The Complete Guide to Incoterms 2020 for Indian Exporters

Incoterms (International Commercial Terms) define the rules of the road for global trade. They specify who is responsible for the cost, who carries the risk, and who handles the documentation at every stage. For an Indian exporter, choosing the right term is the difference between a profitable deal and a financial disaster.

The most common terms used in India

FOB (Free On Board) The exporter's responsibility ends once the goods are loaded onto the vessel at the port of origin. This is common because it allows the buyer to control the freight and insurance, which is often preferred by large international buyers.

CIF (Cost, Insurance, and Freight) The exporter pays for the freight and insurance to the port of destination. This gives the exporter more control over the logistics chain and allows them to build a margin into the freight service.

DDP (Delivered Duty Paid) The exporter handles everything — including customs clearance and duties at the destination. This is high-risk for the exporter but is increasingly requested by e-commerce buyers who want a "seamless" delivery experience.

The insurance trap

A common mistake is assuming that "Cost and Freight" (CFR) includes insurance. it does not. If the ship encounters trouble mid-ocean under CFR terms, and the buyer has not secured their own insurance, the loss falls entirely on the buyer — but the exporter often faces the practical reality of an unpaid invoice for lost goods.

Key Takeaways

1. Incoterms define the 'handover point' for cost, risk, and documentation — they are not the same thing as the contract of sale.

2. CIF includes insurance; CFR does not. This distinction is the most common cause of uninsured cargo losses in Indian exports.

3. DDP is the highest-risk term for exporters — never agree to it without a local partner who can handle destination customs.

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