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Incoterms 2020 Guide with Indian Customs Notes
Pick a term to see who pays for each step, where the risk passes, and what it means for Indian customs: the assessable value on imports and the FOB value on exports.
FOB · Free On Board
Sea and inland waterway onlyInsurance is not compulsory for either side under this term; the buyer usually arranges it because the risk is theirs.
⚠️ Risk passes to the buyer
When the goods are loaded on board the ship at the port of loading.
🇮🇳 Importing into India on FOB
Add freight and insurance (actual, or 20% and 1.125% of FOB) to reach the assessable value.
🚢 Exporting from India on FOB
The invoice value is the FOB value used for RoDTEP, drawback and export realisation.
All 11 terms at a glance
| Term | Load | Export | To port | On board | Freight | Insure | Unload | Import | Deliver |
|---|---|---|---|---|---|---|---|---|---|
| EXW | |||||||||
| FCA | |||||||||
| FAS | |||||||||
| FOB | |||||||||
| CFR | |||||||||
| CIF | |||||||||
| CPT | |||||||||
| CIP | |||||||||
| DAP | |||||||||
| DPU | |||||||||
| DDP |
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Frequently asked questions
▸What are Incoterms?
Incoterms are standard trade terms published by the International Chamber of Commerce (ICC). Each three-letter term, such as FOB or CIF, sets out who pays for each part of the journey, who handles customs, and where the risk passes from seller to buyer. The current version is Incoterms 2020.
▸How do Incoterms affect import duty in India?
Indian customs duty is charged on the CIF value. If you buy on EXW, FCA or FOB, freight and insurance are added to the invoice value; on CFR, insurance is added. If actual amounts are not known, freight is taken as 20% of FOB and insurance as 1.125% of FOB.
▸Why does FOB value matter for exporters?
The Shipping Bill declares the FOB value, and RoDTEP, duty drawback and other benefits are worked out on it. If you sell on CIF, CFR or delivered terms, deduct freight and insurance to arrive at FOB.
▸What is the difference between FOB and FCA?
Under FOB, risk passes when the goods are on board the ship, which suits bulk cargo. Under FCA, risk passes when the goods are handed to the buyer's carrier, for example at a container freight station. The ICC recommends FCA for containerised cargo.
More free tools
Free tools give indicative results for planning only, not legal advice. Rates and rules change with Budgets and notifications; confirm for your exact product with your customs broker or the official notification before filing.