Incoterms 2020 are a vocabulary, not a strategy. The strategy is what trade Incoterm fits the buyer-seller relationship at the current stage of trust and at the procurement team's actual capabilities.
FOB JNPT or Mundra — the default
FOB (Free On Board) means the seller's responsibility ends when the goods are loaded onto the buyer's nominated vessel at the named loading port. From there, freight, insurance, and import customs are the buyer's responsibility.
Why this is the default: the buyer's freight forwarder usually has better contracted rates with carriers than the seller does. The buyer also retains carrier choice — useful for consolidation across multiple suppliers, or for honouring specific carrier agreements.
The trade-off: more moving parts on the buyer's side. If your procurement team doesn't have an established freight forwarder in India, FOB is friction.
CIF destination — the simpler line item
CIF (Cost, Insurance, Freight) means the seller arranges and pays for sea freight and basic insurance up to the named destination port. From there, customs clearance and inland logistics are the buyer's.
Why this is attractive to CFOs: a single landed-cost line on the invoice. Easier accounting. No reconciliation between supplier invoice and freight forwarder invoice for the same shipment.
The trade-off: the seller's freight margin is baked into the quote. Comparing CIF quotes across suppliers requires backing out the freight to compare like-for-like.
When to use which
First-order programmes from a new supplier: FOB. Keeps freight-rate transparency and lets you build a benchmark.
Repeat orders from a trusted counterparty with stable freight rates: CIF. Reduces accounting overhead and lets the supplier handle vessel-booking on your behalf.
Multi-supplier consolidations: FOB. Your forwarder can consolidate cargo from multiple suppliers into a single container — only possible if you control the booking.
Markets with thin freight competition (Australia, parts of Africa): consider CIF. Suppliers with established trade lanes there often have better rates than spot-market freight.
EXW and DDP — the edges
EXW (Ex Works) makes everything the buyer's problem from the seller's warehouse. Useful only if you have a freight forwarder with on-the-ground capability in India.
DDP (Delivered Duty Paid) makes everything the seller's problem up to the buyer's door, including import duty. Rarely sensible for textile categories — duty regimes are complex, the seller is taking on a duty-classification risk they shouldn't, and the price loading is significant.
For most hospitality and retail textile programmes, the answer is FOB or CIF. The other Incoterms are edge cases that exist for specific procurement structures.