What a proforma invoice is
A proforma invoice is an offer dressed as an invoice. It says exactly what you will ship, at what price, on which terms and for how long the offer stands, before anything is made, shipped or paid for. It is not a tax invoice under GST, it is not a demand for payment, and you do not book a sale against it.
Your buyer needs it before they can do anything. Their bank needs it to open a letter of credit, and in many countries their government needs it before it grants an import licence or releases foreign exchange. It is also the document your buyer quotes when they remit an advance to you. When that money reaches your bank in India, the bank ties it to the export through the proforma's number, and the goods normally have to ship within a year of the advance.
The commercial invoice comes later and describes what actually shipped. The proforma describes what you promise to ship. Treat it as the specification the rest of the shipment has to match: the commercial invoice, the packing list, the shipping bill and, if there is one, the letter of credit.
What an Indian exporter's proforma needs
A number and a date. The buyer's bank quotes your proforma number on the letter of credit, and the buyer quotes it on the advance. Keep one series a financial year, such as MSE/PI/2026-27/0148, so that every document traces back to it.
Your IEC and GSTIN. The Importer-Exporter Code identifies you to customs and to your bank for everything foreign exchange. Put it on the proforma so the buyer copies it into the credit correctly. State too whether you will export under a Letter of Undertaking (LUT) without paying IGST, or on payment of IGST that you claim back. It changes your cash flow, and the export invoice will have to say the same.
A validity date. Prices move, freight moves and the rupee moves. An offer with no end date is one you are still bound by six months later, and banks check the date before they open a credit against it.
An Incoterm with a named place. "FOB" alone is not a term; "FOB Nhava Sheva (Incoterms 2020)" is. The rule decides who pays freight and insurance and where the risk passes to the buyer. For CFR and CIF, show the freight, and for CIF the insurance, apart from the value of the goods.
An 8-digit HS code on every line. Indian customs classify exports on the 8-digit ITC-HS code, and your RoDTEP and duty drawback rates follow it. The buyer's customs read the first six digits, which are the same worldwide, to work out their duty. Use the same code on the shipping bill later.
The currency, and the bank to pay into. State the currency you want to be paid in, and give the account, the SWIFT code and the branch. Many exporters add the AD code, the code under which their bank's branch is registered with customs.
Proforma, commercial invoice and GST invoice
They look almost the same and are used at opposite ends of the deal. The proforma is an offer, issued before the order is confirmed, and you may revise it freely until the buyer accepts it. The commercial invoice is issued when the goods leave. For an exporter in India, it is also the tax invoice under GST, and it carries the line "supply meant for export under LUT without payment of IGST" or "on payment of IGST".
The practical rule: once the buyer's bank has opened a credit against your proforma, every material term on the commercial invoice has to match what the credit says. That means the description of the goods, the amount, the Incoterm and the ports. If anything differs, the bank raises a discrepancy and you are not paid on presentation. That is the whole reason to take the proforma seriously: every later document is checked against it.
Mistakes that cost exporters money
- No validity date, then a freight spike. Ocean rates have doubled inside a quarter more than once this decade. An open offer is a free option you have handed the buyer.
- A different HS code on the shipping bill. If the proforma, the invoice and the shipping bill disagree, customs may query the classification, and your RoDTEP or drawback claim can be held up.
- A description the letter of credit cannot repeat. "Model A-3" means nothing to a bank or a customs officer. Describe the goods the way the credit and the shipping bill will, and keep it word for word.
- An Incoterm copied from the last deal. FOB on a container you hand over at an inland container depot is the wrong rule: it leaves the risk with you for a leg you do not control. FCA at the depot is the term that fits.
- An advance with no realistic shipment date. Goods paid for in advance normally have to ship within a year. A proforma that promises more than you can make leaves you explaining a delay to your bank.