Full formBusiness & Corporate
FOBstands forFree on Board
Full Form of FOB
What is FOB?
FOB, or Free on Board, is an international trade term defined by the International Chamber of Commerce (ICC) as part of the Incoterms rules. It specifies that the seller delivers goods on board a vessel nominated by the buyer at a named port of shipment. The risk of loss or damage transfers from seller to buyer once the goods are loaded onto the ship. In India, FOB is widely used in export-import contracts, especially for commodities like textiles, chemicals, and machinery. The term is critical for determining cost, insurance, and freight responsibilities. Indian exporters often quote FOB prices to avoid bearing ocean freight and insurance costs. The term appears in commercial invoices, letters of credit, and shipping documents. For students pursuing B.Com, MBA, or CA, understanding FOB is essential for trade finance and logistics exams. It is also a frequent topic in competitive exams like UGC NET Commerce and ICWA.
FOB का फुल फॉर्म
नि:शुल्क नौका पर
Example
The seller agreed to supply 1,000 metric tonnes of steel at ₹35,000 per tonne FOB Mumbai port.
FOB — frequently asked questions
What is the full form of FOB?
The full form of FOB is Free on Board, an Incoterm indicating that the seller delivers goods on board a vessel nominated by the buyer at a named port, after which risk transfers to the buyer.
How is FOB used in Indian export-import?
Indian exporters often quote FOB prices to limit their responsibility to loading goods at a port like Mumbai or Chennai, leaving ocean freight and insurance to the buyer.
What is the difference between FOB and CIF?
Under FOB, the buyer pays for freight and insurance, whereas under CIF (Cost, Insurance, and Freight), the seller covers those costs up to the destination port.