Incoterms® 2020, made visual. Who pays, and who carries the risk.
Pick any of the 11 Incoterms rules, from EXW to DDP, and see step by step who pays for packing, freight, insurance, clearance and delivery, and exactly where the risk passes from seller to buyer. Every rule has a practical tip for Indian importers and exporters.
Three things every Incoterm decides.
The 11 rules in two families
EXW, FCA, CPT, CIP, DAP, DPU and DDP work for air, road, rail, sea and multimodal moves, including containers. FCA, CPT and CIP are the right choice for most containerised and air cargo.
FAS, FOB, CFR and CIF are built around a ship’s rail. They suit bulk and breakbulk cargo. With containers, the box is handed over at a terminal days before loading, so FCA, CPT or CIP fit better.
DAT became DPU, CIP now needs all-risks cover (Institute Cargo Clauses A), FCA can require an on-board bill of lading, and sellers and buyers may use their own transport under FCA, DAP, DPU and DDP.
India charges import duty on the CIF value. On FOB or EXW imports, actual freight and insurance are added. If they are not known, customs adds 20% of FOB for freight and 1.125% of FOB for insurance.
Questions people ask
What are Incoterms?+
Incoterms® are trade rules published by the International Chamber of Commerce. A three-letter code such as FOB or DAP in your sales contract decides who pays for each part of the journey, who handles customs, and when the risk of loss passes from seller to buyer.
Which Incoterm is best for exporters from India?+
For containers and air cargo, FCA or CPT/CIP usually work best: you clear the goods for export, keep control of your shipping bill for GST refunds, RoDTEP and drawback, and hand over at a clear point. Avoid EXW for exports.
What is the difference between FOB and FCA?+
Under FOB the risk passes when the goods are on board the ship, which suits bulk cargo. Under FCA it passes when the goods are handed to the buyer’s carrier, for example at a CFS or ICD, which is what really happens with containers and air cargo.
Do Incoterms decide when ownership passes?+
No. Incoterms cover costs, risk and customs duties. Transfer of ownership, payment terms and the price are agreed separately in the sales contract and the letter of credit.
Does CIF give the buyer full insurance?+
Not necessarily. CIF only requires minimum cover, Institute Cargo Clauses (C). Buyers who want all-risks cover should ask for it in the contract or buy extra cover. CIP requires all-risks cover.
Can YAM ship on any Incoterm?+
Yes. We handle export and import clearance, freight, insurance and delivery, so we can quote and manage any of the 11 rules, door to door. WhatsApp us your terms and cargo details.