5 min read · Sourcing guide · Updated this quarter
Every sourcing conversation on this site eventually hits the same question: which Incoterm goes on the purchase order? FOB, CIF, and EXW each shift cost and responsibility to a different point in the journey from an Indian factory to your warehouse. The right choice has less to do with price and more to do with how much logistics you're set up to handle.
EXW
- Buyer takes responsibility from the factory gate itself
- Buyer arranges inland transport to the Indian port
- Least common choice for a first order
FOB
- Buyer arranges and pays for shipping from the Indian port onward
- Cheaper landed cost if you already have a freight forwarder
- Exporter handles everything up to the ship's rail
CIF
- Exporter arranges shipping and insurance to your port
- Simplest structure for a first-time buyer
- One line item, one point of contact for the ocean leg
| Incoterm | Who arranges shipping | Who arranges insurance | Best suited for |
|---|---|---|---|
| EXW | Buyer, from the factory gate | Buyer | Buyers with an India-based logistics partner already in place |
| FOB | Buyer, from the Indian port onward | Buyer | Buyers with an existing freight forwarder relationship |
| CIF | Exporter, door to the buyer's port | Exporter | First-time buyers without logistics relationships in place |
If this is your first order out of India and you don't yet have a freight forwarder on speed dial, start with CIF. It puts the shipping and insurance burden on the exporter, who already has the port relationships, and it gives you a single landed cost to evaluate against competing quotes. Move to FOB once you've placed a few orders and have your own forwarder negotiating rates — that's typically where the real savings show up. EXW stays a niche choice until you have boots on the ground in India to manage inland transport.
None of this changes what you're sourcing, only what you're responsible for once the goods leave the factory. Get the Incoterm right first, and the rest of the purchase order gets a lot easier to compare across exporters.
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