With DDP (Delivered Duty Paid) shipping, the seller arranges delivery to your named place and pays import duty and taxes. With DAP (Delivered at Place), the seller delivers but you clear the goods and pay duty and tax. For jewellery from India, DDP is simple for the buyer but is harder for the seller to run than it looks.
Both are Incoterms rules published by the International Chamber of Commerce. The term only works as intended when both sides understand who is registered where.
What does DDP mean for jewellery shipments?
Under DDP the seller is responsible for export clearance, main carriage, import clearance, duty and tax, and delivery. The risk passes to you only when the goods are ready for unloading at your place.
The practical difficulty is import clearance. Someone has to act as importer in your country. That needs a local registration, a customs broker and, in many countries, a tax number. An Indian factory rarely has these, so DDP usually runs through a freight forwarder or courier who offers a DDP service, charged to the factory and built into your price.
Check also what the DDP price covers. Some quotes include only duty at the rate the forwarder expects, and exclude tax, reassessment or storage if the goods are held. Ask for a statement that the seller bears all duty and tax charged on entry, whatever the final assessment is.
DDP or DAP: who pays duty and tax?
In both cases the money for duty and tax ultimately comes from your purchase. The difference is who deals with customs and who carries the risk of mistakes.
- Under DDP, the seller or its agent clears the goods and pays duty and tax, and the price you pay includes them.
- Under DAP, you appoint a broker, pay duty and tax at the border and receive the goods once cleared.
- Under either term, you stay responsible for what the product is legally allowed to do. DDP does not move your safety or labelling duties to the seller.
When does DDP make sense for jewellery?
DDP can suit small, repeat parcels to consumers or small shops, where the buyer does not want to deal with customs. It can also suit marketplace sellers whose platform handles the tax collection.
It suits large orders less well. You lose sight of the real duty and freight figures, and a seller who misjudges the duty may cut corners on declared value. Under-declaration is a risk to you, since you may be the importer on paper.
Ask any seller offering DDP who the importer of record will be, what tax registration is used, and how you will receive the entry papers. If the answer is vague, choose DAP or FOB and appoint your own broker. See FOB, CIF or DAP.
What to put in the contract
Name the Incoterm with the version, for example 'DDP, Incoterms 2020', and the exact place of delivery. State who the importer of record is and what happens if duty is reassessed after delivery.
Keep a copy of the customs entry. Without it you cannot prove the duty paid or support a later claim. The full list of costs that sit around a quote is in hidden costs of importing jewellery from India.
To compare DDP and DAP quotes on a like-for-like basis, book a free sourcing review.