FOB (Free On Board) price is the total cost of a garment at the factory's export port, including fabric, CMT cost, trims, and local freight to port. It does not include international shipping, import duties, or last-mile delivery to your warehouse. When a factory quotes you "FOB Mumbai" or "FOB Tirupur," they're responsible for everything up to the ship's rail, and you take it from there.
At Greige, the garment sourcing platform, we break every quote into line items so brands can see what they're actually paying for before they commit. Here's what FOB means, what's typically included in an Indian FOB quote, and when to use FOB versus other pricing terms.
What's included in an FOB price
An FOB price from an Indian garment factory covers:
- Fabric, sourced by the factory (in full-package production) or supplied by the brand (CMT)
- Trims, buttons, zips, thread, labels, hangtags
- Cut, Make, Trim (CMT), factory labour cost
- Packaging, polybag, carton, inner packaging
- Local freight, from the factory floor to the export port
- Export documentation prep, shipping bill, certificate of origin
Not included in FOB:
- International ocean or air freight
- Import duties and customs clearance fees
- Last-mile delivery
- Your freight forwarder's fee
- Currency conversion costs
The moment the goods are loaded onto the vessel at the port of origin, risk and responsibility transfer from the seller to the buyer. That's what "Free On Board" means operationally.
How FOB prices actually behave
There's no single FOB number for a garment type. The price depends on the fabric (weight, fibre, finish), the construction, the trims spec, and the order size. A heavier fabric or a more complex make pushes the number up. Larger runs spread fixed costs over more units, so per-unit FOB usually comes down with volume.
The bigger surprise for most brands isn't the FOB number itself, it's everything that sits on top of it. FOB is the cost to the port. Landed cost adds international freight, import duty at your product's HTS rate, customs clearance, and your forwarder's fee. Brands that budget on the FOB number alone are the ones who get caught out.
Practical note: FOB prices for the same style can vary meaningfully between factories quoting the same spec. The variables are fabric sourcing relationships (factory-preferred mills versus open-market sourcing), labour efficiency (an experienced line versus a new style), and how order volume gets amortised. Getting three quotes for any style is always worth it.
FOB vs DDP vs EXW: which should you use?
Three pricing terms cover most garment sourcing transactions:
| Term | Who pays freight + duties | Risk transfer | Best for |
|---|---|---|---|
| FOB | Buyer pays everything from port of origin | At port of origin | Brands with a freight forwarder, larger repeat orders |
| DDP (Delivered Duty Paid) | Seller handles freight + duties, delivers to warehouse | At buyer's warehouse | First-time importers, small orders, brands without logistics infrastructure |
| EXW (Ex-Works) | Buyer pays everything from factory floor | At factory | Brands with strong freight infrastructure and agents on the ground in India |
DDP is usually better for small brands ordering low volumes per style. The freight and customs coordination overhead of FOB, freight forwarder, customs broker, duty payments, adds complexity and cost that isn't worth managing at low volumes. A factory or trading company offering DDP pricing has already baked the logistics margin in. You pay more per unit, but you get one invoice and one delivery.
Switch to FOB when: you're ordering larger volumes regularly and have a trusted freight forwarder. At scale, managing freight directly can save meaningfully on the logistics component versus DDP.
Avoid EXW unless you have a freight agent physically based in India. EXW transfers all risk at the factory. If the truck breaks down before the port, that's your problem.
A note on origin: India's tariff treatment has generally been more favourable than China's for US importers, which is part of why brands look at India for sourcing. Duty rates depend entirely on your product's classification, so always confirm your own HTS code rather than assuming.
The hidden cost most brands miss: currency risk
An Indian factory quotes FOB in USD. The actual production costs, labour, local fabric, factory overhead, are in Indian Rupees. When the INR strengthens against the USD, the factory's margin compresses. This can trigger a factory to re-quote mid-production ("the fabric cost has increased") or cut corners to protect margin.
The fix: get your FOB quote locked in writing, with an exchange rate reference date noted in the order. If the currency moves significantly between order and shipping, you want that conversation to happen against an agreed reference, not from scratch.
FAQ
What is FOB price in clothing manufacturing? FOB (Free On Board) price is the total cost of a garment at the factory's port of export, including fabric, CMT, trims, and local freight to port. It does not include international shipping, import duties, or last-mile delivery. FOB is the standard pricing term when sourcing from India or China.
What is the difference between FOB and DDP in garment manufacturing? FOB is the garment cost to the export port, and the brand pays international freight and import duties separately. DDP (Delivered Duty Paid) is an all-in price delivered to the brand's warehouse. DDP costs more per unit because the seller carries freight, duty, and logistics, but it removes that complexity for small brands.
Is FOB or DDP better for small fashion brands? DDP is usually better for small brands ordering low volumes per style. The freight and duty coordination overhead of FOB is not worth the per-unit saving at low volumes. Brands ordering larger volumes per style regularly should consider switching to FOB and using a freight forwarder.
What does a typical India FOB price include? Fabric, CMT (Cut, Make, Trim) labour, trims, packaging, local freight to port, and export documentation. It does not include international shipping, import duties, or your freight forwarder's fees. At Greige, FOB quotes are broken into line items so brands can see exactly what they're paying for.
How do I calculate landed cost from an FOB price? Landed cost = FOB price + international freight + import duty + freight forwarder fee + any last-mile delivery. To estimate it, add freight for your chosen method, apply the duty rate for your product's HTS code (verify at usitc.gov), and spread your forwarder fee across the shipment. Costs vary by fabric, order size, freight method, and duty rate, so build the estimate from your own quote rather than a rule of thumb.
Sea freight from India to the US typically takes a few weeks on top of your FOB date, so factor this into your production timeline planning before you commit to a launch date.
FOB is the standard. Know what it includes, what it doesn't, and when to ask for DDP instead. The brands that get surprised by landed costs are the ones who planned on the FOB number and forgot about everything that happens after the goods hit the ship.