In the late 1970s and early 1980s, the Government of India’s approach to economic policy shifted toward export promotion over import substitution. The Export Committee on Exports and Imports was set up by the Reserve Bank of India under Manmohan Singh as Governor, to study how to simplify and rationalize exchange-control procedures and documentation with an eye to reducing regulatory and compliance hurdles, particularly in relation to exports. It was chaired by M. S. Patwardhan, Managing Director, National Organic Chemical Industries Ltd., with Tarun Das (Executive Director of Association of Indian Engineering Industry); C. K. Hazari (Financial Advisor to Escorts Ltd); Kalyan Banerji (Executive Director at Export-Import Bank of India); S. Padmanabhan (Deputy Managing Director at State Bank of India); A. D. Rege (General Manager at Bank of India); A. S. Chatha (Joint Secretary; Ministry of Commerce); V. L. Kelkar (Economic Adviser; Ministry of Energy); S. Sundar (Joint Secretary at Ministry of Finance); T. N. Anantharam Iyer (Exective Director at RBI); and S. S. Thakur (Controller at Exchange Control Department of RBI and Member-Secretary) as members.

The committee’s report noted the importance of exchange control as a tool for conserving limited foreign exchange and using it according to national priorities, which was especially important when the country faced balance-of-payments difficulties. However, the committee believed that it was necessary to refashion the exchange-control regime to increase exports.

The committee recommended granting general permission to authorized dealers to extend exporters’ allowable time for realizing export proceeds in cases in which the export bills are retired by importers but externalization of the funds is delayed by local exchange controls. Externalization of funds refers to the process of converting and transferring funds held in a domestic currency (in the importing country) into foreign exchange and then repatriating it to the exporter's country. It also suggested that the Reserve Bank of India should delegate powers to authorized dealers to accept export bills with undrawn balances up to 5 percent of the total invoice value irrespective of whether the export order is covered by a letter of credit. It made recommendations for handling export-commission payments, including setting monetary ceilings for different categories of exports and detailing procedures for authorized dealers to facilitate these payments.

The committee also made several recommendations to simplify the remittance process and lower the hurdles associated with exchange rate controls over remittances. It advocated increasing the threshold for remittances related to small-value claims on exports and gifts to nonresidents, which would directly reduce the procedural burden on individuals and businesses engaging in cross-border transactions.

The Patwardhan Committee emphasized the need for simplifying exchange control procedures to address challenges like delays in externalizing funds, thereby reducing administrative hurdles for exporters and fostering smoother international trade operations.