Project Export Payments India: How Contractors Get Paid After 1 October 2026

Project export payments in India now follow the payment terms written into your contract with the overseas client.

There is no fixed realisation clock for a project, so the advance, each milestone and the retention fall due when the contract says.

Since 1 October 2026, the old Project Export Manual approval step is gone.

Your bank instead checks that the project is genuine and then allows receipts as per the underlying contract, so the contract and its payment schedule carry most of the weight.

These rules apply to engineering, procurement and construction (EPC) contractors, including Indian construction and engineering firms working on sites abroad.

They shape EPC contractor payments from the first advance to the final release of retention, and they sit alongside Goods and Services Tax (GST) and bank guarantee questions.

• The rule: receipts follow the contract's payment terms under the Reserve Bank of India (RBI) Foreign Exchange Management (Export and Import of Goods and Services) Regulations, 2026, regulation 5(1)(c).
• The check: your authorised dealer bank (the bank licensed to handle your foreign exchange) confirms the project is genuine before it allows receipts.
• The old step: the Project Export Manual approval process ended on 1 October 2026, and receipts now fall due on the contract's own payment dates.
• The cash flow: a project is typically paid as an advance, then milestone payments, with retention money held back until final acceptance.
• The paperwork: keep the contract, payment certificates and client correspondence ready, because your bank typically reads them before crediting a receipt.

The RBI's A.P.(DIR) Circular 20 of 16 January 2026 superseded the older project export circulars in its annex with effect from 1 October 2026. These include A.P.(DIR) Circular 39 of 14 January 2016, which carried the Memorandum of Instructions on Project and Service Exports (PEM, often called the Project Export Manual).

The new export regulations set the due date by your contract.

Regulation 15(1) lets your bank permit receipts and payments for project exports as per the underlying contract, after it has satisfied itself of the genuineness of the project.

In practice, you should expect the bank to read the contract, the client's details and the payment schedule before the first receipt.

No replacement approval process is set out in the new rules.

If your bank asks for a form or a filing of its own, that is its internal procedure, so ask about it early in the bid stage rather than after the advance arrives.

A typical overseas EPC contract pays you in stages, and each stage has its own trigger. Every contract sets its own terms, but most construction project export payments follow this shape.

For example, on a USD 5 million contract you might receive a mobilisation advance against a guarantee, then monthly progress payments as the engineer certifies work.

A slice of each of those payments is typically retained until the client issues the final acceptance certificate.

The advance is typically recovered pro rata from each progress payment, so your net receipt per certificate is lower than the gross value of work done. Build that into your cash flow before you commit to suppliers on site.

Milestone payments and progress billing for overseas projects

Milestone payments are entitlements that arise only once you complete a defined stage, which is different from retention, where the money is already earned but held back as security.

That difference decides what you can claim if the client stops paying, so your contract should describe each milestone in measurable terms.

Progress billing typically works on a monthly cycle:

1. You submit a statement of work done in the period.
2. The client's engineer checks and certifies it.
3. The client pays the certified sum, less advance recovery and retention.
4. Your bank receives the payment and checks it against the contract schedule.

For your accounts team, matching each receipt to its certificate number saves time when the bank asks which part of the contract a payment relates to.

Letter of credit, open account or escrow as the payment route

The route your client uses to pay is a commercial choice in the contract, and each one shifts risk differently.

A letter of credit is a commitment by a bank on behalf of the buyer that you will be paid, while open account means you complete the work and then wait for payment.

Open account is common with repeat clients you trust, while a new client in a higher-risk market typically justifies a letter of credit.

If you want a bank backstop rather than a full documentary credit, our guide to the standby letter of credit export route explains how it works.

Before releasing the advance, overseas clients commonly ask you for a guarantee from an Indian or local bank.

Each guarantee protects the client if you fail to perform, and each ties up your bank limits, so you should price them into the bid.

• Advance payment guarantee: secures the mobilisation advance, typically 10-20% of the contract value.
• Performance guarantee: secures your delivery of the contract, typically 5-10% of the contract value.
• Retention money guarantee: lets you receive retained payments before the acceptance certificates are issued.
• Other cover: for example, in lieu of customs duty, or as a security deposit for expatriate labour and equipment.

How the advance guarantee is released and when it ends

The advance is generally recovered pro rata from each progress payment during the project.

As the client deducts its share from your certificates, the amount still at risk falls, and the guarantee value can step down in line with that recovery.

Once the advance is fully recovered, the guarantee typically ends on its own terms.

Check the guarantee wording for an expiry date and a reduction clause, because a guarantee that does not step down keeps blocking your bank limit long after the advance is repaid.

Bank guarantee options and Exim Bank support for contractors

A performance guarantee usually stays valid until the maintenance period ends, or until the overseas client grants the final acceptance certificate. That makes it the longest-running bank guarantee on most projects, so your treasury team should track its expiry closely.

Exim Bank (the Export-Import Bank of India) issues this guarantee cover for Indian project exporters with overseas or deemed export contracts.

It also offers funded support for cash-flow gaps during execution, and commercial banks issue this kind of bank guarantee cover.

Project export realisation typically arrives as a SWIFT wire from the client's bank to your authorised dealer bank in India.

The bank checks the payment against your contract, applies the purpose code, converts it to rupees or credits it in foreign currency, and gives you proof of the inward receipt.

• Keeping the currency: you can credit the full value of your foreign exchange earnings to an Exchange Earners' Foreign Currency account, known as an EEFC account, which suits contractors paying overseas suppliers or site wages in the same currency.
• Proof of receipt: your bank issues a foreign inward remittance advice (FIRA) or its electronic version, the e-FIRA, which supports your export and GST records.
• Advance receipts: an advance from your client can also go to the EEFC account, because it counts as an export advance.

The EEFC account pays no interest, and once you withdraw rupees from it, you cannot put them back.

Under RBI's EEFC rules, the credits of a calendar month must be converted into rupees by the last day of the following month, after adjusting for approved uses such as paying overseas suppliers.

Purpose code for construction works abroad

Receipts for construction work you carry out abroad typically use purpose code P0502, explained on our page on construction works abroad. Purpose codes are updated from time to time, so confirm the code with your bank before the first receipt.

Quote that code whenever your bank asks for the purpose of an inward remittance, including any advance that arrives before work starts on site.

Retention money is already earned, so the client can typically hold it back only until completion, or set off quantified defect costs against it.

Liquidated damages work differently: under many construction contracts, they are a pre-set sum deducted from payments due if you finish late.

When the amount you receive is lower than your invoice, the export regulations give you a set route for each case:

Your bank decides each reduction or set-off, so keep the client's deduction notice, the contract clause it relies on and any correspondence. A retention money guarantee is one way to bring retained cash forward.

For a construction project export, the place of supply for services directly related to immovable property is where the property is located, under section 13(4) of the Integrated Goods and Services Tax (IGST) Act.

A site abroad therefore places the supply outside India.

Whether that makes the work a zero-rated export of services, and whether you need a letter of undertaking, depends on the facts of your contract.

Check with your chartered accountant (CA) before you raise the first invoice, and ask about withholding tax in the client's country at the same time.

We built Xflow as a cross-border payments platform for Indian exporters, and it often suits part of an EPC firm's project export proceeds rather than all of them.

We hold final Payment Aggregator Cross Border (PA-CB) authorisation from the RBI as of February 2026. RBI rules limit that route to ₹25 lakh per transaction, so large milestone receipts usually go bank-to-bank.

Where it does fit, it offers the following:

• Advances and small milestones: Xflow may suit receipts of up to ₹25 lakh, such as early mobilisation tranches or small variation orders, paid into our receiving accounts in the client's currency.
• Design and engineering invoices: design, consulting and engineering service invoices raised from India are typically smaller and fit within the limit.
• Several project currencies: you can collect from clients in 25+ currencies when projects run in different countries.
• Proof of receipt: we issue an e-FIRA within 24 hours of each withdrawal, at no extra cost.

On pricing, we charge our variable fee as an FX mark-up on the conversion. For invoices over USD 10,000, our Scale plan uses custom pricing set by our team; you can compare plans on the pricing page.

Agree these points with your authorised dealer bank while the contract is still being signed:

• Purpose code: confirm the code it will apply to project receipts and to any design or service invoices, so each receipt is reported correctly from the start.
• Genuineness check: ask which contract documents it needs to satisfy itself the project is genuine, because regulation 15(1) makes that check a condition for project receipts.
• Third-party payers: tell it early if a parent company, lender or escrow agent will pay, since regulation 8 lets the bank allow this only when it is satisfied the transaction is genuine.
• Deductions: agree how you will report liquidated damages or other short payments, so a reduction in export value under regulation 6 does not hold up your records.
• Currency: decide which receipts you use for foreign-currency costs and which convert to rupees, so overseas suppliers and site costs are covered within the EEFC conversion window.