General Information

First of all, the Indian rupee is partially convertible, which means that in order to carry out regular import and export trade flows you can easily do so by the banks by presenting the underlying trade documents.

On the other hand, capital account transactions, such as a capital injection or intragroup loans, are subject to more rigourous control that requires upstream approvals from the regulator (The Reserve Bank of India) via your bank approved as an ‘Authorised Dealer’.

For a local location, a foreign company, wishing to establish a fixed place of business in India, can opt either for a permanent and perpetual format (private limited etc), or for an extension of the foreign parent company (Liaison Office – LO etc). In both cases, each entity is governed by the same set of regulations in several variants.

Means of Payment & Banking Specificities

The Indian banking system is very well developed. For domestic payments to companies, electronic wire transfer is commonly used alongside cheques, credit cards and cash payments.

For offshore payments, if you are exporting to or importing from India, it is strongly recommended to favour documentary credits. Documentary collection is also a common practice, but it carries the risk that your buyer in India may not accept it. Other solutions include LC with UPAS clause, documentary credit / invoice discounting, (reverse) forfaiting, supplier/buyer credit, etc. If the reputation of the Indian issuing bank lacks visibility, it is advisable to request a letter of credit confirmed by international banks such as Crédit Agricole.

Indian banks have a very efficient and liquid Indian Rupee collection system for local transactions. For foreign currency transactions, the 5 main currencies most commonly used for invoicing are USD, EUR, GBP, JPY and CHF.

For all wire transfers to India, particular attention must be paid to the payment details, the address and the IFSC code of the beneficiary bank branch.

For all foreign correspondence, the direct SWIFT code with the three suffixes of the relevant branch must be used, and the general SWIFT code of the banking group should be avoided.