Exporting from India
Small exporters ask the same ten questions again and again: how to give credit without losing money, how to fund orders, and how to protect payment. Here are plain answers for India.
Last checked: November 2026
Please note: Rules, schemes and procedures change. Confirm current terms with your bank, ECGC or Exim Bank of India before you act. We are consultants, not a bank, lender, insurer or law firm.
The export cash cycle
The short answer
- Match the payment term to the buyer: advance or Letter of Credit for new buyers, open account only for proven ones.
- Talk to your bank about finance before you accept a large order.
- Consider export credit insurance (ECGC) when you give credit.
- Get your registrations, classification and documents right before the first shipment.
The ten questions
1. My buyer wants credit, but I want payment in advance. What should I do?
Insisting on full advance payment can cost you orders to exporters who offer credit. You do not have to choose between all or nothing. Many exporters offer a part-payment in advance and the balance against documents, or a Letter of Credit for a first order, and move to longer terms as trust builds. Whatever you agree, put it in writing on the proforma invoice or contract.
Read: Getting paid safely: Letters of Credit, open account and cargo insurance.
2. How can I finance my export orders?
Indian banks offer pre-shipment finance (often called packing credit) to buy materials and make the goods, and post-shipment finance against your export documents. Lenders look at your orders, your track record and the security you can offer. Export credit insurance from ECGC can make a bank more comfortable with the buyer's risk. Speak to your bank's export or trade finance desk before you accept a large order, not after.
3. I sell services, not goods. Can I export too?
Yes. Software, engineering, design, consulting, finance and many other services are exported from India. The rules differ from goods: there is no Customs clearance, but the payment must come through banking channels, and GST treats an eligible export of services as zero-rated only if the conditions are met. An Importer-Exporter Code is generally needed for services only if you claim benefits under the Foreign Trade Policy. Confirm the position for your service with your chartered accountant and your bank.
4. Am I too small to export?
No. There is no minimum size. What matters is that you are registered and organised: an Importer-Exporter Code, a bank that handles foreign exchange, correct invoices and the right classification of your goods. Many exporters start with a single product and one buyer. Start with the registrations you need and a document check before the first shipment.
See: Which registrations does your business actually need?
5. Are there schemes for women, first-generation and small-business exporters?
Central and state governments, banks and export promotion councils run programmes for MSMEs, start-ups and women entrepreneurs, and the details change from year to year. We do not list schemes here that we cannot confirm are in force today. Start with your Udyam registration, ask your nearest DGFT regional office and your export promotion council what applies to your product, and ask your bank about schemes for small exporters.
6. Do I really have to offer open-account terms to grow my exports?
Not always, but many buyers, especially repeat buyers, prefer them because they are simple. The trade-off is risk: you ship first and wait to be paid. The usual answer is to match the term to the buyer: advance or Letter of Credit for new or risky buyers, and open account only for buyers with a record, ideally with the risk insured or the buyer checked first.
Read: How to verify a buyer or supplier before you pay or ship.
7. What is export credit insurance, and how does it help?
It is a policy that covers part of the loss if a foreign buyer does not pay, or if payment is blocked for political reasons. In India, export credit insurance is provided by ECGC Limited (the Export Credit Guarantee Corporation of India). It lets you offer credit terms with less worry and can help you get bank finance. Cover is limited to the percentage and conditions stated in the policy, so read what is excluded.
8. Why insure a buyer I have traded with for years?
Because a good record does not protect you from a sudden problem: a buyer's bank may fail, the country may restrict payments, or the business may get into trouble. Insurance is not a sign of distrust. It protects your cash flow from the one order that goes wrong.
9. My buyer needs years to pay for machinery. What are my options?
Capital goods are often sold on deferred payment. Options include a buyer's credit or a deferred-payment facility arranged through banks, forfaiting (a bank buys your receivable and pays you earlier), or finance from Exim Bank of India (Export-Import Bank of India), which supports exports of capital goods and projects. Ask your bank and Exim Bank about the structure before you quote a price, because the cost of the credit has to be built into the price.
10. My buyer wants a bank guarantee or standby Letter of Credit. Can I give one?
Overseas tenders and large contracts often ask for a bid, performance or advance-payment guarantee. Indian banks issue guarantees against margin money or other security, and the cost and the amount they ask you to lock in depend on your bank and your standing. Ask early, because a guarantee can take days, and check the wording of the guarantee with the buyer's contract before you accept it.
Where we can help
We are not a bank or an insurer, so we cannot arrange finance or insurance cover. We help you with what comes around it: the registrations, the HS code and rules for your goods, the documents that your payment terms depend on, and Customs, including replies when Customs raises a query.
Before you ship
Check your documents and registrations before the first order.
Shipment Readiness CheckSetting up
Adding exports to your business? Start with the registrations that apply.
Start-up EXIM DeskCommon questions
Which Indian bodies help exporters with credit insurance and finance?
ECGC Limited provides export credit insurance, Exim Bank of India (Export-Import Bank of India) supports exports of capital goods and projects, and banks provide pre-shipment and post-shipment finance. Confirm current terms with each of them.
Do I need an IEC to export services?
An Importer-Exporter Code is generally needed for service exports only if you claim benefits under the Foreign Trade Policy. Check your case with your chartered accountant and bank.
Is open account safe for a new buyer?
Usually not. For a new buyer, use advance payment or a Letter of Credit, or a part-payment with the balance against documents. Move to open account once the buyer has paid on time, and consider insuring the risk.
Related on this site
- Getting paid safely: Letters of Credit, open account and cargo insurance
- How to verify a buyer or supplier before you pay or ship
- Landed cost and Incoterms
- Export incentives like RoDTEP
- Marine cargo insurance
- Contact us
Talk to us
Send us two lines on WhatsApp: your goods, the country you sell to, and what you need. We tell you what we need from you and our fee, in writing, before any work starts. We reply within one working day (Monday to Saturday, 10 AM to 7 PM IST).
Multimodal Logistic Systems Pvt. Ltd., Pune, India. Written by Shankar Jha, Customs and EXIM consultant with 27+ years of experience. Rules and notifications change; we check those in force on the date of your query.