An export costing sheet builds through five cascading price levels. Each a superset of the previous. The DGFT's Certificate of Origin portal uses this same structure for value-addition calculations.
Price level cascade
Level
What it includes
Who pays beyond this
Ex-Works
Raw materials + labour + overhead + packaging + QC + profit
Buyer pays everything from factory gate onward
FOB
Ex-Works + inland transport + port charges + customs + documentation
Insurance is calculated on CIF value (creating a circular reference), so you solve it algebraically. With standard 110% coverage at 1% rate: CIF = (FOB + Freight) ÷ (1 − 0.011).
Current ocean freight rates from India (2026)
Route
20ft (USD)
40ft (USD)
India → US West Coast
$2,000-3,500
$3,000-5,500
India → US East Coast
$2,500-4,500
$3,500-6,200
India → Europe (Rotterdam/Hamburg)
$800-1,800
,200-3,000
India → UAE (Dubai)
$400-800
$600-1,200
Rates highly volatile. Quotes typically valid 7-14 days. Add BAF (bunker adjustment) and seasonal surcharges.
Worked example: FOB to CIF
FOB value
0,000
Ocean freight (India → US East Coast, 20ft)
,200
CIF = (
0,000 +
,200) ÷ (1 − 0.01)
1,313
Insurance premium (1% of CIF)
13
CIF price
1,313
Export incentive impact on pricing
Duty drawback and RoDTEP together can return 2-12% of FOB value. Factoring these into your pricing is what makes Indian exporters competitive. But you need to do it carefully.
Capex reduction amortized per unit over the machine's life
Net effective cost formula
Net cost = Total cost − (RoDTEP + Drawback + AA duty saved + amortized EPCG saving)
RoDTEP and duty drawback can be claimed simultaneously. They target different cost components. But AA inputs cannot also claim AIR drawback (no duty was paid to begin with).
Payment term cost differences
Different payment terms have vastly different costs. Quoting the same price for advance payment and 90-day DA is a common mistake that silently erodes margins.
Pricing impact by payment term (relative to DA 90 days)
At current post-shipment credit rates (~8.65% p.a.): DA 60 days costs ~1.44% of invoice value in interest. DA 90 days costs ~2.16%. Add ECGC premium (0.3-0.9%) and credit risk. A 90-day DA order effectively costs 3-5% more than advance payment. But many exporters absorb this silently. Build it into your price.
Forex risk and hedging
If you quote today and receive payment 90 days later, a 2% adverse INR appreciation on a Rs 10 lakh order wipes out Rs 20,000 from your profit. On thin margins, forex risk is the silent killer.
Hedging options for Indian exporters
Instrument
Cost
Best for
Forward contract
Spread 0.06-0.12% + Rs 500/contract
Predictable receivables, thin margins
USD put option
0.96-1.80% of notional (3-month ATM)
Uncertain timing or amounts
Range forward (zero cost)
No premium
Cost-conscious hedging (capped upside)
PCFC / EEFC (natural hedge)
Borrowing cost differential
Exporters with USD-denominated costs
Recommended forex buffer in quotes
For hedged exposure: 1-2% buffer (covers hedging cost + residual timing risk). For unhedged exposure: 3-5% buffer (covers 90-180 day currency volatility). Rule of thumb: If your net margin is less than typical 60-120 day FX volatility (2-4% annualized for USD/INR), you must either hedge or build in a larger buffer.
Common pricing mistakes
Mistakes that erode margins
Forgetting hidden costs. Bank conversion markup (Rs 1/dollar spread on $20,000 = Rs 20,000 lost), detention/demurrage at port, freight surcharges (BAF, CAF, peak season), and agent commissions (3-7%) are routinely missed.
Same price for all [Incoterms](/resources/incoterms). DDP to Hamburg is not FOB + $2,000. It includes import duty (4.7%), German VAT (19%), destination clearance, and inland delivery. A
0,000 FOB order becomes ~
6,000 DDP.
Same price for all payment terms. DA 90 days costs 3-5% more than advance payment in working capital interest + credit risk. Build the cost of money into your price.
Not updating for input cost changes. Jute mills have shipped at locked-in prices when raw jute jumped, wiping out margins entirely. Include price validity periods (30-60 days max) and escalation clauses in long-term contracts.
Ignoring market-specific compliance costs. USFDA labeling (Rs 15,000-45,000/product), CE marking for EU, halal certification for Middle East (Rs 50,000-2,00,000/year). These vary by destination. Don't quote the same price for all markets.
Wrong HS code = wrong buyer duty. A single digit difference can shift a product from duty-free to 10%. Your buyer calculates total landed cost including duty. If your competitor in an FTA country has zero duty, you're 5-15% more expensive before negotiation.
Competing on price alone. Competing with Chinese volume manufacturers on price is a losing strategy. Compete on quality, reliability, certifications, and customization. These command 15-40% premiums in developed markets.
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Know your real export cost. Down to the paisa
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Sources & citations
DGFT Certificate of Origin costing template (coo.dgft.gov.in)..
CBIC Drawback Schedule 2026. CMA-CGM, Hapag-Lloyd, MSC published THC tariffs. SBI, HDFC, Axis Bank forex and trade service charge schedules (2026).
RBI Master Direction on Risk Management and Inter-Bank Dealings. ECGC premium rate schedules.