Contents
How to get pre-shipment credit — step by step (INFO-1)
How to get pre-shipment credit — step by step (INFO-2)
How to apply for export packing credit — step by step (INFO -1 )
How to apply for export packing credit — step by step (INFO -2 )
How a red clause letter of credit works
What are the documents required for a red clause LC?
ABC
10 March 2026
Srivatsan Sridhar10 March 2026
How to get pre-shipment credit — step by step (INFO-1)
1
Secure Your Export Order
A confirmed purchase order or an irrevocable Letter of Credit (LC) from your buyer is required to start the process.
2
Approach Your Bank
Meet with your Authorized Dealer (AD) bank to discuss your production needs and share your export track record.
3
Submit Your Documents
Gather your IEC, GST, and proforma invoice, and generate your UIN on the DGFT portal to lock in concessional interest rates.
4
Bank Assessment & Sanction
The bank will evaluate your creditworthiness and sanction a limit.
5
Fund Release & Monitoring
Draw the funds in a lump sum or in stages to pay for raw materials and labor.
6
Ship & Liquidate
Close the loan by converting it into post-shipment credit or settling it directly from your incoming export proceeds.
How to get pre-shipment credit — step by step (INFO-2)
1
Secure Your Export Order
A confirmed purchase order or irrevocable LC from your buyer is required to start.
2
Approach Your Bank
Meet your AD bank to discuss production needs and share your export track record.
3
Submit Documents
Gather IEC, GST, proforma invoice and generate UIN on DGFT for concessional rates.
4
Bank Assessment
The bank evaluates your creditworthiness and sanctions a limit.
5
Fund Release
Draw funds in a lump sum or in stages for raw materials and labor.
6
Ship & Liquidate
Close the loan via post-shipment credit or settle from export proceeds.
Follow these steps below after you have made your decision to avail pre-shipment credit from the bank:
Step 1: Secure your export order
A confirmed purchase order or an irrevocable Letter of Credit (LC) from your buyer is required to start the process.
Step 2: Approach your bank
Meet with your Authorized Dealer (AD) bank to discuss your production needs and share your company’s export track record.
Step 3: Submit your documents
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
The bank will evaluate your creditworthiness and sanction a limit
Step 5: Fund release and monitoring
You can draw the funds in a lump sum or in stages to pay for raw materials and labor
Step 6: Ship and liquidate
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.
How to apply for export packing credit — step by step (INFO -1 )
Step 123456 of 6
Start with a confirmed export order or an irrevocable Letter of Credit (LC) from your buyer. This anchors your entire application process.
Foundation step
Foundation step
Talk to your bank or any Authorized Dealer (AD) bank. Share your company profile, funding needs for this specific order, and past export performance.
Bank relationship
Bank relationship
Provide IEC, PAN, GST, confirmed order/LC, proforma invoice, RCMC (if quota items), financials, and buyer credit report if order exceeds $25,000.
Documentation heavy
Documentation heavy
Credit limit is 75–90% of FOB value. For CIF contracts, bank deducts freight (~10%) and insurance (~1%) to calculate the manufacturing value it will fund.
75–90% FOB funded
75–90% FOB funded
Receive funds in one go or in stages matching production. Banks may pay suppliers directly or route funds through a dedicated packing credit account.
End-use monitored
End-use monitored
Loan self-liquidates from export proceeds. You have 180 days (extendable to 360) to ship & close. EEFC account funds can also be used to repay.
180-day window
180-day window
How to apply for export packing credit — step by step (INFO -2 )
1
Export Order
Confirmed order or LC
2
Approach Bank
Share profile & needs
3
Submit Docs
IEC, PAN, GST, financials
4
Credit Sanctioned
75–90% of FOB value
5
Funds Disbursed
Lump sum or stages
6
Ship & Repay
From buyer proceeds
How a red clause letter of credit works
1
Buyer Applies for Red Clause LC
Buyer instructs their bank to open an LC specifying the advance amount you can draw before shipment.
2
Issuing Bank Sends LC to Advising Bank
Your bank in India reviews the LC and notifies you that the credit is ready to use.
3
You Receive the Advance
Submit a signed receipt and letter of indemnity to your bank — they release funds so you can begin production.
4
Produce & Ship the Goods
Use the advance for raw materials, labour, and fulfilment — then ship as per the agreed schedule.
5
Submit Shipment Documents
Present bill of lading, commercial invoice, and other documents to your bank for final settlement.
6
Final Settlement
Bank deducts the advance and interest from the total LC value, transfers the remaining balance to you.
What are the documents required for a red clause LC?
Red Clause LC
Clean Red Clause LC
Advance Stage
Simple Receipt · Letter of Indemnity · Advance Payment Guarantee · Declaration of Intent*
Final Payment
Commercial Invoice · Bill of Lading · Packing List · Certificate of Origin · Insurance Certificate · Inspection Certificate* · RBI Purpose Code
Secured Red Clause LC
Advance Stage
Everything in Clean, plus:
+ Warehouse Receipt
+ Insurance Certificate (stored goods)
Final Payment
Same as Clean Red Clause LC
No additional docs needed
* Only if buyer requests
Test diagram
1
Do you have any overseas investment?
No
✓
Not required
Yes
2
Is it ODI or portfolio?
Portfolio
✓
Not required
ODI
3
Did you fully divest before Jan 1?
Yes
4a
Check with AD bank
No
4b
File APR
Hover over any section to learn what it means
Bill of Lading
The title identifying this as a Bill of Lading — a legal document between shipper and carrier that details the type, quantity, and destination of goods.
Ship Date September 13, 2021
The date goods are handed over to the carrier. Must fall within the LC's allowed shipment window.
Bill of Lading Number: 21099992723
Unique tracking number assigned by the carrier. Used for all correspondence and to track the shipment.
Ship From
The shipper/exporter block — your company's details as the party dispatching the goods.
Example Pick Up Company
123 Pick Up Street
Vancouver, BCV5K 0A4, Canada
Location Type: Business without Dock or Forklift
(123) 456-7890 (Example Pick Up Contact)
Pickup Hours: 9:00AM to 5:00PM
SID#: N/A
Special Handling: Protect From Freeze
123 Pick Up Street
Vancouver, BCV5K 0A4, Canada
Location Type: Business without Dock or Forklift
(123) 456-7890 (Example Pick Up Contact)
Pickup Hours: 9:00AM to 5:00PM
SID#: N/A
Special Handling: Protect From Freeze
Exporter's full address, contact, pickup hours, and any special handling instructions. The carrier uses this to schedule collection.
Ship To
The consignee/buyer block — where the goods are being delivered.
Example Delivery Company
123 Delivery Street
Toronto, ONM1B 0A1, Canada
Location Type: Business with Dock or Forklift
(123) 456-7890 (Example Consignee)
Delivery Hours: 8:00AM to 5:00PM
CID#: N/A
Special Handling: N/A
123 Delivery Street
Toronto, ONM1B 0A1, Canada
Location Type: Business with Dock or Forklift
(123) 456-7890 (Example Consignee)
Delivery Hours: 8:00AM to 5:00PM
CID#: N/A
Special Handling: N/A
Buyer/consignee's full address and delivery requirements. Under an LC, this must match the terms exactly.
Third Party Freight Charges Bill To:
If a third party (not shipper or consignee) is paying for freight, their details go here.
Freightera Logistics Inc.
408 - 55 Water Street, Office 8036
Vancouver, BC V6B 1A1
800-866-4870
408 - 55 Water Street, Office 8036
Vancouver, BC V6B 1A1
800-866-4870
The freight forwarder or logistics company handling the shipment and billing. Common when freight is paid by a third party.
Carrier Name: EXAMPLE CARRIER
Trailer Number:
Seal Number(s):
Pro Number: N/A
Quote#: N/A
Customer PO#: N/A
Carrier's identity and shipment tracking references. The Pro Number is the carrier's own tracking ID. Seal numbers verify container integrity.
Freight Charges Term (prepaid unless otherwise marked)
Prepaid
Collect
✓ 3rd Party
Master BOL with underlying BOLs
"Prepaid" = exporter pays freight. "Collect" = buyer pays on arrival. "3rd Party" = a logistics company handles payment. LC terms dictate which applies.
Please note: Email carrier invoices, BOL, POD, any accessorial document to accountspayable@freightera.com. Additional accessorials MUST be approved by Freightera Dispatch at email dispatch@freightera.com or call (800) 886-4870 Ext. 2.
Administrative instructions for the carrier regarding invoicing and documentation submission.
Special Instructions
• Shipper: Please call 15 minutes before pickup
Any special pickup, handling, or delivery instructions that the carrier must follow.
Carrier Information
| Handling Unit | LTL Only | |||||
|---|---|---|---|---|---|---|
| Qty | Type | Wt | Hzmt | Non-Stackable? | Description | NMFC |
| 1 | Pallet | 300 lb | No | No (48x40x48 in) | Example Goods | |
TOTAL WEIGHT 300 Lbs
Describes the cargo — package type, quantity, weight, dimensions, hazmat status, and freight class. Must match the commercial invoice and LC exactly.
Where the rate is dependent on value, shippers are required to state specifically in writing the agreed or declared value on the property as follows: "The agreed or declared value of property is specifically stated by shipper to be not exceeding ________ per ________."
Received, subject to individually determined rates or contracts that have been agreed upon in writing between carrier and shipper, if applicable, otherwise to the rates, classification and rules that have been established by the carrier and are available to the shipper, on request, and to all applicable state and federal regulations.
Note: Liability Limitation for loss or damage in this shipment may be applicable. See 49 U.S.C. -14706(c)(1)(A) and (B).
This is to certify that the above named materials are properly classified, packaged, marked, and labeled, and are in proper condition for transportation according to the applicable regulations of the DOT.
Shipper Signature Date
Exporter's signature certifying goods are properly classified and packaged per transport regulations.
Freight Loaded Freight Counted
Indicates who loaded and counted the freight — important for liability in case of damage or shortage claims.
Carrier acknowledges receipt of packages and required placards. Carrier certifies emergency response information was made available and/or carrier has DOT emergency response guidebook or equivalent documentation in the vehicle. Property described above is in good order, except as noted.
Carrier Signature Pickup Date
Carrier's signature confirming receipt of goods in good order — makes the B/L legally valid for bank negotiation under an LC.
Diagram APR
1
Do you have any overseas investment?
No
✓
Not required
Yes
2
Is it ODI or portfolio?
Portfolio
✓
Not required
ODI
3
Did you fully divest before Jan 1?
Yes
4a
Check with AD bank
No
4b
File APR
Flowchart APR
STEP 1
Collect Documents
Audited balance sheet and P&L of your foreign entity
STEP 2
Fill Form ODI Part II
Auditor-certified, two-year data, all figures in one foreign currency
STEP 3
Submit to AD Bank
Submit to the branch that handled your original investment
STEP 4
Save Acknowledgment
Stamped acknowledgment from AD bank = official proof of filing
Penalties APR
LATE SUBMISSION FEE
₹7,500
Immediate penalty per return for filing after the deadline
COMPOUNDING PENALTY
Up to 300%
Of total investment amount for continued non-compliance
FUTURE BLOCKAGES
Remittances Blocked
AD bank blocks outward remittances until non-filing is resolved
EDF who needs to file
EDF Filing Requirements
Who Needs to File an EDF?
Current obligations and what changes from October 2026
Exporter Type
File EDF Now?
After Oct 2026?
How They File
1
Goods Exporters
Physical products shipped abroad
Yes
Yes
Auto-filed with shipping bill at major ports. Manual filing at smaller ports via bank.
2
Software / IT Exporters
IT, ITeS, SaaS companies
SOFTEX
EDF
SOFTEX via STPI/SEZ until Oct 2026. Then monthly EDF — one form per month, not per invoice.
3
Freelancers & Agencies
Design, marketing, legal, consulting
Not yet
New
New obligation from Oct 2026. File within 30 days of month-end. Talk to your bank now.
4
E-commerce / Amazon Sellers
Courier & marketplace shipments
Yes
Yes
Each courier shipment auto-creates an EDPMS entry. Every entry must be matched and closed.
EDF what goes into
Hover over any section to learn what it means
Annex I
Export Declaration Form (EDF)
As prescribed under Foreign Exchange Management Act (FEMA), 1999 | To be submitted to the Authorised Dealer Bank
The EDF is a mandatory declaration to RBI that an export has occurred. It creates a tracking entry in EDPMS that stays open until your payment arrives and the bank closes it.
Customs Security No.
__________________________
Reference number assigned by customs. Auto-generated at major ports when your shipping bill is processed through EDI.
Form No.
__________________________
Unique EDF reference number. For smaller ports, generate this on the RBI website before filing. Keep it for all future correspondence.
Nature of Cargo
Government
Non-Government
Indicates whether the export is on behalf of a government entity or a private party. Most exporters select Non-Government.
Shipping Bill No. & Date
_________________ Date: _____________
The shipping bill number from customs. At major EDI ports, this is filed automatically with your EDF. At smaller ports, enter it manually after customs clearance.
Mode of Transport
Air
Sea
Land
Post/Couriers
Others
How your goods are physically leaving India. Select the primary transport mode. Courier exports (Amazon, e-commerce) typically use Post/Couriers.
Category of Exporter
Custom (DTA units)
SEZ
Status Holder Exporters
100% EOU
Warehouse Export
Others
Your exporter classification under FEMA. DTA (Domestic Tariff Area) is the default for most exporters. SEZ and EOU units have separate compliance obligations. From Oct 2026, service exporters also fill this field.
RBI Approval No. & Date (if any)
__________________________
Only required if your specific export needed prior RBI approval — for example, certain deferred payment exports or exports to restricted countries. Leave blank if not applicable.
IE Code
__________________________
Your Importer Exporter Code issued by DGFT. Mandatory for all exports. If you don't have one, you cannot file the EDF or generate a shipping bill.
AD Code
__________________________
Your Authorised Dealer bank's 14-digit code. Must be registered on ICEGATE before your first export. Without this, your shipping bill won't generate at all.
Exporter's Name & Address
Name: _______________________________
Address: ____________________________
____________________________________
GSTIN: _____________________________
Address: ____________________________
____________________________________
GSTIN: _____________________________
Your registered business name and address exactly as it appears in your IEC. Any mismatch with your invoice will cause your bank to reject the form.
AD (Bank) Name & Address
Bank Name: _________________________
Branch: ____________________________
____________________________________
AD Code: ___________________________
Branch: ____________________________
____________________________________
AD Code: ___________________________
Your Authorised Dealer bank — the bank through which you receive your export payment. This must be the same bank that will close your EDPMS entry when payment arrives.
Consignee's Name & Address
Name: _______________________________
Address: ____________________________
Country: ___________________________
Address: ____________________________
Country: ___________________________
Your buyer or the party receiving the goods at the destination. Must match the commercial invoice and, if applicable, the LC terms exactly — including spelling.
Mode of Realisation
L/C
BG
Advance Payment
Open Account
Others
Port of Loading / Source Port (SEZ): _______________
How you will receive payment. L/C = Letter of Credit. BG = Bank Guarantee. Open Account means you ship first and get paid later — higher risk. This determines how strictly your EDPMS entry will be monitored.
Name of Indian Bank & AD Code (for LC/BG)
______________________________
Only fill this if your payment is via Letter of Credit or Bank Guarantee. Enter the Indian bank that will handle the LC or BG negotiation.
Country of Destination
______________________________
The final country where your goods will be consumed or used — not just a transit country. This affects export incentive eligibility and duty treatment at the destination.
Port of Discharge
______________________________
The port where your goods will be unloaded from the vessel. Must match your Bill of Lading exactly. A mismatch here is a common discrepancy that delays LC payment.
Whether Payment to be Received through ACU?
Yes
No
ACU (Asian Clearing Union) is a settlement system used for trade with select Asian countries including Iran, Bangladesh, and Sri Lanka. Most standard exports select No.
Let Export Order (LEO) Date
______________________________
The date customs formally allowed your goods to leave India. This is stamped on your shipping bill at the port. It marks the official export date for FEMA and EDPMS purposes.
General Commodity Description
______________________________________________________
A plain-language description of what you're exporting. Must match your commercial invoice exactly. Vague descriptions like "goods" will be rejected by your bank.
Total FOB Value in Words (INR)
______________________________
FOB (Free on Board) value is the price of goods at the Indian port — before freight and insurance. Always use FOB, not CIF. Write it in words to prevent tampering.
Custom Assessable Value (INR)*
______________________________
The value customs uses to calculate duties — typically the FOB value converted to INR at the RBI reference rate on the date of export. Your freight forwarder usually fills this.
Invoice No.
______________
Your commercial invoice number. Must be identical to the invoice you send to your buyer and the one presented to your bank for payment.
Invoice Currency
______________
The currency you billed in — USD, EUR, GBP etc. Enter the transaction currency as-is. Do not convert to INR here; the bank does that when payment arrives.
Nature of Contract
FOB
CIF
C&F
CI
Others
Your Incoterm — who bears the cost and risk of transport. FOB = buyer pays freight. CIF = you pay freight and insurance. This determines how you calculate the FOB value.
Invoice Date
______________
Date on your commercial invoice. From October 2026, service exporters must file within 30 days of the end of the invoice month — so this date determines your filing deadline.
Invoice Amount
______________
Total invoice value in the transaction currency. This must match what your buyer owes you and what your bank will expect to receive. Any shortfall needs explanation.
| Particulars | Currency | Amount in FC | Exchange Rate | Amount (INR) |
|---|---|---|---|---|
| FOB Value | ||||
| Freight | ||||
| Insurance | ||||
| Commission | ||||
| Discount | ||||
| Other Deduction | ||||
| Packing Charges | ||||
| Net Realisable Value |
Break down your invoice value into components. FOB is the core value. If on CIF terms, list freight and insurance separately. Net Realisable Value = what actually reaches you after deductions. Your EDPMS entry closes against this figure.
I/We hereby declare that the particulars given above are true and correct and that the export value as declared above represents the full export value agreed to and that no part of the export proceeds has been or will be received otherwise than through an authorised dealer in India. I/We undertake that the said amount will be repatriated to India within the stipulated period.
This declaration binds you to repatriate your export proceeds to India within the RBI-permitted timeframe (currently 9 months for most exports). Signing this without following through is a FEMA violation.
For use by the Exporter:
Place: _________________ Date: _____________
Signature & Stamp of Exporter / Authorised Signatory
Your authorised signatory must sign and stamp. The name and designation should match what's registered with your bank's KYC records.
For use by the Customs Authority:
Certified that the goods described overleaf have been examined and found as per declaration.
Signature & Stamp of Customs Officer Date: ________
Customs certifies the goods match your declaration before allowing export. At EDI ports this happens digitally with the shipping bill. At manual ports, the officer stamps the physical form.
For use by the AD Bank:
Certified that the declaration has been verified and EDPMS entry created.
Signature & Stamp of AD Bank Date: __________
Your bank's acknowledgement that they've received and uploaded the EDF. From Oct 2026, banks must upload to EDPMS within 5 working days. Save this stamped copy — it's your proof of filing.
Attestation timeline
Time Expectations
How Long Does Attestation Take?
Plan your shipment timeline around these windows — embassy legalisation in particular can add weeks
← Faster Slower →
1
Chamber of Commerce
Commercial docs, certificates of origin
2
MEA Attestation
⚡ Tatkal available
Apostille for Hague countries
3a
Embassy Legalisation
Non-Hague countries only · UAE, Saudi, China
Total Process Time
End-to-end estimate
⛔
Embassy fees are non-refundable. If your documents are rejected after submission, you pay again to resubmit. Verify every detail before walking in — and always factor embassy timelines into your shipment deadline.
Attestation steps
Step-by-Step Process
How to Get Export Documents Attested
Follow this sequence — skipping steps means starting over
1
Notarisation
Verify documents and get notarised by a licensed notary
↓
2
Chamber of Commerce
Attest commercial docs, invoices, certificates of origin
↓
3
MEA Attestation
Ministry of External Affairs authenticates for international use
↓
Is the destination a Hague Convention member?
✓ Yes
Apostille
MEA affixes apostille sticker. No embassy needed. Done.
4 – 10 days total
✗ No
Embassy Legalisation
Submit to destination country's embassy in India. Fees non-refundable.
2 – 6 weeks total
About the author
Bengaluru, Karnataka
Second Floor, Indiqube Serenity, Phase 2, 31, Hosur Rd,near Vishal Megamart, Muneswara Nagar, Sector 6, HSR Layout,Bengaluru, Karnataka, 560068
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