Distinguish between Buyers' Credit and Suppliers' Credit.

Buyers' Credit: It refers to loans for payment of imports into India arranged by the importer from overseas bank or financial institution. Imports should be as permissible under the extent of Foreign Trade Policy of the Director General of Foreign Trade (DGFT). For the overseas exporter the transaction becomes a cash sale. Suppliers' Credit: Suppliers' credit relates to the credit for imports into India extended by the overseas supplier. In this case too, imports should be as permissible under the extent of Foreign Trade Policy of the DGFT. Usually this type of facility is availed for import of Capital goods. The importer pays an agreed amount of down payment and the balance amounts are paid in instalments over a deferred period. Interest rates for the transactions are decided at the initial contracting stage and are included in the instalments payable by the importer.