Which Incoterm should I use?

Incoterms decide where the supplier's job ends and yours begins: who books the freight, who insures it and who pays duty. Answer four questions and we'll suggest the rule that matches how you want to work.

1How will the goods travel?

2Do you have your own freight forwarder?

Answer the questions to see which Incoterm fits.

Want us to handle export paperwork and freight from India?

Your sourcing team on the ground in India. We find and vet factories, develop samples, negotiate prices and inspect every order before you pay the balance. You get one accountable team in India.

See Sourcing & Buying Agent

Why Incoterms matter

An Incoterm in your purchase order sets the point where cost and risk pass from the supplier to you. Choose one that doesn't match how you actually ship and you can end up paying twice for freight, or uninsured when something goes wrong at sea.

The rules are published by the International Chamber of Commerce. The current version is Incoterms® 2020, so write the rule, the place and the version, for example "FOB Mundra, Incoterms® 2020".

The ones importers from India use most

FOB (Free On Board): the supplier delivers the goods onto the ship at the Indian port and handles export clearance. You book and pay the sea freight. A good choice if you have your own freight forwarder.

CIF (Cost, Insurance and Freight): the supplier pays freight and minimum insurance to your port, but the risk passes to you when the goods are loaded in India. Simple, but you have less control over the shipping line and its charges.

DAP and DDP: the supplier delivers to your door. Under DAP you clear customs and pay duty; under DDP the supplier does. DDP is the least work for you, and usually the most expensive.

FOB, CFR and CIF are for sea and inland waterway only. For air freight, courier or containers handed over at an inland depot, use FCA, CPT or CIP instead.

Questions

Is EXW a good idea when buying from India?

Usually not. Under EXW you're responsible for export clearance in India, which a foreign buyer can't easily do. FCA gives you almost the same arrangement with the supplier handling export clearance.

Does CIF insurance cover everything?

No. CIF only requires minimum cover. If your goods are valuable, ask for more cover or arrange your own cargo insurance.

Does the Incoterm decide when I pay?

No. Payment terms (for example a deposit and balance against inspection) are agreed separately in your contract.