I (Meaning and importance of Exports) Unit Structure

C&F price = F.O.B. + freight
Seller‘s obligations under C&F quotations. 
In addition to the obligations mentioned under FOB 
quotation, the seller must pay freight charges to the shipping 
company the under takes to carry the goods form the part of 
shipment to the part of destination. 
Buyer‘s obligations under C&F quotation. 
1. He has to arrange and pay for insurance. 
2. He has to pay clearing charges, import duties etc. 
3. He has to make payment as per the commercial invoice. 
4. He has to bear the loss or damage to the goods, if any, from the 
time and place at which the seller‟s obligations are over. 
III) CIF (Cost Insurance and Freight) Quotation 
CIF means cost, insuran and freight. It includes FOB price 
plus freight plus marine insurance up to the part of destination. In 
other words, CIF price includes cost of production and all other 
expenses till the goods reach the 
port of destination in the buyer‟s 
country. The unloading charges at the buyer‟s port, custom duties 
etc, are to be paid by the importer. 
In short, CIF price can be summed up as- 
CIF price = FOB price + Freight + Insurance 
Seller‘s obligations under CIF quotation 
 
In addition to the obligations mentioned under FOB 
quotation, the seller must pay for freight and insurance cover also. 
Buyer‘s obligations under CIF quotation 
1. 
He has to pay clearing charges, import duties etc. 
2. 
He has make payment as per the commercial invoice. 

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153 
10.10
SIMPLE PROBLEM ON FOB PRICE 
1. Problem 
Calculate the minimum FOB price which can be quoted by 
an exporter form the following details. 
Ex-factory cost 
Rs. 1,50,000 
Packing cost
Rs. 3,000 
Transport cost 
Rs. 2,000 
Profit contribution at 10% of FOB cost 
Duty draw back at 5% of FOB price. 
Solution 
EX-factory cost 
Rs. 1,50,000 
Packing cost
Rs. 3.,000 
Transport cost 
Rs. 2,000 
FOB cost 
1,55,000 
Contribution towards profit 10% 15500 
FOB Revenue 1,70,500 
The amount of assistances will be considered as follows 
Let minimum FOB price be Rs. x 
Duty drawback at 5% f FOB price be = 0.05x 
FOB price + Incentives = FOB cost + profit 
x + 0.05x = 1,70,500 
1.05x = 1,70,500 
1,70,500
x
1.05
minimum FOB is = Rs. 1,62,381 
2. From the following data calculate the minimum FOB price 
which the exporter ca quote 
Ex-factory cost
Rs. 4,40,000 
Expenses up to on board the ship
Rs. 40,000 
Contribution towards profit 25% of FOB cost 
Duty drawback 10% of FOB price