How to Pay a Chinese Supplier from India (2026): Methods, RBI Rules and Safe Payment Terms

You have found a supplier in China, agreed a price and received a proforma invoice. Now comes the step that worries most first-time importers: sending the money. Pay the wrong way and you can lose the deposit, or end up with an import payment your bank cannot close.

This guide explains the main ways Indian businesses pay Chinese suppliers, which payment terms protect you, and which RBI rules apply. Where a rule is quoted, the paragraph number of the RBI's official Master Direction is given so you can check it yourself.

The short answer

• The usual way to pay a Chinese supplier is a bank wire (T/T, telegraphic transfer) from your business account, through your bank.
• Splitting the payment into a deposit with the order and the balance before or after shipment limits how much you can lose.
• For large or first orders, a letter of credit (LC) gives you more protection, at a higher cost.
• Under RBI rules, import payments should be completed within six months of the date of shipment, and every import payment must later be matched with your Bill of Entry.
• Always pay the company named on the invoice and the contract, and confirm any change of bank details by phone or video call before paying.

Option 1: Bank wire (T/T)

A telegraphic transfer is an international bank transfer through the SWIFT network. It is the standard way factories in China are paid by overseas buyers.

How it works from India:

1. The supplier sends a proforma invoice (PI) with its company name, address and bank details: beneficiary name, account number, bank name, bank address and SWIFT code.
2. You submit an import payment request to your bank (an Authorised Dealer, or AD bank), with the PI and any other documents your bank asks for.
3. You select the purpose of the payment on the bank's form, telling the bank whether it is an advance before shipment or payment of an invoice after shipment.
4. The bank converts rupees into the payment currency and sends the money to the supplier's bank.

What it costs: the bank's exchange rate (compare it with the market rate), the bank's remittance charges and taxes on them, and charges deducted by intermediary banks along the way. On the remittance form you choose who bears the charges: OUR (you pay all), SHA (shared) or BEN (the supplier pays). With SHA or BEN the supplier receives less than the invoice amount, so agree in writing who pays charges before you send money. Ask your bank for its full charges before the first payment.

Option 2: Letter of credit (LC)

With a letter of credit, your bank undertakes to pay the supplier when the supplier presents the documents the LC asks for, such as the commercial invoice, packing list and bill of lading. The supplier gets the security of a bank's promise, and you know the money moves only against the shipping documents you specified.

When an LC makes sense:

• A first order with a new supplier, where you do not want to send a large advance.
• High-value orders, machinery, or anything where a failed shipment would seriously hurt your business.

The trade-offs: an LC costs more than a wire (your bank charges for opening and handling it), takes longer to set up, and the documents must match the LC terms exactly. An LC deals with documents, not with the goods themselves. If you want protection on quality, make an inspection certificate from an independent inspection company one of the documents the LC requires.

Option 3: Online payment gateways for small orders

For small purchases, the RBI allows banks to offer import payments through online payment gateway service providers (OPGSP) for imports of goods and software of value not exceeding USD 2,000 (RBI Master Direction on Import of Goods and Services, para C.15). Above that, use your bank.

Avoid paying business orders through a personal card, a friend's account or an unregulated money-transfer agent. Such a payment is not recorded by your bank as an import payment, and you have little recourse if something goes wrong.

Payment terms that protect you

The method is only half the story. The payment terms decide how much you risk if the order goes wrong.

• Deposit and balance before shipment: you pay part with the order and the rest before the goods leave the factory. Release the balance only after you have seen a pre-shipment inspection report, or at least production photos and videos.
• Deposit and balance against a copy of the bill of lading: safer for you, because the balance is paid only after the goods have been shipped.
• Full advance: acceptable for samples and very small orders. Avoid it for large first orders.
• Letter of credit: the most protection on large or first orders, as above.
• Payment after receiving the goods: the safest for you, but suppliers rarely agree to it with a new buyer.

A sensible pattern with a new supplier is a paid sample, then a small trial order, then a larger order with a pre-shipment inspection. See our guide on how to verify a Chinese supplier for the checks to do before the first payment.

The RBI rules every importer should know

Import payments by an Indian business are governed by FEMA and the RBI's Master Direction on Import of Goods and Services (updated as on 12 January 2026). Your AD bank applies these rules.

• Six-month settlement: remittances against imports should be completed not later than six months from the date of shipment, except where amounts are withheld towards guarantee of performance (para B.5.1).
• Advance payments: where an advance remittance for import of goods exceeds USD 200,000, a bank guarantee or standby letter of credit from the supplier's side is required. Your bank may waive this for advances up to USD 5,000,000 if the supplier cannot provide a guarantee and the bank is satisfied with your track record (para C.1.1).
• Evidence of import: irrespective of the amount paid, you must submit evidence of import to your bank, which means giving the Bill of Entry number, port code and date so the payment can be marked in IDPMS, the RBI's Import Data Processing and Monitoring System (para C.7). If evidence of import is not furnished within three months of a remittance, banks are required to follow it up (para C.10).
• Third-party payments: paying someone other than the supplier is allowed only on conditions, including the invoice stating that payment is to be made to the named third party and the bank being satisfied that the transaction is genuine (para B.7). Do not do it informally.

A practical habit: every time a Bill of Entry is filed for your goods, give it to your bank promptly with the reference of the payment it matches.

The scam to watch for: changed bank details

A well-known fraud against importers is an email that looks like it comes from your real supplier, saying the company has changed its bank account and asking you to pay a new account. The email may come from a hacked account or from a look-alike address.

Protect yourself:

• Pay only into an account in the name of the company on your contract and invoice.
• Treat any change of bank details as suspicious until you have confirmed it on a phone or video call with the person you know, using contact details you already had, not ones given in the email.
• Check the sender's email address letter by letter.
• If you think you have paid a fraudster, contact your bank immediately and report it on the National Cyber Crime Reporting Portal (cybercrime.gov.in).

Common questions

Do I need an IEC? A business importing goods into India for trade needs an Import Export Code (IEC) from the DGFT. Get it before you place your first order. Our guide to importing from China to India covers the registration steps.

Can I pay in Chinese yuan instead of US dollars? Ask your bank which currencies it can remit and ask the supplier which currencies it can receive, then compare the final rupee cost of each option.

What if the goods never arrive? With an advance paid by wire, your protection is your contract and your evidence, which is why advances to new suppliers should be kept small. With a letter of credit, the supplier is paid only against the documents the LC requires.

Before you send your first payment

1. Verify the supplier: business licence, factory address and trading history.
2. Get a proforma invoice with the full company name and bank details, and check that the names match.
3. Agree payment terms, currency, Incoterm (FOB, CIF or EXW) and who pays bank charges, in writing.
4. Confirm the bank details by phone or video call.
5. Pay from your business account through your bank.
6. Arrange an inspection before paying the balance.
7. When the goods clear customs, give the Bill of Entry details to your bank so the payment is marked in IDPMS.

Want suppliers who have already been through a basic verification? Browse verified Chinese suppliers, or post your requirement and let suppliers come to you with quotations.

This article is general information, not legal, tax or banking advice. RBI rules and bank procedures change; confirm the current position with your AD bank, chartered accountant or customs broker before you pay.