Your pre-shipment borrowing just got cheaper. The recently launched<a href="https://www.pib.gov.in/PressReleasePage.aspx?PRID=2210874&amp;reg=3&amp;lang=1"> Niryat Protsahan</a> sub-scheme earmarked 2.75% as the base rate for interest subvention covering 75% of tariff lines.

In plain language, you get the much-needed pre-shipment credit at a more affordable rate. This eases the cost of financing your manufacturing, labour, and packing needs while waiting for your buyer to pay.

If that’s what you’ve been looking for, we suggest you read this blog till the end as we explain the meaning, types, interest rate, and eligibility of pre-shipment finance in this blog.

So, what exactly is pre-shipment credit? Before we get to that, it’s also referred to as <a href="https://www.skydo.com/blog/export-packing-credit">packing credit or export packing credit</a>.&nbsp;

It is a short-term loan from your bank to fund your business from the moment you receive an order until the day you ship the goods. This includes everything from procuring raw materials, manufacturing to labor, processing, labeling, and even inland transport to the port.

However, this financing cannot be used for general business expenses. Because the RBI treats export credit as a priority sector, you benefit from concessional interest rates, significantly lower than regular overdraft or cash credit limits.

What are the types of pre-shipment credit

When choosing the right pre-shipment finance for your business, you generally have two main paths depending on your cost structure and how you invoice your buyers:

This is the standard choice if your production costs, like labour and raw materials, are primarily in Indian Rupees. The interest rate is linked to your bank’s MCLR or base rate plus a concessional spread. If you are an MSME exporter, you also get the 2.75% interest subvention above this.

Pre-Shipment Credit in Foreign Currency (PCFC)&nbsp;

This is a better choice if you invoice your buyers in a foreign currency like USD, EUR, or JPY. The interest rates are linked to international benchmarks like SOFR or EURIBOR, which are usually cheaper than rupee loans. The advantage here is that you borrow and repay in foreign currency. Therefore, you automatically protect yourself from exchange rate fluctuations.&nbsp;

Besides these two above, you also have access to more flexible options of pre-shipment credit:&nbsp;

Your bank can provide short-term credit against advance payments like cheques or drafts even before they clear. This gives you quick access to funds to start production immediately.

With a running account, you can get credit from your bank without presenting a specific export order upfront. You share the confirmed order details within a specific timeframe, like 30 days. This is a brilliant choice for established exporters with a sound track record and managing multiple orders in quick succession.

What's the difference between pre-shipment credit and post-shipment credit?

You might know the basic difference: pre-shipment finance gets your goods to the port, post-shipment finance ensures your business stays liquid while you wait to get paid. But there’s more; check out this table to find out.

Use this table as reference. The actual interest rate for pre-shipment credit depends on the bank, your credit profile, export track record, and order size.

While the interest rate must be your focus, don’t overlook these additional costs:

Standard Tenure: Typically you have up to 180 days from disbursement to ship your goods and settle the loan.

Extensions: If your production cycle is complex, you can usually extend this period to 360 days with prior approval from your bank.

Recent RBI Relief: A recent RBI measure allows for a tenure of up to 450 days for eligible disbursements

The Penalty for Delays: If you exceed the allowed timeline without an extension, your bank will withdraw your concessional interest rate and reprice the entire loan at much higher commercial rates retrospective

How banks assess pre-shipment credit (limit calculation)

These are the most-common steps performed by banks to assess your credit limit:

Imagine you receive an export order for handloom textiles worth $80,000 on a CIF basis.

This is not an exhaustive list, but a useful reference to know what banks check during assessing your loan request:

How to get pre-shipment credit — step by step

Follow these steps below after you have made ‌your decision to avail pre-shipment credit from the bank:

A confirmed purchase order or an irrevocable Letter of Credit (LC) from your buyer is required to start the process.

Meet with your Authorized Dealer (AD) bank to discuss your production needs and share your company’s export track record.

Gather your IEC, GST, and proforma invoice, and ensure you’ve generated your UIN on the DGFT portal to lock in your concessional interest rates.

Step 4: Bank assessment and sanction&nbsp;

The bank will evaluate your creditworthiness and sanction a limit

Step 5: Fund release and monitoring&nbsp;

You can draw the funds in a lump sum or in stages to pay for raw materials and labor

Once you ship the goods, you must close the loan by either converting it into post-shipment credit or settling it directly from your incoming export proceeds.

Check out this eligibility list, including a few critical details, before you apply for pre-shipment credit:

Legal Identity:&nbsp;You must have a valid<a href="https://www.skydo.com/blog/iec-code-apply-online"> Importer-Exporter Code (IEC) </a>issued by the DGFT, along with active PAN and GST registrations.

Proof of Order:&nbsp;A confirmed export order or an irrevocable Letter of Credit (LC) from your buyer&nbsp;

Clean record:&nbsp;Your name must not appear on the RBI’s caution list for unresolved defaults or the ECGC’s Specific Approval List (SAL).

Product Compliance:&nbsp;Your goods must be under the freely permissible category in the Foreign Trade Policy&nbsp;

Financial Health:&nbsp;Banks check for a satisfactory credit history and a stable banking relationship to ensure you can execute the order

Country Risk Check:&nbsp;If you are exporting to countries on the Restricted Cover Countries (RCC) list, you may need specific ECGC approval before the bank will release funds.

On top of the eligibility requirements, remember these RBI guidelines to avoid compliance hassles at the last moment:

Despite all the preparedness, you could still fall prey to common mistakes or come face-to-face with an unprecedented risk. Treat this list as a mini-guide to help you manage the situation if you face one:

Pre-shipment credit takes care of your production costs and ensures you have enough money to ship the goods on time. But an export order is only completed after you get paid by the buyer.&nbsp;

This is where Skydo steps into the export workflow. It helps you get paid on time, with minimum fees, and stay compliant with the RBI regulations.

Here’s what happens when you use Skydo to receive international payments:

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2. Note box: to reiterate a point. For example, if we were discussing about a a tax law and we want to give more emphasis to a point like the last filing date is dd/mm/yy.

3. Pro Tip Box:&nbsp; Something that is related to the topic and very practical. Going by the same example, if we were discussing something related to a tax. Let's say that the pro tip will be something like make sure that you have a certain document before you do the tax or else there is a huge chance of being rejected or so.

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As a freelancer or an exporter, getting paid on time is the most crucial aspect of your business. Wise is one of the most reliable and popular platforms for receiving international transfers from cross-border clients. But what about affordability? Are Wise transfer charges affordable for your business?

In this blog post, we break down Wise transfer charges using practical examples and provide a clear overview of how Wise works for receiving international money transfers. Our aim is to help you understand the costs and features so you can choose the best option for your needs.

Wise (formerly TransferWise) is a global financial technology company known for facilitating cross-border payments.Unlike traditional banks that often route money through complex networks (SWIFT) with hidden markups, Wise uses a peer-to-peer model to move funds.&nbsp;For Indian freelancers and businesses, it serves as a popular gateway to receive payments from international clients in currencies like USD, EUR, and GBP, converting them to INR to be deposited into local bank accounts

Wise’s pricing for Indian businesses typically involves two main components:

Better for smaller transfers&nbsp;: Wise's percentage-based fee structure works in favour of smaller payments. For transfers under $1,000, Wise can be marginally cheaper than Skydo's flat-fee model.

Multi-currency flexibility&nbsp;: Wise lets businesses hold and manage 40+ currencies in a single account—ideal for companies juggling multiple currency requirements.

Established global presence&nbsp;: With over a decade in operation, Wise has built a trusted reputation worldwide, while Skydo is a newer entrant in the market.

Advanced tools and integrations&nbsp;: Wise offers multi-currency wallets, API integrations, and batch payment tools suited for businesses managing complex global payment flows.

Reliable transfer speeds&nbsp;: Wise typically settles payments within 24–48 hours, with faster processing available on popular currency routes.

While efficient, Wise has specific limitations for Indian users:

If you are looking for other options, here are a few standard alternatives:

Skydo vs. Wise: The Most Sensible Option

When comparing Skydo and Wise, the decision comes down to&nbsp;cost efficiency at scale&nbsp;and&nbsp;compliance ease.

Why Skydo Wins for Indian Exporters:

Wise Fees for Receiving USD 10,000 in India

Common Mistakes&nbsp;(And How to Avoid Them)

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Wise (formerly known as TransferWise) is a global payment service founded in the UK in 2011. It began as a peer-to-peer money transfer company, but now people can send, receive, and store money in multi-currency accounts, all in one location.

Wise excels with its transparency, simplicity, and exchange rates, all presented in a seamless user experience. Some features that Wise offers include:

Multiple currency account: Hold 40+ currencies and receive money via local bank details in major currencies like USD, EUR, and GBP.

Transparent pricing: Uses the real mid-market exchange rate and charges a conversion fee of 1.6%–1.9%. FIRA is available at $2.50 per transaction.

Fast transfers: Most payments land in your bank account within 1–5 business days. Wise handles both B2B and P2P transfers smoothly.

User-friendly interface: Simple, intuitive interface available on web and mobile for easy global transfers.

Secure and regulated: Wise partners with RBI-regulated banks in India and is regulated by the FCA in the UK and FinCEN in the US.

Wise Transfer Charges: What do you need to know about them?

Wise takes pride in its transparency, ensuring no hidden fees are included in its pricing. But what are the different components of its transparent fees? Let's find out:

Mid-market exchange rate + Conversion fee

Wise considers the mid-market exchange rate to convert the value of currency. It is derived as the mid-point of the rate at which bankers are ready to buy and sell a currency. The mid-market exchange rate is real, fair, and helps you get paid without getting stuck in the quagmire of exchange rate movements.

Wise charges 1.6%–1.9% of the transaction amount as conversion fees. The exact percentage varies by currency.

For a payment of $10,000, Wise charges approximately $162 as conversion fees.

e-FIRC charges (varies across currencies)

e-FIRC is an abbreviation for Electronic Foreign Inward Remittance Certificate. With every transfer, Wise sends you a digital FIRA, which they call an e-FIRC. This document is essential for tax compliance and GST claims.

For example, if you receive $1,000 from the US, the e-FIRC charges will be $2.50. If you receive 10 payments per month, that's an additional $25/month or $300/year just for compliance documentation.

Along with the above charges, additional fees could be applied to the total cost. These miscellaneous charges are due to the nature of the transaction or bank fees.

For example, if you receive $1,000 from a client in the US through a Wire transfer, the Wise fees will be $6–$15 more compared to a Wise account transfer. In the wire transfer payment method, the money is credited to your bank account. Because there are more participating financial institutions, the transfer fee increases marginally.

Additionally, 18% GST applies on all Wise fees charged to Indian customers.

You can open an account in Wise free of charge, but all the above charges are applicable while making a transfer.

The duration of a Wise payment transfer depends on several factors. These factors include currency conversion (which usually takes up to two business days), the country you're sending money to and from, payment method, security checks, and public holidays and banking hours. Overall, Wise Transfer can take anywhere between&nbsp;<a href="https://wise.com/help/articles/2978029/how-long-does-it-take-to-receive-money-into-a-balance" rel="nofollow" target="_blank">&nbsp;1-5 business days</a>.&nbsp;

Wise Transfer Charges: How much do I need to pay to receive global payments in India

With Wise, you can accept payment in international currencies. However, Wise money transfer charges are variable fees—they are not fixed and depend on the currency.

Here are practical examples showing how charges differ and the net amount you can expect to receive.

Wise Fees for Receiving USD 5,000 in India

We used Wise's Transfer Fees calculator to determine the total Wise transfer fee for receiving $5,000 in India:

Limitations of Wise for Indian Businesses

While Wise is a reputable platform, it has specific limitations that Indian businesses should consider:

Receiving global payments with Wise vs Skydo: Comparing Wise transfer fees with Skydo

Skydo is a great alternative for receiving payment in international currencies in India. You can create an account for free and all the transfer charges are shared with you upfront—no hidden costs.

Moreover, it offers international virtual accounts meaning your clients can transfer money to your account directly like they're making a local transfer. Skydo also provides free instant FIRA with every transaction.

Let's compare Wise and Skydo for receiving $10,000 in US Dollars:

From the above calculation, it's clear that Skydo offers better value than Wise and is the least expensive option to receive international transfers. You save $168 in total fees which means an extra income of ₹14,000+.

Other Alternatives to Wise for Indian Businesses

Beyond Skydo, here are other platforms worth considering based on your specific needs:

Payoneer is popular among Amazon sellers and marketplace freelancers. It supports 150+ currencies and provides free FIRA. However, it charges up to 3% forex markup on INR withdrawals, making it expensive for direct client payments.

PayPal offers universal brand recognition and buyer/seller protection. Clients worldwide are familiar with it. But the fees are steep—4.4% transaction fee plus 3–4% forex markup means you lose 7–8% on every payment. Best used only when clients insist on it.

Razorpay MoneySaver Export Account works well if you already use Razorpay for domestic payments. It charges 1% flat fee on international collections and includes digital FIRA. Good for businesses wanting unified domestic and international payments.

In Conclusion: Which One Should You Choose?

Choose Wise if: You frequently send/receive under $1,000, need multi-currency wallets, or want to hold balances before converting.

Choose Skydo if: You primarily receive payments above $2,000, need free FIRA, want India-based support, or receive invoices larger than $10,000.

If you want to get the best value for currency exchange and switch to a more modern, transparent platform, create a free account with Skydo or book a demo with us.

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