Incoterms & Contracts: Negotiating the Best Terms for Thailand-India Imports

When you import from Thailand into India, the difference between a smooth shipment and a costly dispute often comes down to two things:

1. The Incoterm you choose, and

2. How clearly your contract (or PO + supply agreement) defines responsibilities.

Price matters-but terms decide who controls freight, who carries risk, who handles documentation, and who pays when something goes wrong. This blog breaks down the most practical Incoterms for Thailand-India imports and the contract clauses that help you negotiate with confidence.

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1) Incoterms in One Minute: What They Cover (and What They Don’t)

Incoterms define:

• Delivery point (where the seller’s responsibility ends)

• Risk transfer (when risk shifts from seller to buyer)

• Cost responsibility (who pays which logistics legs)

• Export/import responsibilities (varies by term)

Incoterms do NOT define:

• Payment terms (advance, LC, credit)

• Quality standards and acceptance criteria

• Warranties and remedies

• Ownership/title transfer

• Dispute resolution and governing law

That’s why you should treat Incoterms as the logistics framework, and your contract/PO as the risk-control system.

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2) Why Incoterms Matter Specifically for Thailand–India Imports

On this lane, avoidable costs typically come from:

• Document mismatches (invoice, packing list, BL/AWB inconsistencies)

• Port/terminal delays leading to demurrage/detention

• Unclear responsibility when cargo is damaged, short, or delayed

• “All-in quotes” that hide exclusions (local charges, surcharges, insurance limits)

Choosing the right Incoterm helps you decide whether you want control (over freight and visibility) or convenience (seller handles more).

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3) Most Useful Incoterms for Thailand-India: What to Choose and When

Quick Decision Guide (Practical, Not Theoretical)

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4) Incoterms Explained (Only the Ones You’ll Actually Negotiate)

A) FCA (Free Carrier) - Often the Best “Control + Practicality” Option

Best for: Regular importers who want control without export-side chaos.

• Seller delivers goods to your nominated carrier/forwarder at a named place (factory gate, forwarder warehouse, terminal, etc.).

• Risk transfers at that handover.

Why FCA is strong on Thailand-India trade:

• Cleaner handover point for container freight

• You control main freight and visibility

• Seller can still support export-side delivery

Typical wording:
“FCA Bangkok (named forwarder warehouse), Incoterms 2020”

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B) FOB (Free On Board) - Common in Asia, Still Useful if Written Clearly

Best for: Buyers who want control but are used to FOB quoting.

• Seller is responsible until goods are on board the vessel at the named port.

• Risk transfers once loaded.

Use FOB when:

• Your suppliers and your internal process are set up around FOB, and

• You specify port + documentation + handover clarity so there’s no “responsibility gap.”

Typical wording:
“FOB Laem Chabang Port, Incoterms 2020”

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C) CFR / CIF - Seller Books Ocean Freight (Less Control for You)

Best for: Low volume or first-time imports when you want simplicity.

• CFR: seller pays ocean freight; risk transfers at loading (like FOB risk point).

• CIF: CFR + seller provides insurance (often basic unless you specify better coverage).

Key watch-outs:

• Less control over carrier, routing, schedules, and local charges

• CIF insurance may be minimal unless clearly defined

Typical wording:
“CIF Nhava Sheva (JNPT), Incoterms 2020”

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D) CPT / CIP - Good for Air Freight or Multimodal Moves

Best for: Air shipments Thailand → India, or when you want seller-arranged carriage.

• CPT: seller pays carriage to named destination; risk transfers when handed to carrier.

• CIP: CPT + seller provides insurance.

Watch-outs:

• The named destination must be precise (airport/ICD/warehouse).

• Risk transfers earlier than many buyers assume.

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E) DAP - Delivered to Your Named Place (Buyer Clears Import)

Best for: Importers who want convenience but still want control over Indian customs.

• Seller delivers to a named place (ICD, warehouse, etc.).

• Buyer handles import clearance and duties.

Why DAP is often better than DDP:

• You keep compliance and duty/tax control in India.

• Fewer “who is importer-of-record?” complications.

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F) EXW - Usually Not Ideal Unless You Have Strong Thailand Logistics Support

EXW makes you responsible for almost everything from the supplier’s door. It can work, but it increases coordination complexity—especially for export handling and document control.

If you’re offered EXW, try to negotiate to FCA.

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5) How to Write Incoterms Correctly (This Prevents Many Disputes)

A correct Incoterm line includes:

1. Incoterm rule (FCA/FOB/CIF/etc.)

2. Named place/port (specific)

3. Incoterms version (usually Incoterms 2020)

Good examples:

• “FCA Bangkok (ABC Forwarder Warehouse), Incoterms 2020”

• “FOB Laem Chabang Port, Incoterms 2020”

• “CIP Chennai Airport, Incoterms 2020”

• “DAP ICD Tughlakabad, Incoterms 2020”

Avoid vague terms like:

• “FOB Thailand”

• “CIF India”

• “Delivered to warehouse” (which warehouse? unloaded or not?)

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6) The Contract / PO Clauses That Matter Most

Think of your contract as your “prevention system.” These are the clauses that stop cost leaks and disputes.

A) Specs + Quality Acceptance (Non-Negotiable)

Include:

• Final specifications with revision/version control

• Approved sample reference (“golden sample”)

• Clear acceptance criteria (critical/major/minor defects)

• Inspection rights (pre-production / during / pre-shipment)

Why this matters: If quality isn’t measurable, every problem becomes an argument.

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B) Packaging + Labeling Requirements

Define:

• Carton strength / packaging method

• Palletization rules (if used), wrapping, moisture protection

• Carton markings, SKU labels, barcode/label format

• Any destination-market labeling requirements (as applicable)

Why this matters: Damage claims often fail due to poor packaging and unclear standards.

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C) Documentation Requirements + “Pre-Alert Review”

Specify the exact documents required, such as:

• Commercial invoice

• Packing list (weights/dimensions/carton count + SKU mapping)

• BL/AWB details and consignee instructions

• Insurance certificate (for CIF/CIP)

• Product-specific documents as applicable (test reports, MSDS, etc.)

Add a practical rule:
Supplier must send pre-alert documents for buyer review before dispatch.
This single step prevents many customs and clearance delays.

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D) Lead Times + Delivery Windows (Define What “On Time” Means)

Include:

• When lead time starts (PO date? advance received? artwork approval?)

• “Ready to ship” definition

• Partial shipment rules (allowed/not allowed)

• What happens if delays occur (notice timelines and remedies)

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E) Payment Terms Tied to Risk (Milestones)

For new suppliers, a safer structure is often:

• Part advance to start production

• Balance after passing inspection / pre-shipment checks (or against shipping documents)

The goal: don’t pay 100% before you have proof of compliance—and don’t push terms so hard that you become a low-priority customer.

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F) Insurance + Claims Handling (Write It Down)

Even when insurance is included (CIF/CIP), specify:

• Minimum coverage expectation (and any exclusions you won’t accept)

• Claims notification timeline

• Evidence needed (photos, survey report, packing proof)

• Responsibility for packaging-caused damage

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G) Demurrage/Detention Responsibility (Avoid Surprise Charges)

Define who pays if delays are caused by:

• Incorrect/incomplete documents

• Late document submission

• Errors in consignee/notify party details

• Mis-declared quantities/weights

This clause is especially valuable when sellers control freight (CFR/CIF/CPT/CIP/DAP).

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H) Dispute Resolution + Governing Law (Keep It Simple)

Include:

• Governing law

• Dispute forum (court or arbitration)

• Language and location for arbitration (if used)

This reduces negotiation friction when something goes wrong.

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7) Negotiation Playbook: Getting Better Terms Without Damaging the Relationship

1) Negotiate total landed cost, not unit price

Ask for your quote in two comparable versions:

• FCA/FOB (you control freight)

• CIF/CIP or DAP (seller controls freight)

This quickly reveals hidden cost drivers.

2) Convert “assurances” into written commitments

• “Packaging will be strong” → carton spec + pallet rules

• “We will insure it” → coverage + claims process

• “Documents will be fine” → templates + pre-alert review deadline

3) Use phased trust

First order: tighter controls (inspection + clear milestones)
Later orders: streamline once supplier performance is consistent.

4) Negotiate visibility

Require:

• Production updates (weekly cadence)

• Booking confirmation (vessel/flight, ETD/ETA)

• Pre-alert documents before dispatch

• Tracking updates until delivery/ICD handover

Visibility prevents delays-and makes problem-solving faster.

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8) Short, Professional Clause Samples (PO-Friendly)

Use these as PO add-ons (not legal advice):

Incoterms clause:
“Delivery terms shall be FCA [named place], Incoterms 2020. Risk transfers upon delivery to the carrier at the named place.”

Documentation clause:
“Seller shall provide commercial invoice, packing list, and shipment pre-alert documents for Buyer review prior to dispatch. Documents must match PO number, item description, quantities, weights, and consignee details.”

Inspection clause:
“Buyer or Buyer’s nominated inspector may conduct pre-shipment inspection. Non-conforming goods shall be reworked/replaced by Seller. Re-inspection due to non-conformance shall be borne by Seller.”

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9) First Shipment Checklist (Thailand → India)

Before issuing the PO

• Incoterm + named place/port + “Incoterms 2020” written correctly

• Specs/version + packaging requirements finalized

• Payment milestones aligned to inspection and dispatch

• Documentation list agreed + templates shared

Before cargo leaves Thailand

• Booking confirmed (ETD/ETA, vessel/flight details)

• Packing list matches actual cartons/pallets

• Invoice matches PO, buyer details, currency, and item descriptions

• Pre-alert documents reviewed and corrected (if needed)

After arrival in India

• Inspect on receipt immediately (counts + photos)

• Record discrepancies quickly for claims

• Run a post-shipment review with supplier (root cause + corrective actions)

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10) Common Mistakes to Avoid

• Choosing EXW without export-process clarity → prefer FCA

• Writing “FOB Thailand” / “CIF India” → always name port/place + Incoterms 2020

• Assuming CIF/CIP insurance is comprehensive → define coverage and claims steps

• No document-review step → require pre-alert review before dispatch

• No rule for demurrage/detention → define who pays if delays are document-related