Every export quotation carries a three-letter term such as EXW, FOB, CIF, or DDP. These are Incoterms, the trade rules published by the International Chamber of Commerce. They decide who pays for transport, who arranges it, and the exact point at which risk passes from seller to buyer. Two quotations for the same towel can differ widely in price simply because they are on different terms.

What an Incoterm settles

• Which costs the seller pays and which the buyer pays.
• Who arranges transport and insurance.
• Who handles export and import clearance.
• Where the risk of loss or damage transfers.

An Incoterm does not set the price, the payment terms, or when ownership passes. Those belong in the sales contract.

The four terms towel buyers meet most

EXW: Ex Works

The seller makes the goods available at its own premises. The buyer arranges and pays for everything from that point: collection, export clearance, freight, insurance, import clearance, and delivery. EXW gives the lowest quoted price and the most work for the buyer. It suits buyers who already have a forwarder operating in the seller's country.

FOB: Free On Board

The seller delivers the goods on board the vessel at the named port of shipment and clears them for export. Risk passes to the buyer once the goods are on board. The buyer arranges and pays the ocean freight, insurance, and everything at destination. FOB is widely used for sea freight because it lets the buyer control freight cost while the seller handles the local side.

CIF: Cost, Insurance and Freight

The seller pays for freight and insurance to the named destination port. Risk still passes to the buyer when the goods are loaded on board at origin, even though the seller has paid for the voyage. The buyer handles import clearance, duties, and onward delivery. CIF suits buyers who want one price to their port without arranging freight themselves.

DDP: Delivered Duty Paid

The seller delivers the goods to the named place in the buyer's country, cleared for import, with duties paid. The seller carries the cost and risk the whole way. DDP is the simplest for the buyer and the most demanding for the seller, and it is not always practical, because the seller must be able to clear goods in the buyer's country.

A note on sea and other transport

FOB and CIF are designed for sea and inland waterway transport. For air freight or mixed transport, the equivalent terms are FCA (Free Carrier) and CIP (Carriage and Insurance Paid To). If your towels are travelling by air, ask for the quotation on one of those.

Comparing quotations fairly

To compare an FOB price with a CIF price, add your own freight and insurance cost to the FOB figure. To compare with EXW, add inland transport to the port and export clearance as well. Only then are you comparing like with like.

Which should you choose?

• You have a freight forwarder and ship regularly: FOB usually gives you the best control of cost.
• You are placing a first order and want simplicity: CIF gives a single price to your port.
• You want goods delivered to your door with nothing to arrange: ask whether DDP is available for your country.
• You consolidate goods from several suppliers in India: EXW or FCA may suit your forwarder.

Write it precisely

An Incoterm needs a named place and the edition of the rules, for example "FOB Nhava Sheva, Incoterms 2020" or "CIF Jebel Ali, Incoterms 2020". Put it in the quotation, the proforma invoice, and the purchase order, so there is no doubt later.

Mansa Exim International quotes on the term you prefer. Our Request a Quote form lets you choose EXW, FOB, CIF, or DDP, or you can contact us with your destination and we will advise.

India is one of the world's established sources of cotton terry towels, and buyers in Europe, North America, the Gulf, Australia, and Africa import from it every day. If you are placing your first order, the process is more straightforward than it looks. This guide sets out the steps and the paperwork so you know what to expect.

The order process, step by step

1. Enquiry and specification. You share the towel type, size, weight, composition, colour, branding, quantity, and destination.
2. Quotation. The supplier quotes a price under a named Incoterm, such as FOB or CIF, with payment terms and a production timeline.
3. Sampling. A sample is made to your specification. You test it and approve it in writing.
4. Order confirmation. You issue a purchase order. The supplier issues a proforma invoice confirming the goods, price, and terms.
5. Production. The towels are woven, finished, branded, and packed.
6. Inspection. Goods are checked against the approved sample before they leave.
7. Shipment. The supplier clears the goods for export in India and hands them to the carrier.
8. Import clearance. Your customs broker clears the goods in your country and you take delivery.

The documents you will receive

For a typical sea shipment, the exporter provides:

• Commercial invoice: the seller's bill, showing the goods, quantity, price, and terms.
• Packing list: the contents, weight, and dimensions of each carton.
• Bill of lading: issued by the shipping line. It is the receipt for the goods and the document used to claim them. For air freight this is an air waybill.
• Certificate of origin: confirms the goods were made in India. It may be needed to claim a reduced duty rate where a trade agreement applies.

Depending on your country and your customer, you may also need test reports, an inspection certificate, or an insurance certificate. Ask your customs broker for the full list before you confirm the order, and pass it to your supplier.

The HS code for towels

Customs authorities classify goods using the Harmonized System. Cotton terry towels fall under heading 6302, which covers bed, table, toilet, and kitchen linen. Toilet and kitchen linen of cotton terry towelling is classified under subheading 6302.60. Your country adds further digits to this code, and the full code decides the duty you pay, so confirm it with your broker.

Duties and taxes

Import duty, VAT or sales tax, and any other charges are set by the importing country and change over time. Do not rely on a figure quoted informally. Ask your customs broker for the current rate for your exact product and origin, and include it in your landed-cost calculation.

Understanding the price you are quoted

The Incoterm in the quotation tells you what the price includes. Under FOB, the price covers the goods loaded on the vessel at the Indian port, and you arrange and pay the ocean freight. Under CIF, the price includes freight and insurance to your port. Compare quotations only when they are on the same term.

Payment

Payment terms are agreed between buyer and seller. Common arrangements in international trade include an advance payment with the balance against shipping documents, or a letter of credit issued by the buyer's bank. Choose terms both sides are comfortable with, and put them in the purchase order.

Calculating your landed cost

The price per towel is only part of the cost. Add:

• Ocean or air freight and insurance, if not included.
• Import duty and taxes.
• Port, handling, and customs broker charges.
• Inland transport to your warehouse.

Divide the total by the number of pieces to find your true cost per towel.

Practical tips for a first order

• Appoint a freight forwarder or customs broker before you order.
• Approve a physical sample, and keep it.
• Put the specification, price, terms, and delivery date in writing.
• Allow time for sampling, production, and transit when you plan your stock.

Mansa Exim International exports cotton and polycot terry towels from Belagavi, India, and handles export documentation and shipping for each order. View our product range or send an enquiry to begin.