Key takeaways
- Match payment terms to trust: LCs or staged payments for new suppliers.
- Confirm any bank-detail change by phone on a number you already had.
- Pay only an account in the supplier's legal name.
Choose payment terms by trust level
| Stage | Typical terms | Your protection |
|---|---|---|
| First order with a new supplier | Letter of credit, or a small advance with the balance against inspection | Payment only against documents or a passed inspection |
| Repeat orders, track record building | Part advance, balance against shipping documents | Limited exposure per order |
| Established relationship | Open account (payment after delivery) or credit terms | Credit limits based on the supplier’s filed financials |
Stop bank-detail fraud
- The most common loss: an email — often from a hacked or look-alike address — saying the supplier’s bank details have changed.
- Always confirm new bank details by phone on a number you already had, never one in the email.
- The account holder’s name should match the supplier’s legal name on its GST registration and company records — not a director’s personal account or a “sister company”.
- Be wary of requests to pay a different entity “for tax reasons” or to split payments.
- Check the company first: verify an Indian company or order an India Company Check.
What your Indian supplier needs from the payment
- Payment through normal banking channels in foreign currency, so its bank can issue proof of export receipt.
- Its invoice number and purpose in the payment reference — it helps the supplier reconcile and keeps its export and GST paperwork clean.
- Exports of goods and services from India are zero-rated for GST; your supplier claims refunds or exports under a bond or LUT — clean invoicing on both sides makes this smooth.
If something goes wrong
- Keep contracts, purchase orders, inspection reports and all correspondence.
- Agree an arbitration seat and governing law in the contract.
- For fraud, report immediately to your bank (speed matters for recalling funds) and to the police; Indian counsel can advise on remedies.
Sources
Frequently asked questions
How do I pay an Indian supplier safely?
Use letters of credit or staged payments against inspection for new suppliers, verify that the receiving account is in the supplier's legal name, and always confirm any change of bank details by phone on a number you already had.
Should I pay an Indian supplier in advance?
For a new supplier, keep advances small and tie the balance to shipping documents or a passed inspection; extend credit only as a track record builds and based on the supplier's filed financials.
How do I check an Indian supplier's bank account is genuine?
The account holder's name should match the company's legal name on its GST registration and MCA records. Be cautious of personal accounts, sister companies or last-minute changes.
Please note: this guide is general information based on the rules as they stood on the review date above. Regulations and RBI/CBDT procedures change often — please get advice on your specific facts before acting.