How to pay Chinese suppliers from India

How to pay a Chinese supplier from India: the short answer

An Indian importer pays a Chinese supplier through an authorized dealer (AD) bank. An AD bank is an Indian bank licensed by the Reserve Bank of India (RBI) to deal in foreign exchange. The bank sends the payment by SWIFT, usually in US dollars, and records it against the import in IDPMS, the RBI's Import Data Processing and Monitoring System, which matches each import payment with the Bill of Entry that customs issues when the goods arrive. SWIFT is the international messaging network banks use for cross-border payments, and each bank has an 8 or 11 character SWIFT code.

The usual sequence for an order from China is:

1. Hold a valid, updated Importer Exporter Code (IEC). The IEC is the ten-digit code, issued by the Directorate General of Foreign Trade (DGFT) on the basis of the business's PAN, that every importer needs.
2. Agree the price, the payment terms and the Incoterm with the supplier, and get a proforma invoice and contract. An Incoterm is a standard trade term, such as FOB or CIF, that sets who pays freight and insurance.
3. Pay the deposit through your AD bank as an advance remittance for imports, against the proforma invoice or contract.
4. Pay the balance against the shipping documents, or through a letter of credit or a documentary collection, on the dates in the contract.
5. Clear the goods with a Bill of Entry, the customs declaration for imported goods, and give it to your bank so it can close the IDPMS entry.

The rules changed on 1 October 2026, when the Foreign Exchange Management (Export and Import of Goods and Services) Regulations, 2026 replaced the RBI's Master Direction on imports. This guide covers the new rules, the payment routes, published bank charges, the documents and the risks of paying through agents. For the supplier's side, such as how Chinese factories invoice and why many use a Hong Kong account, see our general guide on how to pay suppliers in China.

FEMA import payment rules from 1 October 2026

India's foreign exchange rules come from FEMA, the Foreign Exchange Management Act, 1999, and the RBI regulations under it. The 2026 regulations were notified on 13 January 2026 and came into force on 1 October 2026. As summarized by the law firm Lakshmikumaran & Sridharan, they give AD banks more room to decide, under their own published policies, and tie import payments to the contract rather than to fixed RBI limits.

Source: Lakshmikumaran & Sridharan via Mondaq, RBI releases FEMA 2026 export import trade regulations. As published on 29 October 2026. Each AD bank publishes its own policy under the new regulations; ask yours for it.

A standby letter of credit (standby LC) is a bank guarantee in the form of a letter of credit, which the supplier can claim if you do not pay. Two rows matter most for buyers from China. First, a deposit before production is now a matter for your AD bank's policy, not a fixed RBI threshold, so ask the bank what it will ask for before you agree a large advance. Second, an open IDPMS entry now has a direct cost: until the Bill of Entry is matched to the payment, the bank must ask for a standby LC or guarantee on your next advance. Submit the Bill of Entry to the bank as soon as the goods clear.

How the money reaches a Chinese supplier

Most Chinese suppliers invoice in US dollars, and many invoice through a Hong Kong trading company with a Hong Kong bank account. An Indian importer pays in one of the ways below. Whichever route you use, the beneficiary should be the company named on the invoice and contract you give your bank.

Sources: Lakshmikumaran & Sridharan via Mondaq on third-party payments under the 2026 regulations; PNC Bank's summary of China's goods trade foreign exchange rules. As published on 29 October 2026.

An EEFC account, or Exchange Earners' Foreign Currency account, is the foreign currency account in which an Indian business keeps its foreign exchange earnings. A company that both exports and imports can pay its Chinese supplier from dollars it earned, without converting to rupees and back.

What the supplier's bank checks

China manages foreign exchange through the State Administration of Foreign Exchange (SAFE). As summarized by PNC Bank, a Chinese company must be on SAFE's list of companies with goods trade foreign exchange business, and banks cannot handle foreign exchange for companies that are not on it. The supplier's bank checks each receipt for a genuine trade background, using documents such as the contract, invoice and customs declaration. The same summary states that the remitter and the beneficiary must be the parties to the contract. So a third-party payment raises questions at both ends: your AD bank must approve it, and the supplier's bank may hold it.

Deposit, balance and payment terms

The payment term decides when money leaves India, what you hold in return, and how the bank closes the import in IDPMS.

Source: Lakshmikumaran & Sridharan via Mondaq on the 2026 regulations. As published on 29 October 2026.

A letter of credit (LC) is a bank's written promise to pay the seller when it presents documents that comply with the credit's terms. It protects you against paying for goods that were never shipped, but it does not check quality. A documentary collection sends the shipping documents through the banks, and you receive them only after you pay or accept a bill of exchange. A supplier that has not traded with you before may ask for an LC on the first order and accept deposit and balance on later orders.

If the supplier also buys from you, the 2026 regulations let your AD bank permit a set-off of your import payable against your export receivable with the same party or its group. Only the net amount then moves. Agree it in writing with the supplier and ask your bank first.

What it costs: published bank charges

Each Indian bank publishes its own schedule of foreign exchange charges. The table shows State Bank of India's charges for the steps in this guide, effective from 1 October 2026.

Source: State Bank of India, Foreign exchange transaction related service charges, effective 1 October 2026, as published on 29 October 2026. GST and TCS apply over and above these charges, and foreign bank and courier charges are recovered. Other banks set their own charges.

An ORM is an outward remittance message, the record of an import payment that the bank reports in IDPMS. On a Rs 30 lakh deposit, 0.12% comes to Rs 3,600, plus the Rs 500 SWIFT charge and GST. On a Rs 70 lakh balance, the commission is Rs 8,400. Above about Rs 1.67 crore, the Rs 20,000 maximum applies, so the percentage falls on larger payments. Three costs sit outside the schedule. The first is the exchange rate if you buy dollars with rupees, so ask for the rate before you confirm. The second is correspondent bank charges deducted on the way to China. The third is the supplier's own bank charge.

Charge codes

Every SWIFT payment carries a charge code. OUR means you pay all transfer fees and the supplier receives the full invoice amount. SHA shares the fees, so intermediary banks can deduct theirs from the amount. BEN puts all fees on the supplier. A payment that arrives short delays shipment while the supplier queries the gap. Check the supplier bank's code with our SWIFT code lookup before the first payment.

Documents that tie the payment to customs

Your AD bank, Indian customs and the supplier's bank each match the same facts: the supplier's name, the invoice number, the goods and the value. Keep them identical across every document.

Sources: Federation of Indian Export Organisations, Guide to IEC; Lakshmikumaran & Sridharan via Mondaq on IDPMS under the 2026 regulations. Typical sequence; requirements vary by bank and product. As published on 29 October 2026.

According to the Federation of Indian Export Organisations, no person may import or export without an IEC unless specifically exempted, and an IEC has permanent validity but must be updated every year or it is deactivated. A bill of lading is the document the shipping line issues when it receives the goods. Ask the supplier for a copy before you pay the balance, and check that the shipper, consignee and goods match the invoice. If the supplier changes its bank details by email, confirm the change by telephone on a number you already hold before the bank pays.

Hawala, agents and crypto: what goes wrong

Some importers pay a Chinese supplier through a hawala operator or an agent who collects rupees in India and pays from an account in China or Hong Kong. Hawala is an informal money transfer system that settles through a network of dealers rather than through banks. The facts below are what an importer should weigh before using these routes.

• The import stays open in IDPMS. Customs records the Bill of Entry, but no AD bank payment matches it. Under the 2026 regulations, an uncleared IDPMS entry means future advance payments must be secured by a standby LC or bank guarantee.
• Your bank cannot match the payment. AD banks may credit or debit an importer's account for a trade transaction only after checking it is genuine and updating or closing the IDPMS entry. A payment made by someone else has no place in that record.
• The supplier's bank may query it. China's rules expect the payer to be the party on the contract. A transfer from an agent's account is a payment from a third party.
• There is no trace. A SWIFT transfer from your bank carries a reference and can be traced through the banks. Cash handed to an agent cannot.
• Crypto is unregulated in India. The Ministry of Finance told the Lok Sabha in February 2026 that virtual digital assets, including cryptocurrencies, are currently not regulated in India, while income from them is taxed at 30% with 1% tax deducted at source on transfers.
• The supplier may not be able to accept it. In November 2025 the People's Bank of China reaffirmed that virtual currency business activities are illegal in mainland China and said stablecoins carry risks including illegal cross-border transfers, as reported by The Block.

Where Helm fits

Helm is a financial technology company, not a bank. Accounts are held with regulated partner institutions. A Helm account gives your company USD account details in its own name, with a US routing and account number that receives ACH, Fedwire and SWIFT payments, plus EUR and GBP details.

• Pay suppliers in USD. Send international payments by SWIFT from your company's own account to the supplier's USD account in China or Hong Kong, with the rate, fee and expected arrival shown before you send.
• Use export dollars for imports. The RBI's Master Direction lets an Indian exporter hold a foreign currency account with a bank outside India for export proceeds, and money in it can be used to pay for imports into India or must be repatriated by the end of the next month.
• Finance the order. Trade finance, such as supplier finance and working capital, is arranged case by case.

FEMA sets the limits. The Master Direction refers to an account with a bank outside India, and Helm is not a bank, so ask your AD bank to confirm how it will treat an account with Helm and how it will record an import paid from it against the Bill of Entry in IDPMS, before you use it for an import. Helm accounts can also receive and convert USDC and USDT, but an Indian business should not use stablecoins in its trade without advice from its AD bank and a FEMA adviser. Each account has a named account manager, and review questions are answered in writing within one business day. Helm agrees pricing with each business in writing before the account opens, and shows the rate, the fee and the expected arrival before you confirm each payment.

A checklist for paying a Chinese supplier from India

• Update your IEC every year so it stays active.
• Get a proforma invoice and contract, and check that the seller on them is the company you will pay.
• Ask your AD bank for its policy on advance payments under the 2026 regulations before you agree the deposit.
• Write the payment dates into the contract, because the import payment timeline now follows it.
• Send each payment through your AD bank by SWIFT, on OUR terms, quoting the invoice and contract numbers.
• Pay the balance against a copy of the bill of lading, or use a letter of credit for a new supplier.
• Give the bank the Bill of Entry as soon as the goods clear, so the IDPMS entry closes.
• Keep SWIFT confirmations with the invoice, bill of lading and Bill of Entry for each order.

For how other importers organize supplier payments, see the importers page.

Questions

References

1. Lakshmikumaran & Sridharan via Mondaq: RBI releases FEMA 2026 export import trade regulations, what businesses need to know
2. Reserve Bank of India: Master Direction, foreign currency accounts by a person resident in India
3. State Bank of India: Foreign exchange transaction related service charges, effective 1 October 2026
4. Federation of Indian Export Organisations: Guide to IEC (Importer Exporter Code), FAQs
5. PNC Bank: Navigating China's regulations on foreign exchange for goods trade
6. Business Today: Crypto still unregulated, but under tax and enforcement radar, FinMin in Parliament (5 February 2026)
7. The Block: China's central bank reaffirms crypto ban, flags stablecoin risks (29 November 2025)

This guide is general information for businesses, not financial, legal or tax advice. Rules, fees and timings were checked against the sources listed on the review date and may change.