When you receive a price quote from an Indian exporter, the price itself is only part of the picture. What matters equally is the pricing term — also known as the Incoterm — because it defines exactly what's included in that price and where the seller's responsibility ends.
Understanding these terms is essential for comparing quotes accurately and avoiding unexpected costs.
What Are Incoterms?
Incoterms (International Commercial Terms) are standardized trade terms published by the International Chamber of Commerce (ICC). They define the responsibilities of buyers and sellers in international transactions — specifically, who pays for shipping, insurance, customs duties, and at what point the risk transfers from seller to buyer.
The most commonly used Incoterms in Indian exports are FOB, CIF, EXW, and DDP.
FOB (Free on Board)
What it means: The seller delivers the goods to the port of shipment in India (e.g., JNPT Mumbai, Mundra, Chennai) and loads them onto the vessel. From that point, the buyer takes responsibility.
- What's included in the price:
- Product cost
- Inland transportation to the Indian port
- Export customs clearance
- Loading charges at the port
- What you pay separately:
- Ocean freight
- Marine insurance
- Import customs clearance
- Inland transportation in your country
Best for: Experienced importers who have their own freight forwarder or shipping agent and want to control shipping costs.
Example: If you receive a quote of $850/MT FOB JNPT for jaggery, that means the price includes everything up to the goods being loaded on the ship at JNPT port. You arrange and pay for the ocean freight to your port.
CIF (Cost, Insurance & Freight)
What it means: The seller handles everything up to delivering the goods to the destination port — including ocean freight and marine insurance.
- What's included in the price:
- Everything in FOB, plus
- Ocean freight to the destination port
- Marine insurance (minimum coverage)
- What you pay separately:
- Import customs clearance
- Import duties and taxes
- Inland transportation from port to warehouse
Best for: Buyers who want a simpler, more predictable landed cost and don't want to deal with arranging international shipping.
Example: A quote of $1,100/MT CIF Dar es Salaam for jaggery means the goods arrive at Dar es Salaam port, and you handle clearance and local delivery from there.
EXW (Ex Works)
What it means: The seller makes the goods available at their factory or warehouse. The buyer handles everything from that point — including pickup, inland transport in India, export clearance, and shipping.
- What's included in the price:
- Product cost only
- What you pay separately:
- Everything: pickup, inland transport, export clearance, freight, insurance, import clearance
Best for: Very experienced importers or buyers with their own agents in India. Rarely used by first-time importers.
DDP (Delivered Duty Paid)
What it means: The seller handles absolutely everything — shipping, insurance, import clearance, and customs duties — delivering the goods to an agreed location in the buyer's country.
- What's included in the price:
- Everything: product cost, export clearance, freight, insurance, import duties, and delivery
- What you pay separately:
- Nothing (or just final-mile delivery to your warehouse)
Best for: First-time importers or buyers who want a completely hassle-free, door-to-door experience.
Example: A quote of $1,400/MT DDP Nairobi means the goods arrive at your specified address in Nairobi, with all duties and taxes paid.
How to Compare Quotes
When you receive quotes from different suppliers, make sure you're comparing the same Incoterm. A $900 FOB quote and a $1,100 CIF quote might actually have the same total cost once you add freight and insurance to the FOB price.
Here's a quick way to estimate:
| Cost Component | FOB | CIF | DDP |
|---|---|---|---|
| Product + inland transport to port | Included | Included | Included |
| Ocean freight | You pay | Included | Included |
| Marine insurance | You pay | Included | Included |
| Import duties & clearance | You pay | You pay | Included |
| Local delivery | You pay | You pay | Included |
Which Incoterm Should You Choose?
- New to importing? Start with CIF or DDP. You'll pay a bit more, but you'll avoid the complexity of arranging international logistics.
- Regular importer with a freight forwarder? FOB usually gives you the most control and often the best total cost.
- Need a completely hands-off experience? DDP is your best option, though it's typically the most expensive.
At Fast Scaling Trade, we quote in all four Incoterms. Tell us your preferred terms when you request a quote, and we'll give you a transparent breakdown of all costs involved.
