Indian Rupee (INR) is not fully convertible as on date & any Importer to approach a bank authorised by Reserve bank of India (RBI) to get Foreign Exchange ( Forex) in hard currencies like USD, GBP, Euro, Japanese Yen etc. for making payments to the overseas supplier.
Payments Term can be in advance or D/A ( Documents against Acceptance), D/P ( Documents against Payment) or Letter of Credits (L/C). For high value orders, an irrevocable, Confirmed L/C is the best for the Exporter and this needs to be studied in detail . L/C to be in line with UCPDC (Uniform Customs and Practices for Documentary Credits – UCP 600) created by ICC ( International Chamber of Commerce). There are different types of L/C’s to choose from. It can be a Sight L/C with immediate payment or with Usance Credit of 30 days, 60 days or 90 days as per agreement.
Importer to regularise these payments with bank with all necessary documents like supplier invoice, Bill of lading (B/L) & Bill Of Entry ( B/E), all attested by the customs officials. Banker issue a ‘Bank Certificate’ upon realisation of payment to the exporter for Audit purpose & for getting Export Incentives.
Where there is too much fluctuation in the exchange rate w.r.t hard currency like USD, importers & exporters have the option for Hedging / booking Option contract / Forward contract with the bank to get a specific rate at a future date. Bank charges a premium depending on date.
