Ways to pay
| Method | Your risk | When it fits |
|---|---|---|
| Advance payment | Highest: you pay before the goods exist | Samples, small first orders, or a supplier you have already checked. Often split, e.g. a deposit now and the balance against shipping documents. |
| Documentary collection (D/P) | Medium: you pay when the documents reach your bank | Suppliers who will ship first but want banks to hold the title documents until you pay. |
| Letter of credit | Lower: the bank pays only against documents that match the credit | Larger orders or new suppliers, where both sides want a bank in the middle. It costs fees and needs exact documents. |
| Credit terms (open account) | Lowest for you | Established relationships. Suppliers rarely offer it on a first order. |
Whatever you choose, tie each payment to something you can check: an approved sample, a passed inspection, or shipping documents.
How the bank payment works
Import payments go through an authorised dealer bank: a bank licensed by the RBI to handle foreign exchange, which most business banks are. You give the bank the supplier's invoice or contract and its bank details, the bank sends the money abroad, and it records the payment against your import. Once the goods arrive, the bank matches the payment to your Bill of Entry in the RBI's Import Data Processing and Monitoring System (IDPMS). Keep your Bill of Entry details ready for the bank.
What changes on 1 October 2026
| Rule | Until 30 Sep 2026 | From 1 Oct 2026 |
|---|---|---|
| Deadline to pay for imports | Within six months of shipment | As agreed in the contract |
| Advance payment without a bank guarantee | Up to USD 200,000 | Up to a threshold your bank sets; above it the bank may ask for a standby LC or bank guarantee |
Advance payment will no longer be allowed for gold and silver imports. Banks can close IDPMS entries for advances where the import never happened, once the money is back. And any interest on a delayed import payment has to stay within the RBI's all-in-cost ceiling for trade credit.
If you pay in advance
An advance leaves an open entry with your bank until the goods arrive and the Bill of Entry is matched. If the import doesn't happen within the contract period or an agreed extension, you have to bring the money back. Leaving advances unmatched can mean your bank allows future advances only against a letter of credit or bank guarantee. A deposit plus balance against documents keeps less at risk than paying everything upfront.
Avoid payment fraud
- The account name should match the supplier on your contract. If it doesn't, get an explanation in writing before paying.
- Treat any email that changes the bank details as suspect. Confirm by phone on a number you already had, not one in the email.
- For a new supplier, verify the company first: see how to verify a supplier.
- Keep the SWIFT confirmation and share it with the supplier, so they can trace the payment.
The exchange rate
You pay at your bank's rate on the day, which includes the bank's margin, so compare it with the market rate and ask about it. Customs values the goods at the exchange rate CBIC notifies, not your bank's rate. For a large order with a later payment date, ask your bank whether a forward contract makes sense. Put both rates into the import landed cost calculator to see the full cost.
Questions
Is there still a time limit to pay for imported goods?
From 1 October 2026, the RBI's fixed six-month limit goes away and payment follows the terms in your contract. Until then the six-month rule applies. Either way, agree the payment date in writing.
What if I paid in advance and the goods never came?
Under the 2026 regulations, if the import doesn't happen within the contract period or any extension, the importer has to bring the advance back to India. If advances are left unmatched, the bank may allow future advances only against a letter of credit or bank guarantee. Tell your bank early.
Do I need an IEC to pay a supplier?
Banks normally ask for your Importer Exporter Code for import payments, along with the invoice or contract. Ask your bank for its exact list before your first payment.