Someone sends you an inquiry. Good volume. Reasonable grade requirements. They’re asking for HMS 1&2 on DA 60-day terms and want a proforma invoice by tomorrow.
That urgency is the first signal. The DA terms are the second. The fact that you know nothing about this company is the third.
India has thousands of legitimate, creditworthy scrap importers – mills, traders, and dealers who have been buying reliably for years. It also has a small but real population of bad actors who specifically target international exporters who don’t know how to verify who they’re dealing with. Running five checks before the deal is confirmed takes less than an hour and costs nothing. Not running them has cost exporters millions of dollars.
Here’s the complete process.
Step 1 – IEC Code Verification
Every Indian company that imports or exports goods must hold a valid Import Export Code – a 10-digit number issued by DGFT. No IEC means no legal import. If a buyer claims to be an importer but can’t or won’t provide their IEC, the conversation ends there.
Getting the IEC number is step one. Verifying it is step two.
The DGFT’s IEC verification portal lets you check any IEC number in seconds. Enter the number, confirm the registered company name matches what your buyer told you, and check the status shows active. Indian companies must update their IEC profile annually between April and June – an inactive IEC means the holder hasn’t maintained their registration and cannot legally clear customs.
Also cross-check the IEC against ICEGATE – India’s customs portal. An IEC active at DGFT but not reflecting on ICEGATE creates customs clearance problems regardless of what the buyer tells you.
What to check:
- IEC number active and matches registered company name
- Address on IEC registration consistent with contact details provided
- IEC not on DGFT’s Denied Entity List (DEL) – companies on this list are barred from import/export activities
Step 2 – GSTIN Verification
Every legitimate Indian business above the ₹40 lakh turnover threshold must be GST-registered. A scrap importer buying international volumes is, without exception, above that threshold. No GSTIN from a claimed high-volume importer is an immediate red flag.
The GST portal at gst.gov.in lets you search any GSTIN publicly. Enter the 15-digit number and verify:
- Legal name on GSTIN matches the company name on IEC and on the buyer’s letterhead
- Registration status shows active – not suspended or cancelled
- Registration type is Regular – not Composition (composition taxpayers can’t import commercially)
- State of registration matches the address where the buyer claims to operate
A buyer who gives you a GSTIN where the legal name doesn’t match their letterhead, or a cancelled registration, is either giving you someone else’s details or operating outside the formal tax system. Neither is acceptable for an international trade relationship.
Step 3 – Import History Check
Past import behaviour is the best predictor of future reliability. Indian import data is commercially available through platforms including Trademo, ImportGenius, and Panjiva. A subscription to any one of these gives you a buyer’s import history – what they imported, from which countries, in what volumes, and from which suppliers.
What you’re looking for:
- Active import history in the past 12 months – consistent buying pattern
- Scrap or steel-related imports specifically – not a random company dabbling in your product category for the first time
- Multiple supplier countries – indicates an established procurement operation, not a one-off
- Volume consistent with what they’re claiming to buy from you – if they say they import 500 MT/month but the data shows 50 MT/year, there’s a gap
No import history at all – for a buyer claiming to be a serious importer – is a problem. Either they’re genuinely new to importing (higher risk, proceed with LC only) or the company name they gave you isn’t the entity doing the actual importing.
Step 4 – Company Registration Check
Every Indian company is registered with the Ministry of Corporate Affairs. Check the MCA21 portal for:
- Company registration number (CIN) and date of incorporation
- Registered office address matching what the buyer provided
- Director names and DIN (Director Identification Numbers)
- Whether the company is active or struck off
Sole proprietorships and partnership firms don’t appear on MCA in the same way – they register under state-level regulations. For these, ask for the GST registration certificate, bank account statement header showing the firm name, and a copy of the trade licence or Udyam registration.
A company incorporated last month that approaches you for 500 MT/month of HMS warrants significant additional scrutiny before you ship anything.
Step 5 – Bank Reference and Financial Standing
Before extending any credit terms – which means any payment structure other than advance TT or confirmed LC at sight – get a bank reference from the buyer.
Ask the buyer to provide their bank’s name, branch, and SWIFT code, and request a bank comfort letter or reference confirming the company is a client in good standing. For significant transactions above USD 50,000, request your bank’s trade desk to do a SWIFT MT799 confirmation with the buyer’s bank – a pre-advice that confirms the buyer’s banking relationship without disclosing confidential financial information.
Indian banks won’t confirm credit limits or account balances to third parties. But they will typically confirm whether a company is their client and whether they’ve maintained their banking relationship satisfactorily. That confirmation, combined with the IEC and GSTIN checks, gives you a credibility baseline.
If the buyer can’t provide banking references, or if their named bank is one you cannot independently verify through your correspondent network, that’s relevant information.
Step 6 – Physical Verification
This one is easy to skip because it requires some effort. Don’t skip it.
Use Google Maps Street View to look at the buyer’s registered address. A claimed induction furnace operator at a Mumbai apartment building is not an induction furnace operator. A claimed major mill whose address maps to a small residential colony in an unlikely industrial location warrants a call before you proceed.
For buyers claiming to own or operate mill facilities, ask for photos of the facility. Ask for a photo of the weighbridge and yard. Ask for a GST certificate showing the place of business. Legitimate mills are not defensive about this – they understand why international sellers ask. Buyers who become evasive about basic physical verification details are telling you something.
For large first shipments – above USD 100,000 in value – a third-party facility inspection through SGS, Bureau Veritas, or Intertek runs ₹8,000 – ₹20,000 and gives you an independent confirmation of the facility’s existence and operational status. On a USD 200,000 first deal, that’s a 0.1% insurance premium.
Step 7 – Reference Checks from Other Suppliers
Ask the buyer for two or three references from international suppliers they’ve bought from before. Then contact those suppliers directly – not through email the buyer provides, but by finding the supplier company independently online and reaching them through their own contact channels.
Ask the references:
- Did this buyer pay on time and in full?
- Were there any grade disputes or deductions after delivery?
- Would you sell to them again?
- What payment terms did they accept?
A buyer who has built clean relationships with suppliers in North America or Europe will have references who speak positively and specifically. A buyer who deflects the reference request, provides contacts you can’t independently verify, or whose references give vague or qualified answers – pay attention to that.
The Red Flag Checklist
Run through this before confirming any deal with a new Indian buyer:
| Red Flag | What It Signals |
|---|---|
| Asks for proforma invoice before discussing specs | Possible fraud – PIs get misused |
| Insists on DA terms for first shipment | Credit risk or deliberate non-payment intent |
| Can’t or won’t provide IEC number | Not a legitimate importer |
| GSTIN shows suspended or cancelled | Operating outside compliance |
| No import history in trade databases | Unverified – treat as first-time with extra caution |
| Company incorporated less than 6 months ago | Very high risk for credit terms |
| Offers price significantly above market | Too good to be true – it is |
| Wants you to ship before LC is issued | Non-negotiable – don’t do it |
| Becomes evasive about facility photos | Physical operation unverified |
| References either don’t exist or are uncontactable | Fabricated references |
The price-above-market point deserves emphasis. An Indian buyer quoting ₹34,000/MT when the market is ₹32,000/MT is not a gift. It’s a signal. Someone paying above market for a first deal either plans to dispute quality after delivery to claw back the difference, or has no intention of paying at all. Checking the live iron scrap rates in India before any negotiation tells you instantly whether the offered price is realistic or suspicious.
What Legitimate Indian Buyers Look Like
A serious Indian scrap importer – an established induction furnace operator or a large trading house – behaves in predictable ways that are easy to verify.
They have an active IEC with import history stretching back years. Their GSTIN is active and the legal name is consistent across all documents. They don’t mind an LC on the first deal – they know that’s standard practice for new supplier relationships. They ask detailed, specific questions about your material – thickness, piece size, galvanized content, contamination – because they genuinely need to know before committing. They have references from other international suppliers who answer the phone and give specific positive feedback.
Understanding what a serious Indian mill buyer actually needs from imported scrap – and how they evaluate material before bidding – is covered in the guide to how steel plants decide buying rates. Knowing their buying logic helps you recognise when a buyer’s questions and specifications are consistent with a genuine operation.
After Verification – The First Deal Structure
Even a fully verified buyer gets the first deal on confirmed irrevocable LC at sight. Verification reduces the risk of dealing with a fraudulent or non-creditworthy party. It doesn’t guarantee payment behaviour on the first transaction.
Clean verification plus confirmed LC on the first deal creates the foundation for the relationship. Once payment has been received cleanly on LC terms, you have the beginning of a track record – and the basis for discussing whether DP terms make sense on the second or third deal.
The payment terms framework for structuring every India deal safely – from LC confirmed to DP to when DA might ever be considered – is covered in the safe payment terms guide for exporting scrap to India.
The One Hour That Protects Every Shipment
IEC check: five minutes on the DGFT portal. GSTIN check: three minutes on the GST portal. Import history: fifteen minutes on a trade data platform. Company registration: ten minutes on MCA. Bank reference request: one email. Physical check: five minutes on Google Maps.
That’s under an hour. It’s the difference between a clean, profitable first India deal and a container sitting at Nhava Sheva with demurrage running while you try to recover payment from a company that never intended to pay.
DGFT, GST, and MCA portal details referenced are accurate as of February 2026. Company status and IEC activity change over time – always verify current status directly on government portals immediately before finalising any transaction.
