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The EDF Backlash Is a Symptom of a Bigger Systemic Silos Problem in Government

EDF Backlash

There is a strong backlash over the Reserve Bank of India’s new Export Declaration Form (EDF), particularly from freelancers, gig workers and small service exporters, which deserves attention, not simply because of the compliance burden it may create, but because it exposes a larger problem in how the government regulates the economy.

The EDF form is an export declaration form under RBI’s Notification No. FEMA 23(R)/2026-RB, January 13, 2026. This notification was announced to remove Softex form and make export declaration f uniform across Software and other services. However, it resulted in trapping small exporters who were not filing Softex earlier becuase they were not exporting Software or were exporting Software that falls in to P802 purpose code. Many of these are Gig Workers (Freelancers) doing small exports and receiving foriegn exchange either directly or through some freelancer aggregator platform or from content platforms. All these were in some form providing data to RBI when remittance acceeptance and purpose code declaration is done. Hence, introduction of one more filing requirement in form of EDF created uproar in this category of exporters. This category may be small in export size but important for Gig economy.

An exporter does not operate under FEMA alone. Had RBI considered the other laws affecting exporters of all sizes, from smallest to largest, before preparing this new FEMA notification, the problem would not have arisen. 

This is not an argument against regulation. RBI has a legitimate responsibility to monitor foreign exchange and export realisation. But regulation designed in isolation can create unintended compliance costs and, more importantly, undermine the larger government’s Ease of Doing Business objective. 

The systemic problem is that one regulator does not consider or interact with other regulators. 

RBI can adopt a simple solution to the EDF problem

In the short run, RBI can consider exempting small exporters earning below 20 lakhs from GST registration. For exporters earning above 20 lakhs, RBI (through IBDIC) should create a digital EDF on common infrastructure, accessible to authorised banks and relevant government systems, with the necessary information flowing into EDPMS.

In the long run, everyone should be brought under this data capture and not abandon EDF. But make its implementation fully digital. For goods, exporters submit to ICEGATE; the EDF is auto-generated from the submitted data. Similarly, for Services and Intangibles, EDF can be auto-generated from data submitted by exporters to 

  1. From GSTR-1, from data submitted to GSTN for those registered with GST Or
  2. Banker at the time of remittance for those not registered with GST

This would also solve a problem for banks. Banks ultimately need to reconcile export proceeds and close the transaction in the regulatory system. If the export declaration, payment and realisation information are digitally connected, much of this reconciliation can move from manual compliance to straight-through processing.

The principle is simple: Declare once. Reconcile automatically. Share the information with every authorised government consumer.

Ensuring cross-regulatory sanctity and ease of doing business.

The exporter sees one transaction. The government sees multiple regulatory transactions because each department sees the transaction through its own statute.

The larger lesson from the EDF episode is that whole-of-government cannot mean merely asking departments to coordinate after a regulation has been designed.

Whole-of-government must begin at the design stage of regulation itself.

Before creating a new compliance requirement, the regulator should ask: Which other laws apply to this transaction? Which other departments regulate it? What thresholds already exist? What information has already been submitted? Which government system already holds it? Can the new requirement be fulfilled through an existing digital system rather than through another form?

These questions should become part of the regulatory design process.

The EDF episode is therefore a small but important warning.

Government must stop designing regulation department by department when businesses operate transaction by transaction.

The next generation of Ease of Doing Business will not come merely from removing regulations. It will come from making different regulations work together.

For this, the Government must pursue a Unified Digital Trade system. This requires a genuine whole-of-government approach—and, eventually, the Connected Digital Public Infrastructure (Digital Port) to make it possible.

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Alternate Way of Doing Business: Building Connected Systems for Ease of Compliance

Every day, businesses in India spend countless hours navigating multiple government portals, repeatedly submitting the same information and managing fragmented compliance processes—not because regulations require it, but because government systems do not work together.

For years, reforms have focused on improving the Ease of Doing Business (EoDB) by simplifying regulations and reducing procedural burden. While these efforts remain important, the next leap requires a different mindset—an Alternate Way of Doing Business (AWDB), where businesses no longer act as the integration layer between disconnected government systems. AWDB is about redesigning the digital experience of regulation—not changing the regulations themselves.

India’s businesses face a double compliance challenge

Every business in India—whether a startup, MSME, manufacturer, exporter, hospital or large enterprise—operates within a complex regulatory landscape. As they grow, they interact with a wide range of regulators, including GSTN, MCA, EPFO, ESIC, FSSAI, RBI, DGFT, Pollution Control Boards, labour departments, municipal bodies and numerous state authorities. Each regulator serves an important public purpose, yet the overall landscape is difficult to navigate. Businesses often struggle to determine which regulations apply to them, when obligations arise, and how requirements vary across sectors, jurisdictions and stages of their lifecycle. This information asymmetry is the first layer of friction. The second layer begins once these obligations are understood. The regulatory ecosystem largely functions as a collection of independent digital silos, each with its own portal, identifiers, workflows and data requirements. Businesses repeatedly submit the same information, upload identical documents, undergo multiple verifications and manage separate compliance journeys for different regulators. Systems that should exchange information seamlessly instead rely on businesses to bridge the gaps between them.

Regulatory Cholesterol: The hidden friction that arises when regulatory systems operate in silos, requiring businesses to repeatedly bridge information gaps and duplicate compliance efforts.

The result is invisible friction that slows businesses without improving regulatory outcomes. Time and effort are spent navigating disconnected systems rather than meeting substantive compliance obligations. This unnecessary overhead created by fragmented regulatory systems rather than regulation itself is what we call regulatory cholesterol.. Removing it is not just about reducing regulation; it is also about making regulation discoverable, interoperable and significantly easier to comply with.

The DPI Playbook: Connect Systems, Not Interfaces

India’s Digital Public Infrastructure (DPI) journey has demonstrated that systemic inefficiencies are best addressed through shared digital infrastructure rather than isolated digitisation of departments. UPI did not replace banks, it connected them through common protocols. DigiLocker did not replace document issuers, it enabled trusted exchange of verifiable digital documents. API Setu did not replace government systems, it provided a common interface for secure data exchange.

The success of these platforms stems from a common design philosophy: preserve institutional autonomy while enabling interoperability through shared standards, protocols and trust frameworks. The next frontier is to apply the same design philosophy to India’s regulatory ecosystem—connecting regulators rather than consolidating them. This is the vision behind the proposed National Regulatory Compliance Grid (NRCG).

Single Window Access Is Only the Beginning

Over the past few years, initiatives such as the National Single Window System (NSWS) have made it easier for businesses to discover approvals and access government services through a common interface. This is an important step towards reducing information asymmetry. However, a single entry point does not, by itself, make the underlying regulatory ecosystem interconnected. Behind the window, businesses still encounter multiple systems, each with its own data model, identifiers, workflows, evidence requirements and integration mechanisms.

The real challenge is structural. Every regulator continues to evolve independently, resulting in bespoke integrations, duplicated data exchanges and fragmented compliance journeys. Each new integration adds to the ecosystem’s technical debt, while businesses remain responsible for repeatedly providing the same information across agencies. Governments incur the cost of maintaining overlapping digital infrastructure, and technology providers build and maintain countless point-to-point integrations. The problem is therefore not one of access alone—it is fundamentally one of interoperability.

From Fragmented Systems to Connected Regulatory Systems

Imagine a regulatory ecosystem where regulators continue to operate independently, but their digital systems speak a common language. Instead of functioning as isolated digital silos, regulatory platforms are connected through common standards and shared digital building blocks. An enterprise establishes its identity once and can be recognised consistently across regulatory interactions. Digital credentials become reusable, compliance evidence becomes machine-verifiable, and common regulatory services can be leveraged across agencies.

This does not require replacing existing regulatory systems or centralising regulatory data. Each regulator continues to own its legislation, business rules, applications, databases and approval processes, while adopting common digital infrastructure where collaboration and connectivity create value. The result is a federated regulatory ecosystem—autonomous regulators connected through shared digital rails.

This is the design philosophy behind the National Regulatory Compliance Grid (NRCG). NRCG is not another government portal or a centralised compliance application. It is a Digital Public Infrastructure (DPI) for regulation—a lightweight connectivity layer that provides common standards, shared digital building blocks and reusable public services, enabling independent regulatory systems to work together. Just as UPI enables seamless payments across independent banks without replacing their core banking systems, NRCG enables seamless compliance across independent regulators without centralising regulatory functions or data. It provides the connective fabric that allows businesses, regulators and service providers to participate in a trusted regulatory ecosystem.

The architecture of NRCG is Guided by five design principles:

  • Choice of access: Businesses should be able to interact with regulatory services through the channel of their choice—government portals, private compliance platforms, ERP systems, APIs or AI agents. Compliance should be accessible wherever businesses already work, rather than requiring every interaction to occur through a single government application.  
  • Reuse of common digital capabilities: Regulators should be able to leverage shared digital building blocks—such as enterprise identity, authorisation, registrations, filings, payments, certificates and notifications—instead of independently developing similar capabilities. Reusable public digital infrastructure reduces duplication, improves consistency and accelerates digital transformation across government.
  • Shared trust infrastructure: Trusted regulatory interactions require common foundations. Shared enterprise identity, delegated authorisation, harmonised identifiers, verifiable digital credentials and reusable compliance evidence should establish trust across regulatory boundaries, enabling information to be accepted once and reused wherever appropriate.
  • Standards-based connectivity: Independent regulatory systems should interoperate through common metadata standards, canonical data models, open APIs and machine-verifiable evidence. Rather than relying on bespoke point-to-point integrations, systems should speak a common digital language that enables secure, seamless and scalable information exchange
  • Federated by design: NRCG should strengthen—not replace—existing regulatory institutions. Each regulator continues to own its legislation, policies, business rules, applications and data while participating in a common digital ecosystem through shared standards, trusted services and interoperable digital infrastructure. The objective is connected systems, not centralised systems.

Towards Frictionless Regulatory Infrastructure

Ease of Doing Business is often viewed as a policy challenge. Increasingly, it is becoming a systems challenge. When regulatory systems cannot communicate with each other, businesses become the integration layer. They repeatedly submit the same information, upload documents across multiple portals, prove their identity to different agencies, reconcile conflicting records and navigate fragmented workflows that often ask essentially the same questions in different ways.

Technology should eliminate this burden—not merely automate existing processes.  NRCG shifts compliance from document exchange to trusted data exchange; from manual verification to machine-verifiable evidence; and from fragmented regulatory workflows to coordinated digital journeys. The objective is not fewer regulations. The objective is frictionless regulation.  The impact of NRCG extends beyond improving government efficiency. An interoperable regulatory infrastructure creates the foundation for a broader innovation ecosystem. Software providers can build compliance platforms without integrating separately with every regulator. AI assistants can help enterprises understand and fulfil regulatory obligations across agencies. Professional service firms can deliver end-to-end digital compliance solutions. Industry bodies can create sector-specific applications, and startups can innovate on standard APIs rather than reverse-engineering government systems.

This is the same pattern that has emerged across India’s Digital Public Infrastructure journey. Shared infrastructure such as identity, payments, document exchange and consent layers have enabled new forms of innovation by allowing public and private actors to build on common digital rails. Regulatory interoperability represents the next evolution of this journey. The vision is not one regulator, one database or one portal. It is one connected regulatory network—where regulators retain their autonomy while participating in a trusted digital ecosystem; where compliance becomes predictable, programmable and increasingly invisible; and where businesses spend less time navigating systems and more time creating value, generating employment and driving economic growth.  Removing regulatory friction is not about reducing regulation. It is about enabling government systems to work together as one. That is the promise of the National Regulatory Compliance Grid (NRCG).

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A Budget that missed the opportunity for being bold on both Strategic Autonomy & Reform action

 iSPIRT Foundation, a technology think-and-do tank, believes India’s hard problems can be solved only by leveraging public technology for private innovation. iSPIRT, as a think-and-do-tank, pioneered the concept of Digital Public Infrastructure (DPI)

The Budget starts by acknowledging that India is facing “an external environment in which trade and multilateralism are imperilled and access to resources and supply chains are disrupted”. But the details aren’t in line with the idea. The Government also acknowledged AI and cutting-edge technologies as force multipliers for better governance. 

AI has been spoken about a few times at different places. However, there is no material proposal on AI, except as a tool for “Bharat-VISTAAR”—a multilingual AI tool in agriculture.

FM announced Manufacturing support to seven strategic and frontier sectors, including Bio-Pharma, Chemicals, Semiconductors, and Electronic Components. This will help the ecosystem build up in these sectors and, in a way, support the cause of “Product Nation” from a building capacity and infrastructure point of view. However, it does not address “strategic autonomy” and technological sovereignty as a thought process. 

The one that most closely links to “Aatmnirbhar Bharat” or strategic autonomy is the announcement on ISM 2.0, to produce equipment and materials, design full-stack Indian IP, and fortify supply chains, including skilling and training. Also, the mention of established dedicated Rare Earth Corridors is a welcome move to fill the gaps in the supply chain in these areas, given the geopolitical situations. 

Any Government announcement takes about 2 years to roll out in the field. The AI Mission, National Quantum Mission, Anusandhan National Research Fund, and Research and Development and Innovation Fund have been mentioned by the FM in speech. RDI is rolling out now. The government missed the bus to announce a “market access” scheme or a fund for the products developed after taking all the steps in R&D and frontier technology advancements. 

We have maintained that our Economic Policy will need to foreground Strategic Autonomy as a core pillar, which becomes all the more imperative in the current global geopolitical scenario. But Strategic Autonomy is not possible without technological sovereignty. While the government has taken steps to “reduce critical import dependencies,” at a time when “new technologies are transforming production systems”, incremental steps are not enough.

“A market access plan for Indian products designed and developed in India by resident Indian companies is the need of the hour for any fruitful outcome from R&D and product development. The Government must consider this with all seriousness in the future,” said Amit Agrahari, volunteer at iSPIRT Foundation.

Last year, Bharat Trade Net was announced as an integrated trading platform. This year’s announcement of “Customs Integrated System (CIS) as a single, integrated and scalable platform for all the customs processes and use of non-intrusive scanning with advanced imaging and AI technology for risk assessment, takes the thought to the next level.  This is very much in line with our National Regulatory Compliance Grid (NRCG) approach and use of advanced technology for data-driven governance. 

However, our proposal of building a NRCG for all regulatory systems is still waiting. “Unless we use a Grid approach for digital transformation and connect all regulators, it is going to be difficult to reduce the regulatory cholesterol”, said Sudhir Singh, an iSPIRT Volunteer looking after Ease of Doing Business, and Policy. 

Linking TreDS with the GeM portal is a welcome step towards unlocking true Digital potential in Ease of Doing Business for MSMEs. “This can further create a grid approach by connecting to the Open Credit Enablement Network (OCEN) and trade finances for SME exporters,” said Tanuvi Thakur, volunteer at iSPIRT Foundation. This will further aid EoDB through quicker and cheaper access to credit by MSMEs. 

The other major welcome step in this regard has been the in-principle movement from penalty and prosecution to fees. This has also been our core decriminalisation aim for achieving EoDB.

Overall, it’s a subdued Budget despite the challenging geopolitical environment rather than a bold Budget that speaks on both “strategic autonomy” and “reforms”.

About iSPIRT Foundation – We are a non-profit think-and-do tank that builds public goods for Indian product startups to thrive and grow. iSPIRT aims to do what DARPA or Stanford University did in Silicon Valley for startups. iSPIRT builds four types of public goods – technology building blocks (aka India Stack), startup-friendly policies, market access programs like M&A Connect, and Playbooks that codify scarce tacit knowledge for product entrepreneurs of India. For more, visit www.ispirt.in.

For further queries, please reach out via email:  [email protected], [email protected] 

Please note: The blog post is authored by our volunteers, Sudhir Singh, Tanuvi Thakur and Amit Agrahari