The most common term for agri imports from India is an advance of roughly 20 to 30 percent, with the balance paid against scanned documents after shipment. This is often called CAD. A letter of credit is the main alternative, especially for larger orders or a new supplier.
This is general guidance, not financial or legal advice. Your bank can tell you which terms suit your risk, your country and your order size.
The common terms, from most to least risk for you
- Full advance before production. The highest risk for you. Some suppliers ask for it on small first orders or samples.
- Advance plus balance against scanned documents. You pay part to start, and the rest when the supplier emails copies of the bill of lading, invoice and other documents. The originals, or a telex release, follow after payment.
- Documents against payment through banks. The supplier's bank sends the documents to your bank, which releases them when you pay.
- Letter of credit at sight. Your bank undertakes to pay once documents that comply exactly with the credit are presented.
- Deferred terms, such as a usance letter of credit or documents against acceptance. You pay a set number of days after shipment or sight. The supplier carries more risk, so these are less common with a new relationship.
- Open account. You pay after the goods arrive. This usually comes only after a long trading history.
Why an advance plus CAD is so common
Indian processors usually buy raw material at the APMC markets, where farmers and commission agents expect prompt payment. An advance funds part of that purchase and shows the supplier you are committed. If the market falls after a supplier has bought for you, the advance protects them from a buyer who walks away.
Paying the balance against documents means the goods have shipped before you pay most of the value. But once you pay and take the bill of lading, you own goods you have not seen at your end. That is why inspection before and during loading in India matters so much on this term.
When a letter of credit makes sense
A letter of credit suits larger orders, a supplier you have not traded with, or a situation where your bank or the supplier's bank requires it. It carries bank fees on both sides. The documents must match the credit exactly, and small discrepancies can delay payment.
A letter of credit protects payment, not quality. The bank pays against documents, not goods. If quality matters to you, list an inspection certificate from a named, independent inspector among the required documents. See the document pack your broker will ask for for what usually travels with an agri shipment.
What to agree in writing
- The advance as a percentage, and when it is due.
- Exactly which documents trigger the balance payment.
- Who holds the original bill of lading, and when it is released.
- The latest shipment date, and what happens if it is missed.
- What happens to the advance if the supplier does not ship.
- The supplier's bank account, in the company's own name, confirmed by phone on a number you already hold. Never change bank details on the strength of an email alone.
How we help
We check the supplier before any advance is paid, supervise loading, and check the document pack before you release the balance. You pay the supplier directly, and our fee is fixed in writing. If you are weighing an advance on a first order, read is it safe to pay a 30 percent advance, or ask for a free sourcing review.