FOB (Free On Board)
- The Indian seller clears export customs and delivers the goods on board the vessel at the Indian port.
- The US buyer books and pays the ocean freight, insurance, and everything from the Indian port onward.
- Risk passes to the buyer once the goods are on board.
CIF (Cost, Insurance and Freight)
- The Indian seller books and pays the ocean freight and minimum insurance to the US port.
- The US buyer pays destination charges, US customs, duty and delivery.
- Risk still passes to the buyer once the goods are on board in India, even though the seller paid for the freight.
Which should you choose?
US importers often prefer FOB: they choose the carrier and forwarder, see the real freight cost, and control the schedule. Indian exporters can win business with CIF because the buyer gets one landed price at the US port, but they take on the booking. Whichever you choose, write it with the named port, for example "FOB Nhava Sheva" or "CIF New York".
For containers, the ICC recommends FCA and CIP in place of FOB and CIF, because the seller hands the container to the carrier at a terminal before it is loaded. In practice FOB and CIF are still widely used on India–USA trade.
