India is becoming a more important market for European companies. With EU–India trade in goods valued at €118 billion in 2025, and around 6,000 European companies already present in India, the country is now growth market for machinery, industrial systems, chemicals, medical instruments, automotive components, and specialised manufacturing products.
The recently concluded EU–India Free Trade Agreement has further strengthened this momentum. According to the European Commission, the agreement is expected to potentially double EU goods exports to India by 2032, reduce or eliminate tariffs on over 96% of EU goods exports, and save European companies around €4 billion annually in duties.
But for European exporters, market access is only one part of the India opportunity. The more immediate question is: how do you secure payment when exporting to India?
Winning the Order Is Not the Same as Getting Paid
In a recent discussion with European manufacturers, what came across was a recurring issue faced by exporters supplying directly to India: delayed payments. The concern was not limited to small buyers. In one case, even a larger Indian company repeatedly delayed payment with assurances such as “next week” or “after a few days.” For a European SME manufacturer, this can quickly become a working capital issue.
This is a familiar pain point for exporters. Indian buyers may push for quick delivery, short shipment timelines, and relationship-based credit terms. However, once the goods are shipped, the exporter’s negotiating position weakens.
For European companies supplying customised machinery, components, industrial equipment, or technical products, this can create a cash flow gap. Production costs, raw material commitments, freight, documentation, and internal working capital are already tied up before the buyer pays.
Payment Risk in India Is a Commercial Issue, Not Just a Banking Issue
Recent data supports why payment discipline must be taken seriously. India B2B payment practices report noted that overdue payments affect more than 60% of B2B invoices in India’s agri-food sector, while in chemicals, more than 70% of B2B invoices were overdue. In textiles and clothing, overdue invoices accounted for 56% of B2B transactions, with liquidity constraints and internal payment delays being key reasons.
These delays are not always driven by unwillingness to pay. In a large and opportunity-rich market such as India, companies can have significant cash tied up in customer transactions and day-to-day working capital. This can create cash-flow constraints that affect their ability to make payments on time. In other situations, the difficulty can arise through the banking channel itself, especially when earlier transactions remain unresolved and begin to affect subsequent cross-border payments.
For European exporters, this does not mean avoiding India. It means entering India with the right payment architecture.
Advance Payment Should Be the Starting Point for New Buyers
For a first-time Indian customer, advance payment should be strongly considered. This does not always mean demanding 100% upfront. A practical structure could be:
50% advance at the time of order confirmation, and 50% before shipment or once the product is ready for dispatch.
This allows the exporter to begin production without carrying the entire risk, while also giving the buyer a clear milestone-linked payment structure. Advance payment should be used at least until the exporter has built comfort around the customer’s creditworthiness and payment behaviour.
The key is to make payment terms part of the commercial negotiation from the beginning, not an afterthought once the order is received.
Letters of Credit Can Help, But They Are Not Always Practical
A Letter of Credit can be useful when dealing with a new buyer, large order value, or limited payment history. It gives the exporter stronger banking security if the buyer fails to pay.
However, many European exporters hesitate because Indian customers often ask for delivery within two to five weeks. Creating and confirming an LC may take time, especially when multiple banks, internal approvals, and documentation are involved. This exact dilemma: exporters are often caught between moving fast to secure the customer and slowing down to secure payment.
The solution is not to reject LCs entirely. Instead, exporters should decide based on order size, buyer profile, urgency, margin, and repeat business potential.
Contracts Must Reflect India-Specific Payment Discipline
India’s 2026 FEMA export-import regulations are also important for exporters to understand. The new framework, effective from 1 October 2026, places greater responsibility on Authorised Dealer banks and links import transaction timelines more closely to the underlying contract.
This makes the contract even more important. European exporters should clearly define:
payment milestones, shipment release conditions, interest on delayed payment, documentation responsibilities, dispute resolution process, and conditions for withholding future supply.
A vague purchase order is not enough when the exporter is operating from Europe and has limited visibility on the buyer’s internal payment process.
Use Future Orders to Recover Past Payments
One practical point which our International Business Advisor Expert Manoj Madachery in India emphasised was continuous follow-up. Payment recovery in India often requires structured escalation rather than one polite reminder after the due date.
If a buyer places a new order while the previous invoice remains unpaid, the exporter should use that moment to insist on clearing the earlier payment before releasing the next shipment. This prevents receivables from accumulating and protects the exporter from becoming an informal credit provider.
Remote Exporting Has Limits
Many European companies begin India with direct exports or a distributor. This is often the right first step. But over time, if India becomes a serious market, remote selling may not be enough.
Exporters need better local visibility: Who is the real decision-maker? Is the buyer financially stretched? Is the distributor pushing unrealistic credit terms? Are payments stuck due to documentation, cash flow, or internal approvals?
At this stage, companies may need stronger local governance, a more structured distributor model, local sales support, or an India presence.
A practical example involved a German company with a subsidiary in India. Certain older transactions dating back to 2018 remained pending after payments could not be completed because of funds and cash-flow constraints. When the Indian entity later wanted to import from Japan, the earlier unresolved transactions created difficulties in making the required payment for the new import. In April 2026, the government/customs authorities introduced provisions that allowed certain old pending cases to be regularised, subject to specific conditions and the individual circumstances of the company. Such relief may also be available at a later stage, depending on the applicable criteria and eligibility of each company. The company was able to use the relevant provision to address the legacy issue and receive relief. The case illustrates why import-related transactions and payments need to be managed correctly from the beginning, before unresolved matters start affecting future business.
The Bottom Line for European Exporters
India offers a strong opportunity for European companies, especially as trade relations deepen and tariff barriers reduce. But successful internationalisation is not only about entering the market. It is about selling profitably, collecting on time, and protecting working capital.
For European exporters, the right question is not simply: Can we sell to India?
It is: Can we sell to India while keeping payment risk under control?
The companies that build advance payment structures, use LCs selectively, draft stronger contracts, monitor buyer behaviour, and maintain disciplined follow-up will be better positioned to scale in India sustainably.
How Maier+Vidorno Can Help European Exporters Secure Their India Business
For European companies, India should not be approached only as an export destination. It should be approached as a market that requires the right commercial structure, payment discipline, local follow-up, and long-term governance. As Manoj Madachery highlighted, the risk is not always in finding Indian customers, but in ensuring that payments are secured, followed up, and not allowed to accumulate into working capital pressure.
This is where Maier+Vidorno, part of ALTIOS International, supports European companies with both strategic advice and on-ground execution. With Maier+Vidorno helping international companies enter and grow in India since 2000, and ALTIOS operating through a network of 750+ experts across 40 offices globally, companies get support from both sides of the transaction- in Europe and in India.
For exporters, this means practical support in assessing Indian buyers and distributors, structuring safer payment terms, coordinating with banks and local advisors, reviewing commercial contracts, building follow-up mechanisms, and deciding when direct exports should evolve into a stronger local presence. Maier+Vidorno also has teams across key Indian business hubs, with offices including Delhi, Mumbai, Pune, Chennai and Bengaluru, enabling closer market visibility and local execution support.
The appropriate support model also depends on whether the European company is exporting directly to India without a local subsidiary or is operating through an Indian entity. In both situations, payment processes, import transactions and banking requirements should be structured from the outset. As the India business grows, this can also include evaluating and forming an Indian subsidiary so that local transactions, imports and governance can be managed through a more permanent structure rather than addressing issues only after they arise.
Whether a company is supplying machinery, industrial components, specialised equipment, or technical products to India, payment security should be built into the India strategy from the beginning.
If your company is exporting to India and facing delayed payments, uncertain buyer behaviour, distributor dependency, or unclear commercial terms, Maier+Vidorno can help you build a more secure and scalable India model. From Europe to India, our teams work together to help you sell with confidence, protect your cash flow, and turn India from an opportunistic export market into a sustainable growth market.
