Payment Terms — LC, TT, DA, DP for Indian Textile Imports

Payment terms determine risk exposure between buyer and supplier and directly affect financial cost. Understanding the trade-offs of each option is essential for effective procurement.

Common Payment Terms

TT (Telegraphic Transfer) — Bank wire transfer. Typically 30% advance + 70% against BL copy.
Letter of Credit (LC) — Bank guarantees payment on document verification.
DA (Documents Against Acceptance) — Buyer accepts documents on promise to pay at future date.
DP (Documents Against Payment) — Buyer pays before receiving documents.
Open account — Payment after receipt, established repeat buyers only.

Cost Comparison

TT: cheapest, moderate seller risk
LC: safest for both parties, ~0.15-0.3% per side of transaction value
DA: buyer-favoured, supplier bears risk of non-payment
DP: supplier-favoured, buyer pays before goods release

When to Use Each

First-time supplier relationship: TT with 50/50 or LC preferred
Established relationships: TT 30/70 standard
Large orders (>$50k): LC recommended
Repeat buyers, small orders: Open account or DA
New buyer / no credit history: LC or DP

Common Pitfalls

Wire transfer to wrong account (invoice-fraud scam) — verify via phone call
LC discrepancies causing delayed payment
Currency conversion timing risk
Bank fees passed to wrong party

Frequently Asked Questions

What payment terms are standard for Indian textile imports?

Standard payment structure is 30% advance via TT (telegraphic transfer) plus 70% against copy of bill of lading. Letters of credit (LC) are recommended for first-time relationships or large orders ($50,000+). Established repeat buyers can negotiate DA/DP terms or open account. Avoid 100% advance payment except for very small sample orders.

How do I verify an Indian supplier before placing a large order?

Verify: IEC code (Indian Import-Export Code from DGFT), GST registration, physical factory address (via video call or third-party visit), references from 2+ existing international customers, SEDEX or BSCI social audit, relevant OEKO-TEX/GOTS scope certificates. Pre-shipment inspection is essential — budget $250–500 per shipment via SGS, Intertek or Bureau Veritas.

What HS code applies to my product for import duty?

HS code depends on fibre composition and construction. Silk items are Chapter 50; wool Chapter 51; cotton Chapter 52; knitted apparel Chapter 61; woven apparel Chapter 62; home textiles Chapter 63. Get a formal HS code determination from your destination customs broker before first import — mis-classification causes customs delays and unexpected duty charges.

Can Indian suppliers ship directly to my end customer (dropshipping)?

Yes, dropshipping from India is technically possible. But it comes with challenges: 14–35 day sea transit customer expectation management, unexpected destination duty charges, complex returns handling, quality control gaps per shipment. For most brands, a wholesale-import-then-fulfil model produces better customer experience than pure dropshipping.

About Blueridge Trade LLP

Blueridge Trade LLP operates a dual business model. Our textile division is a direct manufacturer — we own and operate the production of our cashmere, Merino wool, silk, organic cotton, and blended fabric programmes, controlling quality from fibre sourcing through finishing. This vertical integration is what allows us to guarantee Grade A specifications and offer competitive private-label terms to international brands.

Beyond textiles, we operate as a trading and sourcing partner for industrial commodities (copper, aluminium, zinc, tin, tungsten scrap, activated carbon), botanicals and spices, export-grade packaging, and consumables. In these categories we leverage a vetted network of Indian producers rather than manufacturing in-house — giving international buyers a single consolidated point of contact for both textile manufacturing and broader Indian sourcing requirements.

Payment Terms Explained: LC, TT, DA & DP for Indian Textile Imports