Impact Of INCOTERMS 2020 On Risk Allocation, Cost Distribution, Customs Compliance, And ESG In India-EU Bilateral Trade: A Critical Analysis Of Indian Export-Import Policies And Legal Frameworks
- IJLLR Journal
- 9 hours ago
- 2 min read
Aditya Gautam, B.A. LL.B. (Hons.), Symbiosis Law School, Pune
ABSTRACT
The paper critically examines the effect of INCOTERMS 2020 on risk allocation, costs, and customs compliances in EU-India bilateral trade with the analysis of their interplay with Indian export-import regulations and legal framework. This study reflects and finds that INCOTERMS 2020 majorly designates risk transfer points, freight liability, insurance liability, and customs duties. The major amendments demand special emphasis "on board" bills of lading in the case of FCA shipments in containerized sea transport and an unambiguous allocation of security costs under CIP; while increasing the clarity of contracts, these modifications also grow the complexities of operations. The results imply that traders need to marry these standardized terms with India’s regulatory landscape so as to maximize trade efficiency and render trade compliant'''
Substantial operational friction arises between INCOTERMS 2020 contractual requirements and the logistical constraints in India, especially with regard to bank processing of Letters of Credit under FCA arrangements. Choice of terms, say EXW versus DAP, often leads to disputes on transit risk allocation and unforeseen liabilities for Indian parties. Crucially, under Indian law INCOTERMS stipulate who bears the statutory responsibility for customs clearance, and this interacts directly with CBIC notification frameworks, valuation procedures, origin certification (EU GSP/future FTAs), and electronic filing on ICEGATE. This makes it perilous for systemic non-compliance to take shape wherein parties possessing key local knowledge are not those delimited by the contractual term.
Study therefore highlights that while INCOTERMS 2020 provides an essential framework, application in India-EU trade should require increased stakeholder awareness, technical accuracy, and harmonization within the Indian regulatory environment. Otherwise, antithesis would mean operational friction and regulatory penalties, thereby hindering the strategic optimization of bilateral trade.
