Incoterms 2020 for Indian Importers and Exporters

For most Indian handicraft shipments, the Incoterms you will actually see in a sales contract are EXW, FOB, CFR, CIF, DAP and DDP — and the difference between them is who pays for inland transport, ocean or air freight, insurance, customs clearance at each end, and who carries the risk of loss or damage at each leg. Pick the wrong term, and you can quietly absorb costs the buyer should be paying, or end up liable for damage that happened after the goods were legally “delivered.” Below is how these six terms behave in real Indian export and import workflows, and how to quote them cleanly.

What Incoterms 2020 actually do (and what they don’t)

Incoterms are a set of ICC rules that define three things only: who handles transport and clearance, who pays for each leg, and when risk passes from seller to buyer. They do not dictate who owns the goods, when payment is due, or what law governs the contract — those belong in the sale contract itself. For Indian traders, this matters because your IEC (issued by DGFT), your GST registration, your customs broker (CHA) work, and your EPCH membership all sit alongside the chosen Incoterm, not inside it.

A common mistake is to assume CIF or DDP “includes everything” — it doesn’t include unloading at destination (unless DPU is chosen and agreed), it doesn’t include import duty in the buyer’s country for DAP, and it never replaces your obligation to file the correct shipping bill on ICEGATE or the correct bill of entry on the Indian side.

The six terms Indian handicraft traders use most

EXW — Ex Works (your factory, warehouse, or workshop)

The seller makes the goods available at their own premises. The buyer takes responsibility for pickup, export clearance from India, main carriage, insurance, and import into the destination country. For a handicraft exporter in Moradabad, Jodhpur, Saharanpur or Jaipur, EXW means you hand over the goods at your gate — that’s it. The buyer arranges everything else. EXW places the maximum burden on the buyer, which is why European and US buyers sometimes prefer it, but Indian sellers should be cautious: under EXW the seller is technically not even responsible for loading the goods onto the buyer’s truck.

FOB — Free On Board (Indian port of shipment)

The seller delivers the goods on board the vessel (or aircraft) at the named Indian port — typically Nhava Sheva (JNPT), Mundra, Chennai, Cochin, or Kolkata for sea, or Delhi/Mumbai for air. The seller pays inland transport to the port, export clearance, and loading charges. The buyer pays ocean/air freight from the port of loading, insurance, and import clearance. FOB is by far the most common term in Indian handicraft export contracts because it cleanly splits responsibility at the ship’s rail.

CFR — Cost and Freight (destination port)

The seller pays freight up to the destination port, but the buyer arranges and pays for insurance and carries the risk from the moment the goods are loaded in India. CFR is less common than CIF for handicrafts, but it appears when the buyer has their own marine cargo policy they want to use.

CIF — Cost, Insurance and Freight (destination port)

The seller pays freight and minimum insurance (ICC “C” terms under Institute Cargo Clauses) up to the named destination port. Risk still passes at the Indian port of loading — not at destination — which is a point worth flagging in your sale contract for fragile goods. For brassware, wooden carvings, ceramics, marble, and glass handicrafts, “minimum cover” is rarely enough; many Indian exporters voluntarily take out “All Risk” (ICC “A”) cover even on a CIF quote and build the small premium into the price.

DAP — Delivered At Place (buyer’s named location)

The seller pays for everything up to the named place in the buyer’s country — typically the buyer’s warehouse or a bonded CFS — but the buyer handles import clearance and pays import duty/GST. For handicraft e-commerce and D2C buyers abroad, DAP is increasingly common because the buyer’s courier or 3PL handles the import paperwork, while the Indian exporter controls the experience up to the door.

DDP — Delivered Duty Paid (buyer’s door, duty cleared)

The seller pays everything, including destination import duty and taxes. DDP gives the buyer the most convenience but gives the Indian exporter the most exposure: you now need to register for VAT/GST in the buyer’s country (where required), and any change in destination duty rates becomes your problem.

India-specific mechanics that change your quote

A few Indian realities that sit on top of the Incoterm you choose:

• IEC from DGFT is mandatory for any export, regardless of Incoterm. No IEC, no shipping bill, no foreign remittance.
• Export clearance happens at ICEGATE — the seller is responsible for this under FOB, CFR, CIF, DAP, DDP, but not under EXW.
• GST on exports is zero-rated if you file a Letter of Undertaking (LUT) on the GST portal and claim refund of input tax credit. Confirm the current LUT procedure and refund timelines with the GST portal.
• RoDTEP and duty drawback (administered via ICEGATE) refund embedded duties; these belong to the seller in FOB/CFR/CIF, but should be contractually assigned in DDP/DAP where clearance is led by the buyer.
• EPCH (Export Promotion Council for Handicrafts) membership gives you a Registration-Cum-Membership Certificate (RCMC) used to claim these benefits.
• BIS standards apply to specific handicraft categories (toys, certain metalware) — verify current mandatory certification on the BIS portal before quoting DDP, since non-compliance can block the cargo at destination.
• Wood packaging (ISPM-15) must be heat-treated or fumigated and marked, whichever side owns the packing.

Worked example: $20,000 wooden craft shipment, Moradabad → Hamburg

Goods: hand-carved Sheesham furniture, FOB value USD 20,000, 4 pallets, 2.5 CBM, 1,200 kg.

The same goods quoted in five different ways can move the seller’s invoiced price by 8–25%. That is exactly why a fixed INR/USD assumption and a written internal rate card matters before you send a proforma.

A pre-quote checklist for Indian handicraft exporters

• Confirm the Incoterm and the named place in writing (port, airport, city, warehouse).
• Decide who files the Shipping Bill (ICEGATE) and the Bill of Entry at destination.
• For fragile craft, specify packing standards, ISPM-15 status, and insurance clause (ICC A vs C).
• Allocate RoDTEP, drawback, and GST refund between buyer and seller in the contract.
• If quoting DDP, confirm the destination country’s import duty rate and VAT/GST registration rules.
• Keep IEC, RCMC (EPCH), AD Code registration, and LUT copies ready with your CHA.

Cross-border demand for Indian handicrafts is now matched by a wider global ecosystem — GreenFlip India (greenflip.in) feeds into the broader GreenFlip network at greenflip.org, where overseas buyers and Indian sellers meet around these same Incoterm decisions every day.

Bottom line

Match the Incoterm to who actually has the operational muscle at each end: EXW for very experienced foreign buyers, FOB as the Indian default, CIF for buyers who want freight and a basic cover bundled, DAP for e-commerce-style drops to the buyer’s door, and DDP only when you are ready to own foreign customs and duty. Always pair the term you choose with a clear side-letter covering IEC/ICEGATE filings, GST LUT, RoDTEP, packing, and insurance — and verify current procedures with DGFT, CBIC, the GST portal, EPCH, or BIS whenever the shipment touches a regulated area.