What Are Incoterms?
Incoterms (International Commercial Terms) are standard trade terms published by the ICC. They define the division of responsibility between buyer and seller for transport, insurance, customs clearance, and risk transfer.
Why Incoterms Matter When Importing from India
Choosing the wrong Incoterm can result in:
- Unexpected freight or insurance costs
- Risk transferring earlier than expected
- Loss of control over logistics
- Disputes during damage or delay
Most Common Incoterms Used in Indian Exports
EXW – Ex Works
Seller makes goods available at their factory. Buyer handles everything from pickup onward. Often risky for first-time importers due to limited control and unclear loading responsibility.
FOB – Free On Board
Seller delivers goods onboard the vessel at the port of loading. Risk transfers once cargo is loaded. FOB offers good balance and is widely used in India.
CFR – Cost and Freight
Seller pays ocean freight, but risk transfers at port of loading. Insurance is buyer’s responsibility.
CIF – Cost, Insurance & Freight
Seller pays freight and minimum insurance. Convenient, but buyers should verify insurance coverage carefully.
FOB vs CIF: What Buyers Often Miss
CIF may look simpler, but buyers lose visibility over freight pricing and insurance terms. FOB allows buyers to:
- Choose their own forwarder
- Control insurance coverage
- Maintain shipment visibility
Which Incoterm Should You Choose?
As a rule of thumb:
- First-time importers: FOB or CIF (with checks)
- Regular importers: FOB with nominated forwarder
- Large projects: CFR + buyer-arranged insurance
Common Incoterm Mistakes Buyers Make
- Assuming CIF means “risk-free”
- Using EXW without local handling support
- Not defining port clearly in contracts
- Mixing Incoterms across documents
Conclusion
Incoterms are not just commercial terms—they define risk. When importing from India, the right Incoterm improves cost control, reduces disputes, and creates predictable shipments.
Need help choosing the right Incoterm?
Proficuous Exports helps buyers select the right Incoterm, coordinate suppliers, align documentation, and manage export execution end-to-end.
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