Advance Remittance for Imports: Old Thresholds, New Rules
The AD bank now sets its own guarantee thresholds; the courseware's USD 200,000 rule is what exam questions still ask.
An advance remittance is money sent to a foreign supplier before the goods are shipped. It is the riskiest way an importer can pay: the money has left India and nothing has arrived yet. FEMA lets AD banks allow it, and the rules exist to manage the gap between paying and receiving.
From October 1, 2026, the fixed USD thresholds of the old Master Direction are gone. The AD bank decides, under its own policy, when an advance needs a standby letter of credit or guarantee. The courseware still teaches the old thresholds, so a candidate needs both.
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The Current Rule (From October 1, 2026)
- check_circleThe AD bank may permit advance remittance for import after satisfying itself that the requirement for an advance is genuine.
- check_circleThe AD bank may set its own thresholds above which an advance needs a standby letter of credit (SBLC) or a guarantee.
- check_circleThe importer routes the advance and later payments through the same AD bank, unless it informs both banks of a change.
- check_circleNo advance remittance is permitted for import of gold or silver.
- check_circleInterest on delayed import payments must not exceed the all-in-cost ceiling for trade credit under the Borrowing and Lending Regulations, 2018.
- check_circleThe bank's advance-payment practice must be written into its internal policy and SOP, with the main features published on its website.
When the Import Does Not Arrive
- 1
Repatriate the advance
If the importer cannot import within the contract period or any extended period, the advance must be brought back to India.
- 2
Close the entry only on a genuine reason
Where neither import nor repatriation is possible, the AD bank may close the IDPMS advance entry on the importer's reasoned request, if satisfied.
- 3
Future advances need cover
If the advance is not repatriated within the contract or extended period, or the IDPMS advance entry has not been marked off under that genuine-reason route, any future advance by that importer needs an unconditional, irrevocable SBLC or a guarantee from an international bank of repute, or an AD bank guarantee backed by such a bank's counter-guarantee.
The Superseded Thresholds Courseware Still Tests
These come from the Master Direction on Import of Goods and Services, which applied until September 30, 2026.
| Case | Rule under the old Master Direction |
|---|---|
| General advance for goods | Above USD 200,000: unconditional, irrevocable SBLC or guarantee from an international bank of repute (or an AD bank guarantee against its counter-guarantee) |
| Importer cannot get an overseas guarantee | AD bank satisfied about track record could waive it up to USD 5,000,000 (not for public sector importers) |
| Public sector company or Government department | Above USD 100,000: specific waiver of bank guarantee from the Ministry of Finance |
| Aircraft and helicopters; shipping vessels | Permitted entities could remit up to USD 50 million without a bank guarantee |
| Advance for import of services | Above USD 500,000: guarantee from a bank of international repute outside India |
Threshold and guarantee questions, with explanations.
How CCFE Tests This
The question bank asks the old thresholds directly: "above what amount does an advance need a bank guarantee" (USD 200,000), "up to what amount can the AD waive it" (USD 5 million), "what does a public sector importer need above USD 100,000" (Ministry of Finance waiver). The common slip is mixing the goods figure with the services figure (USD 500,000). For questions framed on the 2026 Regulations, the answer is that thresholds are set by the AD bank.
Gold and Silver Are the Hard Line
Whatever an AD bank's policy says, the 2026 Regulations prohibit advance remittance for import of gold or silver. This is one of the few import rules stated as a flat ban, and a likely exam answer.
FAQs
Is a bank guarantee needed for advance payment for imports?expand_more
From October 1, 2026, only if the advance crosses a threshold the AD bank itself sets, or the importer has an earlier advance that was not repatriated in time. Under the old Master Direction, a guarantee or SBLC was needed above USD 200,000.
Can advance payment be made for gold imports?expand_more
No. The 2026 Regulations do not permit advance remittance for import of gold or silver.
What happens if goods are not imported after advance payment?expand_more
The importer must repatriate the advance. If it does not repatriate within the contract or extended period, every future advance by that importer needs an unconditional, irrevocable SBLC or a guarantee from an international bank of repute.
What was the advance remittance limit for import of services?expand_more
Under the superseded Master Direction, advances for services above USD 500,000 needed a guarantee from a bank of international repute outside India.
Next steps
- Import Paymentsarrow_forward
- EDPMS & IDPMSarrow_forward
- Standby LCarrow_forward
- Trade Creditsarrow_forward
100 questions on this exact syllabus, timed and scored.