The most common payment terms for grain and pulse contracts from India are an advance, often 20 to 30 percent, with the balance against scanned documents, or a letter of credit (LC). Larger contracts and new relationships lean towards LCs.
Grains and pulses are low-margin, high-volume goods, and a single contract can run to several containers. That makes the payment structure matter more than it does for small spice orders.
The right term depends on the size of the contract, how well you know the supplier and how volatile the product is. A first trial container can use simpler terms than a season-long contract for many shipments.
The main options
- Advance plus balance against documents: you pay part upfront and the rest when the supplier sends scanned shipping documents. Simple and common, but the advance is at risk if the supplier fails.
- Cash against documents (CAD): documents are sent through banks and released when you pay. No advance, so suppliers usually accept it only from known buyers.
- Letter of credit: your bank promises to pay when the supplier presents documents that match the LC terms exactly. Protects both sides but adds bank fees and paperwork. See what a letter of credit is.
- Open account: payment after delivery, used only once trust is established.
Why grain contracts are different
Grain prices move with harvest, weather, stocks and government action. When the market rises after you book, a weak supplier may delay or default. When it falls, a buyer may look for reasons to reject. Payment terms should keep both sides committed.
Rice and wheat also carry export restriction risk. If a ban stops shipment, an advance can be hard to recover. Keep advances low on such products and read how export restrictions on rice and wheat affect contracts.
Making the terms work for you
General guidance is in typical payment terms for agri imports from India.
- Link any balance payment to documents that prove shipment, such as the bill of lading.
- Make an inspection certificate or test report one of the required documents.
- Split large contracts into shipments, each paid separately.
- Keep the advance small with a new supplier, and only after you have verified the company.
- Agree how price changes, quality claims and delays affect payment.
- Pay only to a bank account in the supplier's registered company name.
- Treat any late change of bank details as a warning sign and confirm it by phone with a known contact.
How we help
We verify the supplier before you pay any advance and inspect the lot before the balance is due. You pay the supplier directly, and our fee is fixed and agreed in writing. Ask for a free sourcing review to set safe terms for your grain contract.