Incoterms โ International Commercial Terms โ govern who pays what and when in international shipping. Choosing the wrong Incoterm can add 5โ15% to total landed cost.
Common Terms
- EXW (Ex Works) โ Buyer picks up at factory gate. Cheapest supplier cost, most buyer effort.
- FOB (Free On Board) โ Supplier delivers to origin port. Buyer pays sea freight.
- CIF (Cost, Insurance, Freight) โ Supplier delivers to destination port. Buyer pays customs.
- DAP (Delivered At Place) โ Supplier delivers to buyer's location, buyer pays duties.
- DDP (Delivered Duty Paid) โ Supplier handles everything including destination customs and duties.
Typical Costs per 20ft Container from India
- Inland Delhi โ Nhava Sheva (FOB origin): $400โ600
- Sea freight India โ Rotterdam: $1,500โ2,500
- Sea freight India โ New York: $2,000โ3,500
- Destination handling: $300โ800
- Customs clearance: $200โ500
When to Use Each Term
- EXW โ Only when you have local logistics infrastructure in India
- FOB โ Standard for experienced importers with freight forwarder network
- CIF โ First-time importers, simpler documentation
- DAP โ Small orders, quick market entry
- DDP โ Premium option, minimal buyer overhead but 8โ15% cost premium
Common Pitfalls
- DDP quotes that don't include destination duties (verify explicitly)
- CIF minimum insurance coverage may be inadequate โ increase to 110%
- Currency fluctuation risk not addressed in long lead-time orders
Frequently Asked Questions
What payment terms are standard for Indian textile imports?
Standard payment structure is 30% advance via TT (telegraphic transfer) plus 70% against copy of bill of lading. Letters of credit (LC) are recommended for first-time relationships or large orders ($50,000+). Established repeat buyers can negotiate DA/DP terms or open account. Avoid 100% advance payment except for very small sample orders.
How do I verify an Indian supplier before placing a large order?
Verify: IEC code (Indian Import-Export Code from DGFT), GST registration, physical factory address (via video call or third-party visit), references from 2+ existing international customers, SEDEX or BSCI social audit, relevant OEKO-TEX/GOTS scope certificates. Pre-shipment inspection is essential โ budget $250โ500 per shipment via SGS, Intertek or Bureau Veritas.
What HS code applies to my product for import duty?
HS code depends on fibre composition and construction. Silk items are Chapter 50; wool Chapter 51; cotton Chapter 52; knitted apparel Chapter 61; woven apparel Chapter 62; home textiles Chapter 63. Get a formal HS code determination from your destination customs broker before first import โ mis-classification causes customs delays and unexpected duty charges.
Can Indian suppliers ship directly to my end customer (dropshipping)?
Yes, dropshipping from India is technically possible. But it comes with challenges: 14โ35 day sea transit customer expectation management, unexpected destination duty charges, complex returns handling, quality control gaps per shipment. For most brands, a wholesale-import-then-fulfil model produces better customer experience than pure dropshipping.
Related Reading
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About Blueridge Trade LLP
Blueridge Trade LLP operates a dual business model. Our textile division is a direct manufacturer โ we own and operate the production of our cashmere, Merino wool, silk, organic cotton, and blended fabric programmes, controlling quality from fibre sourcing through finishing. This vertical integration is what allows us to guarantee Grade A specifications and offer competitive private-label terms to international brands.
Beyond textiles, we operate as a trading and sourcing partner for industrial commodities (copper, aluminium, zinc, tin, tungsten scrap, activated carbon), botanicals and spices, export-grade packaging, and consumables. In these categories we leverage a vetted network of Indian producers rather than manufacturing in-house โ giving international buyers a single consolidated point of contact for both textile manufacturing and broader Indian sourcing requirements.