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

Factory Gate
Ex Works
  • Buyer takes responsibility from the factory gate itself
  • Buyer arranges inland transport to the Indian port
  • Least common choice for a first order
Fastest growing

FOB

Port of Loading
Free On Board
  • 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

Port of Arrival
Cost, Insurance, Freight
  • 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
IncotermWho arranges shippingWho arranges insuranceBest suited for
EXWBuyer, from the factory gateBuyerBuyers with an India-based logistics partner already in place
FOBBuyer, from the Indian port onwardBuyerBuyers with an existing freight forwarder relationship
CIFExporter, door to the buyer's portExporterFirst-time buyers without logistics relationships in place
Our recommendation

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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