Guide to Trade Financing for Indian Textile Imports

Guide to Trade Financing for Indian Textile Imports

Payment risk is the primary concern for both sides of an India textile import transaction. The exporter does not want to ship without payment. The importer does not want to pay without confirmed goods. Trade finance instruments resolve this tension.

Standard Payment Terms

Telegraphic Transfer (T/T)

T/T is the most common method. For new buyers: 30% advance T/T to begin production, 70% balance on receiving shipping documents. **Never pay 100% upfront.** The 70% balance against documents provides leverage — payment is tied to the existence of a bill of lading.

Letter of Credit (LC)

A bank guarantee. Your bank commits to pay the Indian supplier when they present specified documents proving shipment. Use LC for orders above $50,000 where relationship is new. Cost: 0.5–2% of LC value.

Trade Finance Lines

If you are a regular importer, your bank may extend a trade finance facility — a credit line for import financing. This allows you to defer payment 60–90 days after shipment and smooth seasonal cash flow.

Building Toward Open Account

Once a supplier relationship is established (3–5 successful orders), open account terms become available — pay after receiving goods (30–60 day net terms). Build toward this by starting with 30/70 T/T, then requesting 60-day terms on the 70% portion after 3 orders.

For detailed payment terms and a proforma invoice for your linen requirement, [contact Anabyn](/request-quote).