Import from overseas-regarding

[Mathi]

We are MNC company in india and our counterpart in USA. We need to procure a shaft from our USA office and the shaft is not available. so our USA office advice to procure the shaft from their supplier who s located in Australia. So purchase order and payment will transfer to our USA office and we will bring the material from Australian Supplier to India..(Our USA office will settle to Australian suuplier)

In this connection How we will settle the transaction in IDPMS by ICEGATE

[YAGAY andSUN]

In the present transaction, the Indian entity shall be treated as the importer of record since the goods (shaft) are being physically imported into India from the Australian supplier, though the commercial payment is routed through the group company in USA. Under RBI Master Direction - Import of Goods and Services, "Third Party Payment for Import Transactions" is permissible, provided there is a firm purchase order / tripartite arrangement and the import documents clearly disclose the third-party payment mechanism.

Accordingly, in IDPMS/ICEGATE, the Bill of Entry must be filed in the name of the Indian importer, with the Australian supplier as shipper/exporter, and narration that payment is to be remitted to / through the USA affiliate as third-party beneficiary. The AD Category-I Bank shall close the IDPMS entry based on the Bill of Entry, import invoice, inter-company debit note / agreement, and proof that the remittance has been made to the USA office which in turn settles the Australian supplier.

The transaction shall not qualify as merchanting trade since goods are entering India. Compliance should be aligned with Para B.7 (Third Party Payment for Import Transactions) of RBI Master Direction No. 17/2016-17 under FEMA, subject to AD Bank satisfaction regarding bona fides, FATF compliance, and matching of import documents with remittance trail.

[YAGAY andSUN]

B.7. Third Party Payment for Import Transactions

Master Direction - Import of Goods and Services (Updated as on January 12, 2026)

RBI/FED/2016-17/12 FED Master Direction No. 17/2016-17 January 1, 2016

AD category I banks are allowed to make payments to a third party for import of goods, subject to conditions as under:

1. Firm irrevocable purchase order / tripartite agreement should be in place. However this requirement may not be insisted upon in case where documentary evidence for circumstances leading to third party payments / name of the third party being mentioned in the irrevocable order / invoice has been produced.

2. AD bank should be satisfied with the bonafides of the transactions and should consider the Financial Action Task Force (FATF) Statement before handling the transactions;

3. The Invoice should contain a narration that the related payment has to be made to the (named) third party;

4. Bill of Entry should mention the name of the shipper as also the narration that the related payment has to be made to the (named) third party;

5. Importer should comply with the related extant instructions relating to imports including those on advance payment being made for import of goods.

[Ryan Vaz]

Your transaction can generally be handled in IDPMS as a third-party payment import transaction.

In your case:

Item	Party
Importer	India entity
Ordering/Intermediary entity	USA group company
Actual supplier/shipment origin	Australia supplier
Goods movement	Australia India
Payment remitted by India entity	To USA office

This is permissible subject to:

• proper documentation,
• AD bank approval,
• declaration of third-party payment arrangement.

In IDPMS, the Bill of Entry will be matched against remittance made to the USA entity under third-party settlement documentation.

[Shilpi Jain]

When you submit the docs to the AD Bank, you can show that your contract is with the US party while delivery you have received from the Aus party. Basis this the entry in EDPMS can be closed.

[Shilpi Jain]

Sorry , read it as IDPMS

[Shilpi Jain]

This is not a case of third party payemnt or any set off since you would be paying to the vendor on whom you have placed the order.

So just explain to your AD banker and it should be closed in IDPMS

AI Summary

Third party payment imports can be closed in IDPMS when documents disclose the remittance trail and AD bank approves. Third party payment for import transactions is permissible where an Indian importer orders goods from an overseas seller, but payment is routed through a third party, provided the import documents clearly disclose the arrangement and the AD bank is satisfied about the bona fides of the transaction. The Indian entity remains the importer of record, and the Bill of Entry should be filed in its name with the third-party payment narration reflected in the documentation. In IDPMS/ICEGATE, the transaction may be closed on the basis of the Bill of Entry and supporting remittance trail.