Landed cost calculator

The unit price stops at the seller's port

A ₹450 FOB part becomes a ₹560 part in your warehouse before a single one is inspected, and the 24% gap is where supplier comparisons are usually decided. Quote the same part from three countries and the FOB spread is often smaller than the duty and freight spread. Landed cost is the only number that compares.

The valuation chain

goods value = unit price × quantity

insured value = goods value × 1.10

insurance = insured value × insurance rate

CIF value = goods value + freight + insurance

duty = CIF value × duty rate

landed cost = CIF value + duty + inland and handling + carrying cost

carrying cost = landed cost before financing × cost of capital × days held / 365

The order of operations matters more than any single rate. Insurance is calculated on the insured value, not on the goods alone. Duty is calculated on CIF, not on FOB. Inland handling is in local currency and does not attract duty. Carrying cost is calculated last, on the money already committed.

Why duty sits on CIF

Customs values imported goods at the point of import, which means the goods, the freight to get them there and the insurance while they move. Most regimes, including India's customs valuation rules, assess on a CIF basis. Some markets assess on FOB and then add freight separately; the tariff schedule and the valuation rules for the destination decide, not the Incoterm on the invoice.

The practical consequence is that a cheap freight quote raises the duty base as well as the freight line. Moving from air to sea saves freight and saves duty on the freight, which is why the sea option often lands further ahead than the freight difference alone suggests.

The Incoterm decides who owns which line

FOB means the seller clears the goods for export and loads them; the buyer pays freight, insurance and import duty. CIF moves freight and insurance to the seller but duty stays with the buyer. DAP adds delivery to a named place, and DDP puts duty in the price. A quotation that names only a price without an Incoterm is not a quotation, and a DDP price is not comparable with a FOB price until both are built back to a landed basis.

Currency is a cost line with no invoice

A quote in USD or EUR with 90-day validity carries exchange risk that is either hedged or absorbed. A 3% move on a ₹4,50,000 goods value is ₹13,500, which is larger than the entire insurance line. Buyers who compare only the converted unit price at today's rate are comparing a number that will not exist when the goods ship.

Ask for the quote currency, the validity period and the Incoterm in writing. Then run the comparison at a rate at the pessimistic end of the range, not the spot rate on the day of the analysis.

Inventory carrying cost

Sea freight from India to Europe or the Americas ties up cash for 25–45 days in transit, plus customs, plus safety stock. A domestic supplier on a weekly release holds almost nothing.

carrying = committed value × cost of capital × (transit + safety stock days) / 365

At 12% annual cost of capital, 75 days of pipeline costs 2.5% of the landed value. That is small against a 20% FOB advantage and decisive against a 1% one. Add obsolescence and the risk of a design change while a container is at sea, and the comparison is no longer about price.

Duty classification is not a pricing question

The HS or HSN code determines the duty rate, and the code is a legal determination based on what the goods are, not on what they are called. Two similar fabricated assemblies can sit under codes several percentage points apart. Getting it wrong is a compliance exposure, not a costing error: duty recovered later, penalties, or a shipment held at the port.

Use the tariff schedule published by the destination customs authority, check whether a preferential rate applies under a trade agreement and whether the goods meet the rules of origin for that agreement, and record the code, the rate and the date the rate was checked on the quotation file. If the classification is genuinely ambiguous, an advance ruling is cheaper than a dispute.

Every rate in this tool is a user input. The 7.5% duty and 0.5% insurance in the default state are planning placeholders to show the structure, not the duty or insurance that applies to your shipment.

What Ganesh runs

Ganesh exports fabricated assemblies from Mumbai (Vasai) and Nagpur, and quotes FOB and CIF depending on the buyer's Incoterm. The five units cover stamping, laser cutting, bending, robotic and manual welding, seven-tank pretreatment and powder coating, so a landed cost can be built against a single supplier rather than a chain of them.

See export-ready sheet metal manufacturing from India, how to compare sheet metal manufacturing quotations and the sourcing and export guides.

What to put in the comparison sheet

• Incoterm and named place for every quote.
• Currency, exchange rate used and its date, plus quote validity.
• Freight mode, transit time and whether it is per shipment or per kg.
• HS code, duty rate, its source and the date checked.
• Insurance basis and rate.
• Inland leg, clearance and port charges.
• Expected reject rate and the cost of sorting a bad lot.

1,000 parts at ₹450 FOB, freight ₹45,000, insurance 0.5% on 110% of goods, duty 7.5% on CIF, inland ₹12,000, cost of capital 12% over 75 days.

Step 1 — Goods value: 1,000 × ₹450 = ₹4,50,000.

Step 2 — Insured value: ₹4,50,000 × 1.10 = ₹4,95,000. Insurance at 0.5% = ₹2,475.

Step 3 — CIF value: ₹4,50,000 + ₹45,000 + ₹2,475 = ₹4,97,475.

Step 4 — Duty at 7.5% of CIF: ₹37,310.63.

Step 5 — Inland and handling: ₹12,000.

Step 6 — Subtotal: ₹4,97,475 + ₹37,310.63 + ₹12,000 = ₹5,46,785.63.

Step 7 — Carrying cost: ₹5,46,785.63 × 0.12 × 75 / 365 = ₹13,482.

Step 8 — Landed total: ₹5,60,268, or ₹560.27 per part. The gap from FOB is 24.5%.

The sensitivity matters more than the total. Duty at 10% instead of 7.5% adds ₹12,437 (₹12.44 per part). A 3% currency move on the FOB value adds ₹13,500 (₹13.50). Thirty more days in the pipeline adds ₹5,393 (₹5.39). A 2% reject rate takes the cost per good part to ₹571.70. Freight doubling adds ₹45,000 plus ₹247.50 of insurance, or ₹45.25 per part — the largest single lever after duty.