Page 36 - Banking Finance June 2021

ARTICLE

INCOTERMS 2020
®

- AN EFFECTIVE

TOOL TO REDUCE

INCONSISTENCIES

IN GLOBAL TRADE

"INCOTERMS®" is an acronym derived from international beginning of the decade by the International Chamber of
commercial terms. These standard trade terms listed under Commerce (ICC). The latest version of "INCOTERMS®" came
"INCOTERMS®" provide a universal meaning to buyers and into effect from 1st January 2020 in the name of
sellers around the world. They're used in sale contracts to "INCOTERMS® 2020". Incoterms® 2020 is a registered
make sure that the buyer and seller know and understand trademark of ICC.
their individual responsibilities as to:
Y Who is responsible for the cost of transporting the History of INCOTERMS®:
goods, including insurance, taxes and duties? One of the main agenda of the International Chamber of
Y Where the goods should be picked up from and Commerce (ICC) after its creation in 1919 was to facilitate
transported to? International Trade. In the early 1920's ICC conducted a
study on the commercial trade terms used by merchants
Y Who is responsible for the goods at each step during
across 13 countries and it was limited to six commonly used
transportation?
terms in these countries. In 1923 the results of the study
were published and it highlighted the disparities in
Presently, INCOTERMS® is being revised and published at the
interpretation of the six commercial trade terms.
About the author In the year 1928, a second study was initiated in order to

R Narayanan identify the discrepancies in the inaugural survey. The scope
Faculty Member, Union Bank of India of the second study was expanded to identify the various
Staff Training Centre, Powai, Mumbai trade terms used in more than 30 different countries. The
MBA (Banking & Finance), CAIIB, findings of these studies led to the publication of the first
Diploma in System Audit from IIBF version of the "INCOTERM®" rules. The terms included FAS

36 | 2021 | JUNE | BANKING FINANCE