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An Ahmedabad-based textile exporter received their first EU Letter of Credit from an Italian fashion brand for EUR 180,000 worth of printed fabrics. The LC was for a sight credit confirmed by ICICI Bank. Documents were presented on day 18 (within 21-day limit). The bank returned the documents with 4 discrepancies: (1) fabric weight on invoice 245 g/m² vs LC requirement 240 g/m²; (2) B/L notify party address missing postcode; (3) packing list showed 240 cartons vs shipping bill 241 cartons; (4) COO issued by chamber of commerce not EEPC as specified in LC.
The Italian buyer initially refused to waive discrepancies, using the documentary error as leverage to negotiate a 12% price reduction on the goods (which were already in transit). ICICI Bank' trade finance desk was engaged. AJG facilitated communication between the exporter and Italian buyer. Ultimately the Italian buyer agreed to waive 3 of 4 discrepancies but insisted on corrected COO from EEPC — requiring an original COO amendment. EEPC India issued an amended COO. Payment was released 34 days late, without price reduction, but with EUR 2,800 in late payment interest foregone.
Payment ultimately received at full value. EUR 180,000 recovered without price reduction. 34 days of working capital tied up. EUR 2,800 in interest cost foregone. The exporter implemented a 20-point pre-presentation document checklist after this experience.
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