FOB vs CIF vs EXW — complete guide to Incoterms 2020 for Indian exporters with export costing examples
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FOB vs CIF vs EXW: Complete Guide to Incoterms 2020 for Indian Exporters

Buyers ask for FOB price, CIF price, EXW price — but what do these actually mean? This complete guide to Incoterms 2020 explains EXW, FOB, CIF, FCA, DAP, DDP and more with real export costing examples, a responsibility matrix, and practical tips for Indian exporters.

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October 1, 2026
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<article class="incoterms-blog">

<!-- =========================================
INTRODUCTION
========================================== -->

<h1>
FOB vs CIF vs EXW: Complete Guide to Incoterms 2020 for Indian Exporters
</h1>

<p>
If you are starting an export business from India, you will frequently hear terms
like <strong>EXW, FOB, CIF, CFR, FCA, DAP, and DDP.</strong>
</p>

<p>
But what do these terms actually mean?
</p>

<p>
A buyer may ask:
<strong>"Can you give your FOB price?"</strong>
Another buyer may say:
<strong>"Please quote CIF."</strong>
And sometimes a buyer may simply ask:
<strong>"What is your EXW price?"</strong>
</p>

<p>
These are <strong>Incoterms</strong> — and understanding them is essential for
export costing, international buyer communication, logistics, shipping, and
export pricing.
</p>

<div class="info-box">
<strong>Key Point:</strong>
Incoterms decide who is responsible for which costs, activities, and risks
during the delivery of goods.
</div>

<p>
The current ICC edition is <strong>Incoterms® 2020</strong>, which contains
<strong>11 trade rules</strong>. ICC divides them into rules for any mode of
transport and rules specifically for sea and inland waterway transport.
</p>


<!-- =========================================
WHAT ARE INCOTERMS
========================================== -->

<h2>What Are Incoterms in Export?</h2>

<p>
<strong>Incoterms = International Commercial Terms.</strong>
</p>

<p>
They are standardized three-letter rules published by the
<strong>International Chamber of Commerce (ICC)</strong>.
</p>

<p>They help buyers and sellers understand:</p>

<ul>
<li>Who arranges transportation?</li>
<li>Who pays freight?</li>
<li>Who handles export clearance?</li>
<li>Who handles import clearance?</li>
<li>Who arranges insurance?</li>
<li>Where does delivery take place?</li>
<li>When does the risk transfer from seller to buyer?</li>
</ul>


<!-- =========================================
PRICE EXAMPLE
========================================== -->

<h3>Example: How Incoterms Change the Export Price</h3>

<div class="table-wrapper">

<table class="incoterms-table">

<thead>
<tr>
<th>Incoterm</th>
<th>Price</th>
</tr>
</thead>

<tbody>

<tr>
<td>EXW Price</td>
<td class="price">₹4,00,000</td>
</tr>

<tr>
<td>FOB Price</td>
<td class="price">₹4,80,000</td>
</tr>

<tr>
<td>CIF Price</td>
<td class="price">₹5,45,000</td>
</tr>

</tbody>

</table>

</div>

<div class="info-box">
<strong>Important:</strong>
The product has not changed. The responsibilities and included costs have changed.
</div>


<!-- =========================================
ALL 11 INCOTERMS
========================================== -->

<h2>Incoterms 2020: All 11 Terms</h2>

<p>
The 11 Incoterms 2020 are divided into two groups.
</p>

<h3>Rules for Any Mode of Transport</h3>

<div class="table-wrapper">

<table class="incoterms-table">

<thead>
<tr>
<th>Incoterm</th>
<th>Full Form</th>
<th>Transport Mode</th>
</tr>
</thead>

<tbody>

<tr>
<td><strong>EXW</strong></td>
<td>Ex Works</td>
<td>Any Mode</td>
</tr>

<tr>
<td><strong>FCA</strong></td>
<td>Free Carrier</td>
<td>Any Mode</td>
</tr>

<tr>
<td><strong>CPT</strong></td>
<td>Carriage Paid To</td>
<td>Any Mode</td>
</tr>

<tr>
<td><strong>CIP</strong></td>
<td>Carriage and Insurance Paid To</td>
<td>Any Mode</td>
</tr>

<tr>
<td><strong>DAP</strong></td>
<td>Delivered at Place</td>
<td>Any Mode</td>
</tr>

<tr>
<td><strong>DPU</strong></td>
<td>Delivered at Place Unloaded</td>
<td>Any Mode</td>
</tr>

<tr>
<td><strong>DDP</strong></td>
<td>Delivered Duty Paid</td>
<td>Any Mode</td>
</tr>

</tbody>

</table>

</div>


<h3>Rules for Sea and Inland Waterway Transport</h3>

<div class="table-wrapper">

<table class="incoterms-table">

<thead>
<tr>
<th>Incoterm</th>
<th>Full Form</th>
<th>Transport Mode</th>
</tr>
</thead>

<tbody>

<tr>
<td><strong>FAS</strong></td>
<td>Free Alongside Ship</td>
<td>Sea / Inland Waterway</td>
</tr>

<tr>
<td><strong>FOB</strong></td>
<td>Free On Board</td>
<td>Sea / Inland Waterway</td>
</tr>

<tr>
<td><strong>CFR</strong></td>
<td>Cost and Freight</td>
<td>Sea / Inland Waterway</td>
</tr>

<tr>
<td><strong>CIF</strong></td>
<td>Cost, Insurance and Freight</td>
<td>Sea / Inland Waterway</td>
</tr>

</tbody>

</table>

</div>


<!-- =========================================
EXW
========================================== -->

<h2>EXW — Ex Works</h2>

<p>
Under EXW, the seller makes the goods available to the buyer at the agreed
location — such as the seller's factory or warehouse.
</p>

<p>
The seller generally does not have to load the goods onto the buyer's
collecting vehicle or clear them for export under the EXW rule.
</p>

<h3>Example</h3>

<p>
An Indian furniture manufacturer quotes:
</p>

<p>
<strong>EXW Jodhpur — ₹4,000 per chair</strong>
</p>

<div class="info-box">
<strong>EXW in simple words:</strong>
"Goods are ready at my premises. You take it from here."
</div>

<h3>Important Point for Indian Exporters</h3>

<p>
EXW may look simple because the seller has fewer delivery responsibilities.
However, international transactions can create practical issues around
export clearance and loading.
</p>


<!-- =========================================
FOB
========================================== -->

<h2>FOB — Free On Board</h2>

<p>
FOB is one of the most commonly used Incoterms for sea exports.
</p>

<p>
Under FOB, the seller delivers the goods on board the vessel nominated by
the buyer at the named port of shipment. The risk transfers to the buyer
when the goods are on board the vessel.
</p>

<h3>Example</h3>

<p>
<strong>FOB Nhava Sheva — USD 5,000</strong>
</p>

<div class="info-box">
<strong>FOB in simple words:</strong>
"I will get the goods loaded on the ship — after that, it is the buyer's responsibility."
</div>

<h3>Important</h3>

<p>
FOB is meant for sea or inland waterway transport where the goods are
delivered by being placed on board a vessel.
</p>


<!-- =========================================
CIF
========================================== -->

<h2>CIF — Cost, Insurance and Freight</h2>

<p>
Under CIF, the seller delivers the goods on board the vessel, pays the
freight to the named destination port, and arranges the insurance required
under the CIF rule.
</p>

<div class="info-box">
<strong>Important:</strong>
CIF does NOT mean the seller carries the risk until the goods reach the
destination port. Under CIF, risk transfers when the goods are delivered
on board the vessel at the port of shipment.
</div>

<h3>Example</h3>

<p>
<strong>CIF Melbourne — USD 8,000</strong>
</p>


<!-- =========================================
MAIN COMPARISON
========================================== -->

<h2>FOB vs CIF vs EXW: Quick Comparison</h2>

<div class="table-wrapper">

<table class="incoterms-table">

<thead>
<tr>
<th>Point</th>
<th>EXW</th>
<th>FOB</th>
<th>CIF</th>
</tr>
</thead>

<tbody>

<tr>
<td>Full Form</td>
<td>Ex Works</td>
<td>Free On Board</td>
<td>Cost, Insurance &amp; Freight</td>
</tr>

<tr>
<td>Transport Mode</td>
<td>Any</td>
<td>Sea / Inland Waterway</td>
<td>Sea / Inland Waterway</td>
</tr>

<tr>
<td>Seller Delivery Point</td>
<td>Named Place</td>
<td>On Board Vessel</td>
<td>On Board Vessel</td>
</tr>

<tr>
<td>Main Freight</td>
<td>Buyer</td>
<td>Buyer</td>
<td>Seller</td>
</tr>

<tr>
<td>Export Clearance</td>
<td>Buyer*</td>
<td>Seller</td>
<td>Seller</td>
</tr>

<tr>
<td>Insurance</td>
<td>Buyer</td>
<td>Buyer</td>
<td>Seller</td>
</tr>

<tr>
<td>Import Clearance</td>
<td>Buyer</td>
<td>Buyer</td>
<td>Buyer</td>
</tr>

<tr>
<td>Risk Transfer</td>
<td>Agreed EXW Delivery Point</td>
<td>On Board Vessel</td>
<td>On Board Vessel</td>
</tr>

<tr>
<td>Destination Freight Included?</td>
<td>No</td>
<td>No</td>
<td>Yes</td>
</tr>

</tbody>

</table>

</div>


<!-- =========================================
RESPONSIBILITY MATRIX
========================================== -->

<h2>Incoterms Responsibility Matrix</h2>

<div class="table-wrapper">

<table class="incoterms-table">

<thead>
<tr>
<th>Responsibility</th>
<th>EXW</th>
<th>FOB</th>
<th>CIF</th>
</tr>
</thead>

<tbody>

<tr>
<td>Product Manufacturing</td>
<td>Seller</td>
<td>Seller</td>
<td>Seller</td>
</tr>

<tr>
<td>Product Packaging</td>
<td>Seller</td>
<td>Seller</td>
<td>Seller</td>
</tr>

<tr>
<td>Loading at Seller's Premises</td>
<td>Buyer</td>
<td>Seller</td>
<td>Seller</td>
</tr>

<tr>
<td>Export Clearance</td>
<td>Buyer*</td>
<td>Seller</td>
<td>Seller</td>
</tr>

<tr>
<td>Inland Transport to Port</td>
<td>Buyer</td>
<td>Seller</td>
<td>Seller</td>
</tr>

<tr>
<td>Main Ocean Freight</td>
<td>Buyer</td>
<td>Buyer</td>
<td>Seller</td>
</tr>

<tr>
<td>Required Insurance</td>
<td>Buyer</td>
<td>Buyer</td>
<td>Seller</td>
</tr>

<tr>
<td>Delivery on Board Vessel</td>
<td>Buyer</td>
<td>Seller</td>
<td>Seller</td>
</tr>

<tr>
<td>Import Clearance</td>
<td>Buyer</td>
<td>Buyer</td>
<td>Buyer</td>
</tr>

<tr>
<td>Import Duties / Taxes</td>
<td>Buyer</td>
<td>Buyer</td>
<td>Buyer</td>
</tr>

<tr>
<td>Risk Transfer</td>
<td>EXW Delivery Point</td>
<td>On Board Vessel</td>
<td>On Board Vessel</td>
</tr>

</tbody>

</table>

</div>


<!-- =========================================
COSTING
========================================== -->

<h2>Real Export Costing Example</h2>

<p>
Suppose an Indian exporter receives an order for
<strong>100 wooden chairs.</strong>
</p>

<div class="table-wrapper">

<table class="incoterms-table">

<thead>
<tr>
<th>Cost Component</th>
<th>Amount</th>
</tr>
</thead>

<tbody>

<tr>
<td>Product Cost (100 × ₹4,000)</td>
<td>₹4,00,000</td>
</tr>

<tr>
<td>Export Packaging</td>
<td>₹20,000</td>
</tr>

<tr>
<td>Inland Transportation</td>
<td>₹25,000</td>
</tr>

<tr>
<td>Export Clearance Costs</td>
<td>₹15,000</td>
</tr>

<tr>
<td>Applicable Port / Handling Costs</td>
<td>₹20,000</td>
</tr>

<tr>
<td>Ocean Freight</td>
<td>₹60,000</td>
</tr>

<tr>
<td>Insurance</td>
<td>₹5,000</td>
</tr>

</tbody>

</table>

</div>


<h3>Final Export Price Calculation</h3>

<div class="table-wrapper">

<table class="incoterms-table">

<thead>
<tr>
<th>Incoterm</th>
<th>Calculation</th>
<th>Final Price</th>
</tr>
</thead>

<tbody>

<tr>
<td><strong>EXW</strong></td>
<td>Product Cost</td>
<td class="price">₹4,00,000</td>
</tr>

<tr>
<td><strong>FOB</strong></td>
<td>
₹4,00,000 + ₹20,000 + ₹25,000 + ₹15,000 + ₹20,000
</td>
<td class="price">₹4,80,000</td>
</tr>

<tr>
<td><strong>CIF</strong></td>
<td>
₹4,80,000 + ₹60,000 + ₹5,000
</td>
<td class="price">₹5,45,000</td>
</tr>

</tbody>

</table>

</div>

<div class="info-box">
<strong>Key Takeaway:</strong>
The same product has different export prices because different Incoterms
include different costs and responsibilities.
</div>


<!-- =========================================
FOB VS CIF
========================================== -->

<h2>FOB vs CIF: What Is the Main Difference?</h2>

<div class="table-wrapper">

<table class="incoterms-table">

<thead>
<tr>
<th>Feature</th>
<th>FOB</th>
<th>CIF</th>
</tr>
</thead>

<tbody>

<tr>
<td>Goods Delivered</td>
<td>On Board Vessel</td>
<td>On Board Vessel</td>
</tr>

<tr>
<td>Main Ocean Freight</td>
<td>Buyer</td>
<td>Seller</td>
</tr>

<tr>
<td>Insurance</td>
<td>Buyer</td>
<td>Seller</td>
</tr>

<tr>
<td>Risk Transfer</td>
<td>On Board Vessel</td>
<td>On Board Vessel</td>
</tr>

</tbody>

</table>

</div>


<!-- =========================================
EXW VS FOB
========================================== -->

<h2>EXW vs FOB: What Is the Difference?</h2>

<div class="table-wrapper">

<table class="incoterms-table">

<thead>
<tr>
<th>Feature</th>
<th>EXW</th>
<th>FOB</th>
</tr>
</thead>

<tbody>

<tr>
<td>Seller Delivery Point</td>
<td>Agreed Seller Location</td>
<td>On Board Vessel</td>
</tr>

<tr>
<td>Seller Responsibility</td>
<td>Lower</td>
<td>Higher</td>
</tr>

<tr>
<td>Transport Mode</td>
<td>Any Mode</td>
<td>Sea / Inland Waterway</td>
</tr>

<tr>
<td>Main Freight</td>
<td>Buyer</td>
<td>Buyer</td>
</tr>

</tbody>

</table>

</div>


<!-- =========================================
CFR VS CIF
========================================== -->

<h2>CFR vs CIF</h2>

<div class="table-wrapper">

<table class="incoterms-table">

<thead>
<tr>
<th>Feature</th>
<th>CFR</th>
<th>CIF</th>
</tr>
</thead>

<tbody>

<tr>
<td>Full Form</td>
<td>Cost and Freight</td>
<td>Cost, Insurance and Freight</td>
</tr>

<tr>
<td>Main Freight</td>
<td>Seller</td>
<td>Seller</td>
</tr>

<tr>
<td>Required Insurance</td>
<td>Buyer</td>
<td>Seller</td>
</tr>

<tr>
<td>Risk Transfer</td>
<td>On Board Vessel</td>
<td>On Board Vessel</td>
</tr>

</tbody>

</table>

</div>


<!-- =========================================
DAP VS DDP
========================================== -->

<h2>DAP vs DDP</h2>

<div class="table-wrapper">

<table class="incoterms-table">

<thead>
<tr>
<th>Feature</th>
<th>DAP</th>
<th>DDP</th>
</tr>
</thead>

<tbody>

<tr>
<td>Delivery</td>
<td>Named Destination, Ready for Unloading</td>
<td>Named Destination, Duty Paid</td>
</tr>

<tr>
<td>Import Clearance</td>
<td>Buyer</td>
<td>Seller</td>
</tr>

<tr>
<td>Import Duties / Taxes</td>
<td>Buyer</td>
<td>Seller</td>
</tr>

<tr>
<td>Seller Obligation</td>
<td>High</td>
<td>Maximum</td>
</tr>

</tbody>

</table>

</div>


<!-- =========================================
PAYMENT TERMS
========================================== -->

<h2>Incoterms vs Payment Terms</h2>

<div class="table-wrapper">

<table class="incoterms-table">

<thead>
<tr>
<th>Category</th>
<th>Examples</th>
<th>What It Defines</th>
</tr>
</thead>

<tbody>

<tr>
<td>Incoterms</td>
<td>FOB, CIF, EXW</td>
<td>Delivery responsibilities, costs and risk</td>
</tr>

<tr>
<td>Payment Terms</td>
<td>Advance Payment, LC, Open Account</td>
<td>How and when payment is made</td>
</tr>

</tbody>

</table>

</div>


<!-- =========================================
HOW TO CHOOSE
========================================== -->

<h2>How to Choose the Right Incoterm</h2>

<p>Before preparing your export quotation, ask:</p>

<ol>
<li>What is the transport mode?</li>
<li>Where will I deliver the goods?</li>
<li>Who will arrange the main freight?</li>
<li>Who will arrange insurance?</li>
<li>Who handles export clearance and import clearance?</li>
<li>What costs must I include?</li>
<li>When does risk transfer?</li>
<li>What does my buyer require?</li>
<li>Have I mentioned the named place/port clearly?</li>
</ol>


<!-- =========================================
CONCLUSION
========================================== -->

<h2>Conclusion</h2>

<p>
Understanding <strong>Incoterms 2020</strong> is essential for anyone starting
an export business or entering international trade.
</p>

<div class="table-wrapper">

<table class="incoterms-table">

<thead>
<tr>
<th>Incoterm</th>
<th>Simple Meaning</th>
</tr>
</thead>

<tbody>

<tr>
<td><strong>EXW</strong></td>
<td>
Goods available at the agreed seller location.
</td>
</tr>

<tr>
<td><strong>FOB</strong></td>
<td>
Seller delivers goods on board the vessel; buyer arranges main freight.
</td>
</tr>

<tr>
<td><strong>CIF</strong></td>
<td>
Seller delivers goods on board, pays main freight, and arranges
required insurance.
</td>
</tr>

</tbody>

</table>

</div>

<div class="info-box">
<strong>
Understand the responsibilities → Calculate the costs →
Check the transport mode → Understand the risk transfer → Then quote.
</strong>
</div>

<p class="source-note">
<strong>Source:</strong> International Chamber of Commerce (ICC), Incoterms® 2020.
</p>


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#Incoterms 2020#FOB meaning export#CIF meaning export#EXW meaning export#FOB vs CIF#export costing India#Incoterms for Indian exporters#FCA export#DAP DDP export#GIFT export training

Frequently Asked Questions

What is the difference between FOB, CIF, and EXW in export?

EXW means the seller makes goods available at their premises — the buyer handles everything after that. FOB means the seller delivers goods on board the vessel at the named port — the buyer arranges the main freight. CIF means the seller delivers goods on board, pays the main freight, and arranges the required insurance to the named destination port.

Does CIF mean the seller bears the risk until the goods reach the destination port?

No. Under CIF, risk transfers when the goods are delivered on board the vessel at the port of shipment — not at the destination. The seller pays freight and required insurance but does not carry the risk all the way to the destination.

Is FOB suitable for air shipments or containerized exports?

No. FOB is specifically a sea and inland-waterway Incoterm. For air shipments or containerized/multimodal exports where goods are handed over to a carrier at a terminal, FCA (Free Carrier) is generally more appropriate — as recommended by the ICC.

What should I include in my export quotation when using Incoterms?

Always mention the price, the Incoterm, the named place or port, and the Incoterms version. For example: USD 5,000 — FOB Nhava Sheva — Incoterms® 2020. Never quote a price without clearly specifying the Incoterm — the same product can have very different prices depending on which term is used.

Are Incoterms the same as payment terms in export?

No. Incoterms define delivery responsibilities, costs, and risk transfer between buyer and seller. Payment terms — such as advance payment, Letter of Credit, or open account — are separate contractual matters. For example: FOB Nhava Sheva + 30% advance + 70% against documents combines both delivery and payment terms in one transaction.

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