Incoterms in plain English
Incoterms allocate cost, risk and responsibility between buyer and seller. Choosing carelessly is how an apparently profitable export order turns into a loss discovered three months later.
EXW — Ex Works
The buyer collects from your door and handles everything after that, including export clearance in your own country.
Attractive on paper for a seller. In practice, export clearance requires an Indian entity, so a foreign buyer usually cannot actually perform it, and EXW quietly becomes FOB with worse paperwork.
FOB — Free On Board
You deliver the goods cleared for export and loaded at the named Indian port. Risk transfers there; the buyer arranges and pays for the main carriage.
The most common structure for Indian exports and usually the right default for a first-time exporter. Your obligations end at a place you can control.
FOB is where most Indian export relationships should start.
CIF — Cost, Insurance and Freight
You additionally pay for freight and insurance to the destination port. Note the asymmetry: you pay for carriage, but risk still transfers at the origin port.
Buyers like CIF because it gives them one number. Sellers should price the freight generously, because a rate quoted in January and shipped in October may have moved a long way.
DDP — Delivered Duty Paid
You deliver to the buyer’s door with all duties and taxes settled. Maximum obligation for the seller and maximum convenience for the buyer.
Only offer DDP when you genuinely understand the destination’s duty and tax treatment of your product. A classification error you have agreed to absorb is your loss, not theirs.
The practical rule
Take responsibility for the parts of the journey you can influence, and hand over the parts you cannot. For most Indian exporters that boundary is the port of loading.
Move up to CIF or DDP once you have shipped the lane enough times to price its risks accurately.
In short
- EXW rarely works because foreign buyers cannot clear Indian exports.
- FOB is the sensible default for a first export order.
- Under CIF you pay freight but risk transfers at origin.
- Only offer DDP on lanes whose duty treatment you know cold.
Put this to use
A free Indian address takes under a minute and costs nothing until something ships.