with 5-year continuity option.
Cloud Services
Tax holiday till 2047 for foreign cloud service providers using Indian data centres.
Indirect Taxes
Customs Duty Reforms
Personal Imports
Tariff rate on dutiable goods for personal use reduced from 20% to 10%. Basic customs duty exempted on 17 drugs and medicines. Seven more rare diseases added for duty exemption on personal imports.
Export Competitiveness
Duty-free import limit for seafood processing inputs increased from 1% to 3% of FOB value. Duty-free imports extended to leather and synthetic footwear exports. Fish catch in EEZ made duty-free.
Export Timeline Extension
Export time frame for final products extended from six months to one year for exporters of leather or textile garments, leather or synthetic footwear, and other leather products.
Manufacturing Support
BCD exemption extended for capital goods manufacturing lithium-ion cells. Capital goods for critical minerals processing exempted. Nuclear power project imports exempted till 2035.
Aviation Sector
BCD exempted on components for civilian and training aircraft manufacture. Raw materials for aircraft parts in defence sector MRO exempted from basic customs duty.
SEZ Domestic Sales
One-time measure allowing eligible manufacturing units in special economic zones (SEZs) to sell goods in domestic tariff area at concessional duty rates, addressing underutilization of manufacturing capacity due to global trade disruptions.
Central Goods and Services Tax(CGST) Amendments
The Union Budget 2026-27 introduces several key amendments to the CGST Act, 2017, streamlining processes and providing clarity on various tax aspects.
Section 15: Valuation of Supply
Clarifies that post-supply discounts are permissible for valuation if a credit note is issued by the supplier and the recipient reverses the input tax credit (ITC) attributable to such discount.
Section 34: Credit and Debit Notes
Aligns with the amendment in Section 15, allowing for the issuance of credit notes for post-supply discounts that meet the specified conditions.
Section 54: Refunds
Expands the scope of refund claims to include unutilized input tax credit.
Excludes cases of tax refund on exported goods (with tax payment) from certain sub-sections, streamlining export refunds.
Section 101A: National Appellate Authority (NAA)
Introduces an interim provision allowing the Government to empower existing authorities to hear appeals under Section 101B until the NAA is constituted. This ensures continuity in the appellate process.
Disclaimer
All information presented in this document is based on announcements made by the Finance Minister during the Union Budget 2026-27 speech. The applicability and enforceability of these provisions will come into effect only upon their official publication through notifications under the relevant Acts and Laws.
Reserve Bank released the results of the fifteenth round of its biennial survey on foreign collaboration in Indian industry (FCS) covering the financial years 2023-24 and 2024-25. This survey captures information on financial parameters and operations of the Indian companies having technical collaboration with foreign companies.
Highlights:
Foreign technical collaboration (FTC) agreements were primarily present in the foreign direct investment (FDI) companies, which were either foreign subsidiaries (i.e., single foreign investor holding more than 50 per cent of total equity) or foreign associate companies (i.e., foreign investors’ equity holding ranging between 10 to 50 per cent), with 68 per cent and 21 per cent share of the total FTCs, respectively.
The FTCs in the manufacturing sector entities accounted for 78.4 per cent of the total reported FTCs, of which, machinery and motor vehicles together accounted for 30.6 per cent; while FTCs in the services sector constituted 16.6 per cent.
Japan, the United States of America (USA) and Germany remained the top three countries contributing to the technical collaborations in the Indian entities.
Around 61 per cent of FTCs involved technology know-how transfer by the foreign collaborators and 8 per cent FTCs were for use of trademarks / brand names.
Royalty payments, inclusive both royalty and lump sum technical fees, was the payment mode for around two-thirds of FTCs.
Of the 601 reported FTC agreements, 187 had export restriction clauses and 188 FTC had provision for exclusive rights on assets transferred.
Manufacturing sector had the highest share in value of production among the FTC companies. Within manufacturing, motor vehicles sector had the largest share.
The exports of the FTC reporting entities grew at a faster pace (20.3 per cent) as compared to the imports (4.6 per cent) in 2024-25 – they had 17.7 per cent and 18.6 per cent shares, respectively, in the total value of production.
Average profitability of FTC reporting companies, measured by the ratio of gross profit to capital employed, stood at 14.4 per cent in the current survey round.
The Government has consolidated 29 labour laws into four comprehensive Labour Codes. The four Labour Codes include the Code on Wages, 2019, the Industrial Relations Code, 2020, the Code on Social Security, 2020 and the Occupational Safety, Health and Working Conditions Code, 2020.
The Industrial Relations Code, 2020
The Industrial Relations Code, 2020 revolutionizes labour laws by simplifying compliance and promoting harmonious employer and employee relations. It strengthens collective bargaining, dispute resolution, and job security through clearer, uniform provisions. The Code empowers workers with uniform definitions while granting employers greater flexibility in operations. Overall, it fosters industrial peace, boosts productivity, and supports a balanced, growth-oriented work environment.
The Code on Wages, 2019
The Code on Wages, 2019 promotes fairness, equity, and inclusivity in India’s labour market. By ensuring uniform wage standards and social security, it safeguards both workers’ rights and employers’ interests. Overall, it strengthens economic justice, encourages formalisation, and enhances the dignity of labour.
The Code on Social Security, 2020
The Code on Social Security, 2020 consolidates nine existing labour laws into a single, comprehensive framework. It is a step to ensure universal social protection for all workers by strengthening social welfare coverage for both organized and unorganized workers including gig and platform workers. It also promotes women’s participation in the workforce, and simplifies compliance, thereby enhancing ease of doing business.
The Code reflects the Government’s commitment towards inclusive growth and social security for all, in line with the vision of a Viksit Bharat by 2047
The Occupational Safety, Health and Working Conditions Code, 2020
The Occupational Safety, Health and Working Conditions Code, 2020 strengthens India’s labour architecture by unifying standards, empowering workers, and enhancing ease of doing business. It lays the foundation for a safer, fairer, and more productive workforce aligned with India’s vision of inclusive and sustainable growth.
The United States continues to expand sanctions on Russia in response to its invasion of Ukraine and has expanded secondary sanctions targeting Russia. To this end, the Office of Foreign Assets Control (“OFAC”) has imposed secondary sanctions on any foreign financial institution that facilitates prohibited transactions. In light of the OFAC prohibitions on certain transactions related to Russia, specifically in certain critical goodsA and operating or having operated in certain sectorsB in Russia, in that case bank will not support, facilitate or process any transaction or banking service that relates directly or indirectly to transactions involving the critical goodsA and/or sectorsB in Russia (please refer to Annex A and B).
Prior to entering into any transaction or service, one should ensure it is not
prohibited by any such sanctions.
Annex A
The Russia Critical Items Determination issued by U.S. Office of Foreign Assets Control, pursuant to subsection 11(a)(ii) of Executive Order 14024 identifies certain items that support Russia’s military-industrial base. Please note that the list is subject to periodic updates or additional determinations may be issued from time to time.
Annex B
Technology sector of the Russian Federation economy: The term technology sector of the Russian Federation economy includes activities such as the production, procurement,
research, development, design, engineering, testing, servicing, financing, distribution, use, or transport involving the Russian Federation, of software, equipment, electronics, items, tools, materials, or devices, and any components, parts, or accessories of the foregoing, related to the fields of computing, engineering, applied mathematics, or applied sciences involving the Russian Federation and any related activities, including the provision or receipt of goods or services involving the technology sector of the Russian Federation economy.
Defense and related material sector of the Russian Federation economy: The term defense and related materiel sector of the Russian Federation economy includes military, armed forces, or security forces of or within the Russian Federation; the use of arms or related materiel by military, armed forces, or security forces of or within the Russian Federation; any person designing, developing, manufacturing, supplying, financing, procuring, or distributing goods, services, or technology to, from, or involving military, armed forces, or security forces of or within the Russian Federation; and any related activities, including the provision or receipt of goods, services, or technology involving the defense and related materiel sector of the Russian Federation economy. The term defense and related materiel sector of the Russian Federation economy also includes acquisition, possession, procurement, research, design, development, testing, evaluation, manufacture, maintenance, upgrade or refurbishment, shipping, supply, sale, transfer, or storage to, from, within, for, transiting, or on behalf of the Russian Federation of arms or related materiel of all types; enablers, aggregates, components, parts, as well as related documentation and instructions for any such arms or related materiel; or training for
the use of included systems, provision of simulation equipment, documentation (including
training manuals, maintenance orders, or technical bulletins), prototypes, software upgrades, and licensing and manufacturing agreements for such items.
Construction sector of the Russian Federation economy: The term construction sector of the Russian Federation economy includes activities such as the production, procurement, devising, framing, design, testing, financing, distribution, or transport involving the Russian Federation, of goods, services, or technology to fabricate, shape, alter, maintain, or form any buildings or structures, including the on-site development, assembly, or construction of residential, commercial, or institutional buildings, or of transportation infrastructure, in the Russian Federation; and any related activities, including the provision or receipt of goods, services, or technology to, from, or involving the construction sector of the Russian Federation economy.
Aerospace sector of the Russian Federation economy: The term aerospace sector of the
Russian Federation economy includes activities such as the production, procurement,
development, design, testing, servicing, financing, distribution, use, or transport involving the Russian Federation and its airspace, of aircraft or any other device used or intended to be used for flight or activities in the air or in space, missiles, unmanned aerial vehicles, space-based vehicles, satellites, high-altitude balloons, any other device that operates above the surface of the earth, and any items, components, parts, or accessories intended for the foregoing; airports or any other area of land or water used or intended to be used for a purpose related to the aerospace sector of the Russian Federation; and any related activities, including the provision or receipt of goods, services, or technology involving the aerospace sector of the Russian Federation economy.
Manufacturing sector of the Russian Federation economy: The term manufacturing sector of the Russian Federation economy includes activities such as the creation, modification, repair, testing, or financing, of goods by manual labor or machinery involving the Russian Federation and any related activities, including the provision or receipt of goods, services, or technology to, from, or involving the manufacturing sector of the Russian Federation economy. Note that persons conducting or facilitating transactions that are exempt or authorized by OFAC—such as those related to the provision of agricultural commodities, food, medicine, or medical devices, or related to energy—will not be subject to sanctions under E.O. 14024.
Extracted from: 1126 | Office of Foreign Assets Control (treasury.gov)
Reserve Bank of India (RBI) issues Master Circular to regulate import of goods and services in India. For delay remittance following guidelines of RBI Master circular should be complied
AD Category – I banks can consider granting extension of time for settlement of import dues up to a period of six months at a time (maximum up to the period of three years) irrespective of the invoice value for delays on account of disputes about quantity or quality or non-fulfilment of terms of contract; financial difficulties and cases where importer has filed suit against the seller. In cases where sector specific guidelines have been issued by Reserve Bank of India for extension of time (i.e. rough, cut and polished diamonds), the same will be applicable.
While granting extension of time, AD Category –I banks must ensure that:
a. The import transactions covered by the invoices are not under investigation by Directorate of Enforcement / Central Bureau of Investigation or other investigating agencies;
b. While considering extension beyond one year from the date of remittance7 , the total outstanding of the importer does not exceed USD one million or 10 per cent of the average import remittances during the preceding two financial years, whichever is lower; and
c. Where extension of time has been granted by the AD Category – I banks, the date up to which extension has been granted may be indicated in the ‘Remarks’ column.
(iii) Cases not covered by the above instructions / beyond the above limits, may be referred to the concerned Regional Office of Reserve Bank of India.
(iv) The above shall be reported in IDPMS as per message “Bill of Entry Extension” and the date up to which extension is granted will be indicated in “Extension Date” column.
Pushkar Mer 