We are importing the machine parts from the various counties for the first time. So, I need help/knowledge about Advance Import Payment & Direct Import Payment. like AD code and etc. We have a current account SBI.
10 July 2024
When importing machine parts for the first time, you'll need to understand the process of Advance Import Payment (AIP) and Direct Import Payment (DIP), along with requirements like the AD code. Here’s an overview to help you navigate these terms and procedures:
### Advance Import Payment (AIP):
1. **Definition**: Advance Import Payment refers to making payment to the overseas supplier before receiving the goods. It involves transferring funds to the exporter’s account based on a proforma invoice or contract terms.
2. **Process**: - **AD Code**: An Authorized Dealer (AD) Code is a unique identification code issued by banks in India. You’ll need to obtain an AD Code from your bank (in your case, SBI) to facilitate foreign exchange transactions for imports. - **Documentation**: Prepare necessary documents like purchase order, proforma invoice, and import license (if applicable) to initiate the AIP process. - **Payment**: Transfer funds to the exporter’s account using SWIFT (Society for Worldwide Interbank Financial Telecommunication) or other approved methods specified by your bank.
3. **Bank Procedures**: Contact your SBI branch to: - Apply for an AD Code if you don’t have one. - Understand their specific requirements and documentation for AIP. - Ensure compliance with Reserve Bank of India (RBI) guidelines on foreign exchange transactions.
### Direct Import Payment (DIP):
1. **Definition**: Direct Import Payment involves paying the overseas supplier upon shipment or after receiving the goods. It doesn’t involve advance payment but rather payment against documents (like bill of lading or shipping documents) or upon receipt of goods.
2. **Process**: - **Documentation**: Similar to AIP, prepare necessary import documents and ensure compliance with customs regulations. - **Payment**: Initiate payment as per terms agreed with the supplier, typically upon presentation of shipping documents or upon receipt and inspection of goods.
### Key Points to Remember:
- **AD Code**: Obtain and use the AD Code from your bank for all foreign exchange transactions related to imports. - **Documentation**: Maintain accurate records of all import-related documents, including invoices, shipping documents, and customs declarations. - **Compliance**: Ensure compliance with RBI guidelines, customs regulations, and any specific requirements related to your imported goods.
### Seeking Assistance:
For detailed guidance tailored to your specific circumstances: - Consult with your bank’s international trade department for assistance on AD Code issuance and import payment procedures. - Engage a customs broker or import-export consultant if needed to navigate regulatory requirements and ensure smooth import operations.
By understanding these terms and processes, you can effectively manage your first-time imports and comply with applicable regulations in India.
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