Every Incoterm shifts cost and risk to a different point in the journey. Here's who pays for what, and who's holding the risk, at each stage — for the five terms Indian importers actually encounter.
| Incoterm | Supplier pays for | You pay for | Risk transfers to you at |
|---|---|---|---|
| EXW Ex Works |
Nothing beyond making goods available at their factory | Everything — export clearance, all freight, insurance, import duty | The factory gate |
| FOB Free On Board |
Export clearance, delivery to port, loading onto vessel | Sea freight, insurance, import duty & clearance | Once goods are loaded on the vessel |
| CFR Cost & Freight |
Export clearance, loading, sea freight to destination port | Insurance, import duty & clearance | Once goods are loaded on the vessel (freight paid by supplier, risk still transfers early) |
| CIF Cost, Insurance & Freight |
Export clearance, loading, sea freight, and insurance to destination port | Import duty & clearance only | Once goods are loaded on the vessel (insurance is supplier-arranged, often minimum coverage) |
| DDP Delivered Duty Paid |
Everything — freight, insurance, import duty, delivery to your door | Nothing — all-inclusive price | Your door (but you can't audit any individual cost line) |
FOB is generally the best default once you're past your first shipment or two — you control and can shop freight, and every cost is visible and auditable. EXW looks cheapest on paper but leaves you (or your agent) managing export clearance in China with no local visibility — usually not worth the saving. CIF is convenient for a first order if you want fewer moving parts, at the cost of an opaque, supplier-marked-up freight/insurance number. DDP is the most convenient and the least transparent — fine for a small trial order, but you're trusting the supplier's math on duty and freight with no way to check it.
Incoterms run roughly in order of how much the supplier handles: EXW (least) → FCA → FOB → CFR → CIF → DAP → DDP (most). The further right you go, the more convenient and the less visibility and control you have over individual cost lines. Full reasoning in our Complete Import guide and Logistics & Customs service.
We'll help you choose — and negotiate — the right Incoterm for your order size and experience level.
