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Guide · Buyer essentials

Incoterms Explained for Machined Parts Buyers: EXW, FOB and CIF

Who pays, who carries the risk, and which Incoterm suits your first order from an Indian machining supplier.

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On this page9 sections

The three rules we quote, line by line

Each card is the same set of questions answered for one rule. Read down the cards rather than across the prose, then write your choice on the purchase order with its named place.

EXW Pune

Ex Works, our plant in Pune, Maharashtra

Seller's duty ends
When the goods are made available at the plant
Export clearance
Your responsibility, through an Indian agent
Inland haulage to port
You arrange and pay
Sea or air freight
You arrange and pay
Insurance
Yours from collection onward
Risk passes
At the plant, before loading
Suits
Buyers who already have an agent and a presence in India

FOB Nhava Sheva

Free On Board, JNPT or Mumbai port

Seller's duty ends
When the goods are on board the vessel
Export clearance
We complete it
Inland haulage to port
We arrange and pay
Sea or air freight
You arrange and pay, with your forwarder
Insurance
Yours for the voyage
Risk passes
On board at the port of shipment
Suits
Regular buyers with a forwarder and consolidation plans

CIF your port

Cost, Insurance and Freight to the named port

Seller's duty ends
On delivery of the contract of carriage and documents
Export clearance
We complete it
Inland haulage to port
We arrange and pay
Sea or air freight
We book and pay to your named port
Insurance
We take minimum cover, Clause C at 110 % of contract value
Risk passes
On board at the port of shipment, not on arrival
Suits
First orders, and buyers with no forwarder at origin

Start here

EXW (Ex Works)

You collect from our Pune plant and handle export clearance yourself. It looks cheapest, but it is often the hardest option for overseas buyers without an Indian agent.

  1. 01 / 03

    FOB (Free On Board)

    We deliver to the vessel at Nhava Sheva/JNPT with export clearance done. You choose and pay your own forwarder for the sea leg. This is the most popular option for regular buyers.

  2. 02 / 03

    CIF (Cost, Insurance & Freight)

    We book freight and minimum insurance to your nearest port. You handle import clearance and onward delivery. This is convenient for first orders.

    Micrometer measuring a machined component — illustrative machining image
    Illustrative machining and inspection imagery.
  3. 03 / 03

    Which should you choose?

    First order with no forwarder: CIF. Regular orders with an established forwarder: FOB. Air freight samples: we usually quote door-to-door by courier.

FOB against CIF, the choice most buyers actually make

EXW rarely survives a first conversation with an overseas buyer. The real decision is whether you or the supplier books the ocean leg.

CriterionFOB Nhava Sheva (JNPT)

You control the sea leg

CIF your nearest port

We book the sea leg

Who nominates the carrierYou, or your forwarder's agent in IndiaWe do, to the port you name
Freight cost visibilityYou see the rate and any surcharges separatelyFreight sits inside the quoted price
Consolidating several suppliersStraightforward; your forwarder groups the cargoHarder; each shipment is booked on its own
InsuranceYours to place, at the cover level you wantMinimum cover only; top it up if your goods value demands it
Import clearance and deliveryYoursYours, from the arrival port onward
Admin effort at originYou need a forwarder contact in IndiaNone at origin
Typical useRepeat production ordersA first order, or an occasional buyer

Samples and urgent parts are normally quoted door to door by courier instead, which is simpler than applying a sea rule to a small air parcel.

Settling the Incoterm before you raise the purchase order

  1. 01

    Decide who clears export in India

    If you have no agent in India, rule out EXW. Export clearance from Pune is the part an overseas buyer is least able to do unaided.

  2. 02

    Check whether you have a forwarder at origin

    A forwarder with an Indian agent makes FOB Nhava Sheva the cheaper and more transparent choice. Without one, CIF removes the problem for a first order.

  3. 03

    Name the place precisely

    Write the port or address in full and add the rules year: "FOB Nhava Sheva (JNPT), Incoterms 2020" or "CIF Hamburg, Incoterms 2020". A rule with no named place is unenforceable.

  4. 04

    Set the insurance you actually need

    CIF obliges only minimum cover at 110 % of the contract value. If your cargo value or route justifies wider cover, place your own policy or agree a higher level in writing.

  5. 05

    Confirm the document set

    Commercial invoice, packing list, certificate of origin and inspection report travel with every shipment. Add the EN 10204 3.1 material certificate if you need traceability, and say so at RFQ stage.

  6. 06

    Agree who is importer of record

    Under all three rules you clear the goods for import and pay duties and taxes at destination. Name the importing entity on the order so the documents are issued correctly.

Getting the Incoterm right on paper

Do this on the order

  • Write the rule, the named place and the rules year in one phrase
  • Name the exact port of discharge, not just the country
  • State the importing entity that will act as importer of record
  • List the documents required with the shipment, including any certificate of origin you need for a trade preference
  • Say whether the packing must be ISPM-15 crated, and whether VCI film is required
  • Give the forwarder's name and Indian agent where you buy FOB
  • Record the payment terms alongside the Incoterm, since they are negotiated together but are not the same thing

Common mistakes

  • "FOB" with no port named, or a sea rule applied to an air parcel
  • Assuming CIF insurance is comprehensive; the rule requires only Clause C at 110 % of contract value
  • Believing risk passes on arrival under CIF, when it passes on board at the port of shipment
  • Choosing EXW on price alone and then discovering you cannot clear the goods out of India
  • Leaving duties and import taxes unassigned; they are the buyer's under all three rules
  • Quoting a delivered date against a port-to-port transit figure that excludes customs and inland delivery

The short answer

Which Incoterm should you choose for machined parts?

For a first order from an Indian machining supplier, choose CIF to your nearest port: the supplier handles export clearance and books the vessel, and you only need to clear the goods in. Once you have a forwarder with an Indian agent, move to FOB Nhava Sheva or Mumbai so you see the freight rate and can consolidate shipments. EXW Pune only makes sense if you already have an agent in India. Samples are usually quoted door to door by courier.

  • EXW Pune: you collect from the plant and clear the goods for export
  • FOB Nhava Sheva (JNPT) or Mumbai: we clear export and load; you own the sea leg
  • CIF your port: we book freight and minimum insurance to the named port
  • Risk passes on board at the port of shipment under both FOB and CIF
  • Import clearance, duties and taxes are the buyer's under all three rules
  • Always write the rule with its named place and "Incoterms 2020"

Keep exploring

Related capabilities, materials and markets

Everything below is machined in the same Pune plant to the same ISO 9001:2015 system. Follow whichever is closest to the part you are sourcing.

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