DDP vs EXW vs FOB (2026): Incoterms Explained for India–Korea Trade, With Cost Examples
The Incoterm on your quote decides who pays freight, who clears customs and who eats the Korean VAT bill. Get it wrong and your 'cheap' EXW price loses to a competitor's DDP price. Here is every relevant term for India–Korea trade, explained with numbers.
Key takeaways
- EXW puts every cost and risk on the Korean buyer from your factory gate; DDP puts it all on you until the buyer's door — and Korean buyers overwhelmingly prefer DDP or DAP landed prices.
- FOB is a sea-freight term; for air shipments the correct equivalent is FCA (named airport/forwarder).
- Under DDP the seller pays Korean duty and 10% VAT — price it in explicitly, or use DAP if the buyer wants to recover VAT themselves.
- ShipKorea quotes DDP door-to-door from ₹609/kg so exporters can offer landed KRW prices without handling Korean customs.
Quick answer
Incoterms define where the seller's responsibility for cost and risk ends. For India–Korea trade the practical options are EXW (buyer collects from your premises), FCA/FOB (you hand over to the carrier in India), CIF/CPT (you pay freight to Incheon/Busan, buyer clears import), DAP (you deliver to the buyer's address, buyer pays duty/VAT) and DDP (you deliver duty and VAT paid). Korean buyers prefer DAP or DDP landed prices. ShipKorea.in makes DDP simple with all-inclusive per-kg door-to-door rates.
The Incoterms 2020 ladder, from least to most seller responsibility
EXW (Ex Works): goods ready at your factory; buyer arranges everything including Indian export clearance — rarely practical for Korean buyers. FCA (Free Carrier): you clear export and hand goods to the buyer's carrier at a named place (your city airport or forwarder's warehouse) — the correct air term. FOB (Free On Board): you load goods on the buyer's vessel at an Indian port — sea only. CFR/CIF: you pay ocean freight (and insurance for CIF) to a Korean port; import clearance is the buyer's. CPT/CIP: the air/multimodal equivalents of CFR/CIF. DAP (Delivered at Place): you deliver to the buyer's address, unloading and import duty/VAT excluded. DPU: as DAP but you unload. DDP (Delivered Duty Paid): you deliver to the door with Korean duty and VAT paid — the buyer does nothing.
Why 'FOB' is wrong for air shipments
FOB, CFR and CIF are defined for sea and inland waterway transport — risk passes when goods are loaded on board the vessel. Most India–Korea shipments fly, and there is no 'on board' moment at Delhi cargo terminal. Using FOB for air creates disputes on when risk passed. Use FCA (seller delivers to the carrier at a named point) or CPT/CIP (seller pays air freight to Incheon). Korean importers and their banks (for L/Cs) know the difference.
Who pays Korean duty and VAT under each term
Under EXW, FCA, FOB, CIF, CPT, DAP and DPU the Korean buyer is importer of record and pays duty (0–13% MFN, 0–5% on many Indian goods under CEPA) and 10% VAT — which a VAT-registered Korean business later reclaims. Under DDP the seller pays both. That last point is why some Korean B2B buyers prefer DAP: they want to recover VAT through their own filing. B2C consumers and small shops prefer DDP because they cannot reclaim VAT and hate customs calls. Choose per buyer type.
Worked example: 100 kg of Indian home textiles to Seoul
Goods value ₹2,00,000. EXW price ₹2,00,000 — buyer must find an Indian forwarder, pay ~₹75,000 freight/clearance, then Korean duty (say 5% CEPA ≈ ₹13,750) and VAT (10% ≈ ₹28,900): buyer's total ≈ ₹3,17,650 and lots of work. DDP with ShipKorea at ₹609/kg: freight/clearance/duty/VAT bundled ≈ ₹60,900; you quote ₹2,60,900 landed to the door. Same goods, lower total, zero buyer effort — that is why DDP quotes win Korean orders. See DDP vs DDU shipping to Korea.
Documents and wording
Put the Incoterm, version and named place on every proforma, invoice and contract: 'DDP Seoul, Buyer's warehouse, Incoterms 2020' or 'FCA Delhi Airport, Incoterms 2020'. Match the invoice value basis to the term — Korean customs assess duty on CIF-equivalent value, so a DDP invoice should show the goods value separately from freight/duty components, or provide a breakdown. Under CEPA, the Certificate of Origin is required regardless of Incoterm.
Choosing the right term for your situation
Selling to a large Korean importer with its own forwarder and VAT recovery: FCA or DAP. Selling to small shops, restaurants, marketplaces or consumers: DDP. Sending samples: DDP always. Sea shipments of bulk goods: FOB/CIF are fine because the buyer's CHA clears at Busan. Importing from Korea to India: ask your Korean supplier for FCA Incheon or CPT and let us handle the Indian DDP leg — see how to import from Korea to India.
How ShipKorea fits in
Our door-to-door service is DDP by design: pickup in India, export clearance, air freight, Korean import clearance with CEPA applied, duty and VAT pre-paid, delivery — one all-inclusive per-kg rate (₹749/kg small lots, ₹609/kg at 21 kg+). If your buyer wants DAP, we invoice duty/VAT to them; if they want FCA, we hand over at Delhi/Mumbai cargo. Details on our commercial shipping and customs clearance pages.
