If you are buying safety pins from India for the first time, you may get three quotations on three different terms: one FOB, one CIF and one DDP. The prices will look very different, but they do not cover the same costs, so the cheapest-looking quotation is not always the cheapest once the goods reach your warehouse. This guide explains what each term means under the Incoterms 2020 rules of the International Chamber of Commerce (ICC): who pays for freight, insurance and import duty, and where the risk passes to you. A worked example then puts all three quotations on the same basis.
This guide is general information about the Incoterms 2020 rules, not legal or customs advice. Every figure in the worked example is an EXAMPLE for illustration only. None of them is a Suvik Overseas price, a freight quotation or a duty ruling. Agree the exact term, the named place and the Incoterms version in your contract, and check costs with your freight forwarder and customs broker.
Quick answer
FOB (Free On Board), named port of shipment: the supplier pays to get the goods loaded on the ship in India. You book and pay the ocean freight, the insurance, the import clearance, the duty and the delivery to your door. Risk passes to you once the goods are on board.
CIF (Cost, Insurance and Freight), named port of destination: the supplier also pays the ocean freight and buys minimum cargo insurance to your port. Risk still passes to you when the goods are loaded in India, and import duty and destination costs are still yours.
DDP (Delivered Duty Paid), named place of destination: the supplier delivers to the agreed place in your country, with import clearance done and import duty paid. You pay the least on top of the quotation, but the quoted price is higher because it includes those costs.
To compare quotations fairly, add your own costs to each one until all three reach the same point (your warehouse, duty paid), then compare the totals.
For containers and air freight, the ICC points to FCA, CPT or CIP rather than FOB or CIF. FOB and CIF are meant for sea and inland waterway transport.
What Incoterms are, and why the version matters
Incoterms are 11 standard trade terms published by the ICC. Each three-letter code says who pays for each part of the journey, who handles customs clearance, and where the risk passes from seller to buyer. The current edition is Incoterms 2020. The rules group the 11 terms into seven for any mode of transport (EXW, FCA, CPT, CIP, DAP, DPU and DDP) and four for sea and inland waterway transport only (FAS, FOB, CFR and CIF).
An Incoterm only works when it is written in full: the code, the named place, and the version. For example, "FOB Kolkata Port, India, Incoterms 2020" or "CIF Felixstowe, Incoterms 2020". Older versions can still be used if both parties agree, so naming the version avoids arguments later.
Incoterms do not set the price, the payment terms or what happens in a quality dispute. Those belong in the rest of the contract. See our guide to safety pin import payment terms.
FOB: Free On Board (named port of shipment)
Under FOB, the seller delivers the goods loaded on board the vessel you nominate at the named port of shipment in India. The seller handles transport from the factory to the port, the loading and the export clearance. At that point the risk of loss or damage passes to you.
From there, you are responsible for:
booking and paying the ocean freight (usually through your own freight forwarder);
cargo insurance, if you want it (FOB does not require anyone to insure the goods);
unloading and destination port charges;
import clearance, import duty and import taxes such as VAT;
delivery from the port to your warehouse.
When FOB suits you. FOB works well if you already have a forwarder and good freight rates. You control the booking and the insurance. The catch for first-time importers: an FOB price can look low simply because the freight is not in it.
CIF: Cost, Insurance and Freight (named port of destination)
Under CIF, the seller arranges and pays for the sea freight to the named port of destination and buys cargo insurance for you. The important point is that the risk still passes to you when the goods are loaded on board in India, not when they arrive. If the goods are damaged at sea, it is your loss, and you claim on the insurance the seller bought.
Three things to know about CIF:
It is only for sea and inland waterway transport. The ICC states that CIF is for port-to-port shipments by sea or inland waterway. It is not meant for air freight or for road or rail.
The insurance is minimum cover. Under Incoterms 2020, the seller must insure the goods on terms that comply with Institute Cargo Clauses (C), often called minimum cover. The cover must be at least the contract price plus 10%, which is 110% of the contract price. For wider cover, agree it in the contract or buy your own top-up policy.
CIF does not include your import costs. Import clearance, import duty, import VAT, destination port and terminal charges (unless the seller's freight contract covers them) and delivery to your warehouse are all for your account.
When CIF suits you. CIF is convenient if you have no forwarder yet and want one price to your port. Ask your local agent what the destination charges will be.
DDP: Delivered Duty Paid (named place of destination)
DDP puts the most responsibility on the seller. The seller delivers the goods to the named place in your country, for example your warehouse, ready for unloading. The seller arranges the transport, the export clearance, the import clearance, and pays the import duty and taxes. You are usually responsible only for unloading, unless the seller's transport contract includes it.
When DDP suits you. It is the simplest option for a first order: one price to your door.
What to check with DDP:
The duty is built into the price. If the import duty is high, the DDP price will be high too. For example, for steel safety pins entering the United States, the official US tariff on 3 November 2026 showed 4.5% general duty plus a 50% Section 232 steel duty. A DDP price to the US has to cover that. See our guide to import duty on safety pins in the US, UK, EU and UAE for the rates by market.
Ask what "duty paid" includes. Confirm in writing whether import VAT or GST is included, and whether the delivered price covers broker fees and final delivery.
Tariff changes. If duty rates change before import, agree who absorbs the difference.
Some countries make DDP hard. The ICC notes that in some countries foreign sellers cannot carry out import customs and tax formalities, and that elsewhere it can be difficult and costly. That is why many exporters prefer DAP (Delivered at Place), where the seller delivers to your door but you handle import clearance and duty.
The other terms you may see: EXW, FCA and CIP
EXW (Ex Works): the seller makes the goods available at its premises and the buyer does everything else, including export clearance in India. The ICC describes it as minimal responsibility for the seller. For an overseas buyer, FCA is often more practical.
FCA (Free Carrier): the seller hands the goods, cleared for export, to your carrier at a named place, such as a container terminal. The ICC notes that FCA suits containerised goods better than FOB, because a container can wait at the terminal for days before loading.
CIP (Carriage and Insurance Paid To): like CIF, but it works for any mode of transport, including air and multimodal container shipments. Risk passes when the goods are handed to the first carrier. CIP requires a higher level of insurance than CIF: cover in line with Institute Cargo Clauses (A), at least 110% of the contract price.
Worked comparison: three quotations on one basis
Here is how to compare quotations on different terms. All figures are EXAMPLE figures in US dollars for illustration only. They are not Suvik Overseas prices or freight rates. The import duty uses an EXAMPLE rate of 5% charged on a value that includes freight and insurance (the way the UK, the EU and the UAE value goods). Your real rate and value basis depend on your country and product; the US, for example, charges duty on a value close to FOB.
Assume one sea shipment of the same safety pins, and three quotations:
Quotation A: FOB Kolkata, US$10,000.
Quotation B: CIF your destination port, US$10,700.
Quotation C: DDP your warehouse, US$12,600 (confirmed to include import duty and broker fees; import VAT excluded).
Step 1: add what each quotation leaves out (EXAMPLE figures).
Quotation A, FOB Kolkata:
Goods, FOB: 10,000
Ocean freight booked by your forwarder: 800
Cargo insurance you buy: 30
Destination port and terminal charges: 350
Customs broker fee: 150
Delivery from port to warehouse: 300
Import duty at 5% of the value including freight and insurance (5% of 10,830): 541.50
Total to your warehouse, duty paid, before VAT: 12,171.50
Quotation B, CIF destination port:
Goods, freight and insurance, CIF: 10,700
Destination port and terminal charges: 350
Customs broker fee: 150
Delivery from port to warehouse: 300
Import duty at 5% of 10,700: 535
Total to your warehouse, duty paid, before VAT: 12,035
Quotation C, DDP warehouse:
Delivered price including duty and broker fees: 12,600
Unloading: 0 (in this example the carrier's contract includes it)
Total to your warehouse, duty paid, before VAT: 12,600
Step 2: compare the totals, not the headline prices. The FOB quotation looked cheapest at 10,000, but it comes to 12,171.50 once you add your own freight, insurance and import costs. In this example the CIF quotation ends up slightly cheaper at 12,035, and the DDP quotation is the most expensive at 12,600. You pay the extra 565 or so (compared with CIF) for having one supplier handle everything. Different freight or duty figures can change the order, so run your own.
Step 3: compare the risk and insurance too. Under CIF, the seller must insure at least 110% of the contract price (here 11,770), but only on minimum Clauses (C) terms. Under FOB, the cover is whatever you buy. Under DDP, the goods stay at the seller's risk until delivery.
For a full line-by-line cost build with real US duty rates, see our worked example of landed cost from India to the USA. For a broader checklist of what to compare in a quotation, see how to compare safety pin export quotations.
How to choose the right term for your order
You have a forwarder and import regularly: FOB (or FCA for containers) gives you the most control.
First order, no forwarder: CIF (or CIP) gets the goods to your port insured. Line up a customs broker before arrival.
You want one delivered price: ask for DDP and confirm in writing what "duty paid" covers. If DDP is not possible, DAP is the usual alternative.
Air or courier: use FCA, CPT or CIP. See our guide to shipping bulk safety pins by LCL, FCL or air.
Several suppliers: ask all of them to quote on the same term, named place and Incoterms 2020.
Make sure the commercial invoice shows the goods value and, where relevant, freight and insurance as separate lines, because customs uses them to work out the duty. See our guide to safety pin export documents.
Which terms does Suvik Overseas quote?
According to the Suvik Overseas shipping policy, export orders are typically shipped on FOB Kolkata or CIF port of destination terms, and DDP can be arranged on request. The port of loading is Kolkata (INKOL), with Kolkata Airport (CCU) for air freight, and buyers may nominate their own freight forwarder. The minimum order quantity is negotiable and depends on the order.
FAQ
What is the difference between FOB and CIF?
Under FOB, the seller pays to load the goods on board at the port of shipment, and the buyer pays the ocean freight and insurance. Under CIF, the seller also pays the freight to the destination port and buys minimum insurance. Under both, risk passes to the buyer once the goods are on board.
Does a CIF price include import duty?
No. CIF covers the goods, the sea freight and minimum insurance to the destination port. Import clearance, import duty, import taxes, destination charges (unless the seller's freight contract includes them) and delivery to your warehouse are paid by the buyer.
Who pays import duty under DDP?
The seller. Under DDP, the seller handles import clearance and pays the import duty and taxes in the buyer's country, and delivers to the named place. Confirm in writing whether import VAT or GST is included, because this is a common point of misunderstanding.
How much insurance does CIF include?
Under Incoterms 2020, the seller must insure at least 110% of the contract price on terms that comply with Institute Cargo Clauses (C), which is minimum cover. If you want wider cover, such as Clauses (A), agree it in the contract or buy your own policy. CIP requires Clauses (A) cover as standard.
Can I use FOB or CIF for air freight or containers?
FOB and CIF are meant for sea and inland waterway transport. For air freight, use FCA, CPT or CIP. For containers handed over at a container terminal, the ICC suggests FCA (or CIP) is more appropriate than FOB or CIF.
What shipping terms and minimum order does Suvik Overseas offer?
Suvik Overseas typically ships on FOB Kolkata or CIF port of destination terms, and DDP can be arranged on request. The minimum order quantity is negotiable and depends on the size, finish and packaging. Share your requirements to get a confirmed figure.
Get a quotation on the terms you need
Send Suvik Overseas your sizes, material, finish, packaging, quantity, destination and preferred Incoterm (or ask for two terms to compare). The quotation will name the term, the place and the Incoterms version. Request a quote
Sources
Checked on 4 November 2026.
ICC, Incoterms 2020 (11 rules; CIF uses Institute Cargo Clauses (C) as the default and CIP requires Clauses (A)): https://iccwbo.org/business-solutions/incoterms-rules/incoterms-2020/
ICC Academy, Incoterms 2020: CIP or CIF? (CIF only for sea or inland waterway; risk passes on loading; Clause C minimum cover): https://academy.iccwbo.org/incoterms/article/incoterms-2020-cip-or-cif/
ICC Academy, Incoterms 2020: CPT or CIP? (CIP needs Clauses (A) cover of at least 110% of the contract price): https://academy.iccwbo.org/incoterms/article/incoterms-2020-cpt-or-cip/
ICC Academy, Incoterms 2020: FAS or FOB? (FOB delivery on board; sea or inland waterway only; FCA for containerised goods): https://academy.iccwbo.org/incoterms/article/incoterms-2020-fas-or-fob/
ICC Academy, Incoterms 2020: EXW or DDP? (seller's import clearance under DDP; limits in some countries; DAP alternative): https://academy.iccwbo.org/incoterms/article/incoterms-2020-exw-or-ddp/
ICC Academy, Including tariffs in your Incoterms training sessions (under DDP the seller pays export and import tariffs; under EXW the buyer does): https://academy.iccwbo.org/incoterms/article/including-tariffs-in-your-incoterms-training-sessions/
ICC Academy, Incoterms 2020: C or D rules? (DDP: the seller carries out export, import and transit formalities; unloading costs): https://academy.iccwbo.org/incoterms/article/incoterms-2020-c-or-d-rules/
US International Trade Administration, Know Your Incoterms (seven rules for any mode, four for sea and inland waterway; using earlier versions by agreement): https://www.trade.gov/know-your-incoterms
export.gov (US Department of Commerce, legacy), What does export insurance usually cover? (cover usually placed at 110% of the CIF or CIP value): https://legacy.export.gov/article?id=What-does-export-insurance-usually-cover
US tariff rates for steel safety pins (4.5% + 50% Section 232), as sourced in our 3 Nov 2026 duty guide: https://hts.usitc.gov/search?query=7319.40
Suvik Overseas, Shipping and Delivery Policy (FOB Kolkata / CIF port of destination; DDP on request; INKOL and CCU): https://safety-pins.com/shipping-policy