DDP, DAP, FOB, CIF for Indian exporters – UNI Traans Log Pvt. Ltd.

DDP, DAP, FOB, CIF: which Incoterm should an Indian exporter actually use?

FOB suits exporters who want the buyer to control the main leg. CIF suits buyers who want a single landed price to the port. DAP means you deliver to the buyer’s address but they pay import duty. DDP means you deliver and pay the duty too.

The right choice depends on how much control you want and how much risk you are willing to carry. An Incoterm is a three letter rule that answers three questions: who arranges transport, who pays for what, and at exactly which point risk passes from seller to buyer. Incoterms 2020 is the current set.

The four terms Indian exporters use most

FOB (Free On Board)

You deliver the goods on board the vessel at the Indian port. From that moment the cargo is the buyer’s problem. You pay for: inland transport, export clearance, terminal handling at origin. The buyer pays for: ocean freight, insurance, destination charges, import duty. FOB is the most common term for Indian exports. Buyers often insist on it because they have their own freight contracts and want to use them.

CIF (Cost, Insurance and Freight)

You arrange and pay for ocean freight and insurance to the destination port. Risk still transfers when the goods are loaded in India, which surprises people. CIF gives your buyer a single number to the port. It also lets you use your own forwarder, which means you keep visibility over the shipment. Note that CIF and FOB apply only to sea and inland waterway transport. For air freight, the equivalents are FCA and CIP.

DAP (Delivered At Place)

You deliver to a named address in the buyer’s country. You pay everything up to that point except import duty and taxes, which the buyer clears and pays. DAP works well when your buyer is an established importer with their own customs broker.

DDP (Delivered Duty Paid)

You deliver to the buyer’s address and pay import duty and taxes as well. It is the maximum obligation term. The buyer does nothing but receive the goods. DDP is standard for Amazon FBA shipments, because Amazon will not act as importer of record.

How to actually choose

Choose FOB if your buyer has strong freight rates and wants control, or if you are new to exporting and want the simplest possible obligation.

Choose CIF if you want to keep control of the shipment and quote your buyer one clean number to their port. You also keep the relationship with the forwarder, which matters more than most exporters realise.

Choose DAP when you are delivering to a door but your buyer has a customs broker and knows their own duty position.

Choose DDP for ecommerce, samples, and any situation where the receiver cannot or will not handle customs.

Price it carefully, because you are absorbing duty in a country whose tariff rules you may not follow closely.

The mistakes that cost money

Quoting DDP without checking the duty rate. You are agreeing to pay a cost you have not calculated. Classify the product properly before you quote.

Assuming CIF means you carry risk to the destination. It does not. Risk passes at loading. If the vessel has a problem mid-ocean, that is the buyer’s insurance claim, not yours.

Using FOB or CIF for air shipments. These terms are written for sea freight. For air, use FCA and CIP.

Agreeing a term verbally. The Incoterm should be in the contract, the purchase order and the invoice, with the named place spelled out. “DAP Hamburg” and “DAP buyer’s warehouse, Hamburg” are different obligations.

Frequently asked questions

What is the main difference between DAP and DDP?
Import duty. Under DAP the buyer clears and pays. Under DDP the seller does both.

Which Incoterm is best for a first-time Indian exporter?
FOB, usually. Your obligation ends at the Indian port, which limits the number of unfamiliar things that can go wrong.

Can I change the Incoterm after the order is placed?
Only by agreement with the buyer, and it should be documented. Changing terms mid-shipment causes disputes over who pays what.

Does CIF insurance cover me?
CIF requires only minimum cover, and the policy benefits the buyer. If you want protection for your own exposure, arrange it separately.

Which Incoterm does Amazon FBA need?
DDP. Amazon does not act as importer of record, so duty has to be handled by you or your freight partner.