Select the right Incoterms 2020 trade terms for your import-export shipments. Use the smart selection wizard or browse the cost-risk responsibility matrix. Free tool for Indian exporters.
Incoterm Selection
Select an ICC Incoterm to view standard cost and risk allocations, or use our smart selection wizard below.
Smart Selection Wizard
1. Who should control and pay for the main ocean/air freight?
2. Who should bear the risk and cost of destination customs clearance and import duties?
Custom Contract Advisory
Unsure about the risk transfer points for your sales contract? Submit your details to consult our EXIM advisors.
Incoterms Cost & Risk Matrix
Review the detailed allocation of costs and risks between seller and buyer according to ICC rules.
FOB
Free On Board - Risk transfers once goods are loaded on the vessel. Marine transport only.
Transfer of Risk Point:Loaded on board the vessel at the designated port of loading.
Transaction Element
Responsibility
Insurance Warning Alert
Under standard CIF and CIP terms, the seller is legally required to secure marine cargo insurance. For all other terms, insurance is optional but highly recommended to protect against cargo damage during transit.
What are Incoterms 2020?
Incoterms 2020 are international commercial terms published by the International Chamber of Commerce (ICC) that define buyer and seller responsibilities in trade contracts. They clarify who handles costs, risks, insurance, and customs clearance at each stage of shipping. For Indian exporters, choosing the right Incoterm is crucial for protecting margins and avoiding disputes.
Incoterms 2020 Quick Reference
Incoterm
Mode
Key Obligation
EXW
Any Mode
Buyer collects goods at seller's premises
FCA
Any Mode
Seller delivers to carrier nominated by buyer
FOB
Sea only
Seller loads goods on vessel, buyer handles freight
CIF
Sea only
Seller pays freight and insurance to destination
CPT
Any Mode
Seller pays carriage to destination
CIP
Any Mode
Seller pays carriage and comprehensive insurance
DAP
Any Mode
Seller delivers ready for unloading, buyer clears import
DDP
Any Mode
Seller manages all duties and delivery to buyer
Which Incoterm Should Indian Exporters Use?
FOB - Most Common for Indian Exporters
FOB (Free On Board) is the most widely used Incoterm for Indian exporters. The buyer controls international freight and insurance, and the seller's responsibility ends once goods are loaded on the vessel. This shifts freight costs and transit risks to the overseas buyer, protecting Indian exporters from rate fluctuations.
CIF - When Buyers Ask for Inclusive Pricing
CIF (Cost, Insurance and Freight) is preferred when the overseas buyer requests the seller to arrange shipping and insurance. The seller pays for freight and marine insurance but retains no risk once goods are on board. Use CIF carefully as you retain freight and insurance obligations.
EXW - Recommended When Buyer Has a Forwarder
EXW (Ex Works) places minimum obligation on the seller. The buyer collects goods at your factory or warehouse and manages all transport and customs. However, many international buyers avoid EXW because it burdens them with origin logistics.
Incoterms for Air Freight
For air freight shipments, use Incoterms designed for any mode of transport:
FCA (Free Carrier): Seller delivers to carrier at origin airport
CPT (Carriage Paid To): Seller pays air freight to destination
CIP (Carriage & Insurance Paid To): Seller pays freight and comprehensive insurance
DAP (Delivered at Place): Seller delivers to buyer's location
FOB and CIF are strictly for sea and inland waterway transport and should not be used for air freight.
Related Services & Tools for Indian Exporters
Streamline your export documentation with our comprehensive services and tools.
Incoterms 2020 are international commercial terms published by ICC (International Chamber of Commerce) that define buyer and seller responsibilities in trade contracts. They clarify who handles costs, risks, insurance, and customs clearance at each stage of shipping.
What is the difference between FOB and CIF?
FOB (Free On Board) means the seller delivers goods on board the vessel and the buyer handles freight and insurance. CIF (Cost, Insurance and Freight) means the seller pays for freight and insurance to the destination port. Both are for sea and inland waterway transport only.
Which Incoterm is best for Indian exporters?
FOB is most commonly used by Indian exporters as the buyer controls international freight and insurance. CIF is preferred when the buyer requests the seller to arrange shipping. EXW shifts all responsibility to the buyer but may make Indian goods less competitive if buyers avoid extra work.
What is EXW Incoterm?
EXW (Ex Works) places minimum obligation on the seller. The buyer collects goods at the seller's premises and manages all transport, export clearance, and costs. It is suitable when the buyer has a reliable freight forwarder.
What is the difference between DAP and DDP?
DAP (Delivered at Place) means the seller delivers goods ready for unloading at the destination, but the buyer handles import duties and clearance. DDP (Delivered Duty Paid) means the seller manages and pays for import duties, taxes, and clearance at the destination.
Which Incoterm is suitable for air freight?
For air freight, use Incoterms designed for any mode of transport: FCA (Free Carrier), CPT (Carriage Paid To), CIP (Carriage and Insurance Paid To), DAP (Delivered at Place), or DDP (Delivered Duty Paid). FOB and CIF are only for sea or inland waterway transport.
Who pays for insurance under CIF Incoterm?
Under CIF, the seller is required to purchase marine cargo insurance under Clause C (basic cover) of the Institute Cargo Clauses. Under CIP, the seller must purchase comprehensive insurance under Clause A. For other Incoterms, insurance is optional but recommended.
What Incoterm should I use for LCL shipments?
For LCL (Less than Container Load) shipments, FCA (Free Carrier) is recommended when the goods are handed to a carrier. FOB can be used when goods are loaded onto a vessel. For any-mode transport, use FCA, CPT, or CIP based on who arranges the main carriage.
