Project Cargo and DSU for Indian Capital-Equipment Imports 2026: Heavy-Lift, ICC Clauses, Incoterms and the Re-Import Lead Time

When an Indian company imports capital equipment for a new plant, a gas turbine for a power project, a reactor train for a chemical unit, a stamping line for an automotive factory, a paper machine or a cement mill, it is running two linked exposures at once, and the insurance has to address both or it leaves a hole.

The first exposure is physical: the equipment can be damaged, lost or destroyed in transit from the overseas manufacturer to the Indian site. It travels by sea as project cargo, often in pieces too large or heavy for ordinary handling, is lifted on and off ships and trailers, moves over Indian roads that may not be built for its dimensions, and is stored and finally erected at site. Each stage carries a risk of damage, and a single damaged component on a long-lead-time machine can be irreplaceable for months.

The second exposure is financial and time-based: if that physical damage delays the project's start, the company loses the profit it would have earned had the plant come on stream on schedule. A turbine dropped during discharge does not just cost the price of the turbine; it costs the months of generation revenue lost while a replacement is fabricated and shipped. The financial loss from delay can dwarf the physical loss to the equipment itself, and a standard marine cargo policy that indemnifies only the physical damage leaves the much larger delay loss uncovered.

The cover that addresses the second exposure is delay in start-up (DSU), also called advance loss of profits (ALOP). It is not a standalone product; it is an extension tied to the underlying physical-damage policies (the marine cargo policy for the transit phase and the erection-all-risks or contractors-all-risks policy for the construction and erection phase), and it pays the loss of gross profit or the increased standing costs that result when an insured physical loss delays the commencement of the project beyond its planned date. The mechanics of that trigger, the time excess and the indemnity-period clock are worked through in a companion post; the focus here is the procurement and logistics architecture that has to be right first, because the DSU is only ever as good as the physical cover and the supply-contract terms underneath it.

This post sets out the procurement-and-logistics half of the programme for an Indian capital-equipment import: the marine project cargo cover and its heavy-lift, break-bulk and over-dimensional features leg by leg, how the Incoterms in the supply contract set the point of risk transfer and decide who insures each stretch, where the importer's insurable interest sits along the journey, the customs and re-import cycle that lengthens any replacement, and the pre-shipment and warranty survey conditions that determine whether a claim is paid at all. The physical cover and the delay extension are bought together because the loss they guard against is a single chain from a damaged crate to a delayed start, but it is the inbound supply chain, not the financial section, that this piece takes apart.

The foundation of the programme is the marine project cargo policy, which covers the capital equipment against physical loss or damage during the international and domestic transit from the manufacturer's works to the project site. It is a specialised form of marine cargo cover, written for a single project's flow of high-value, often indivisible consignments, rather than the recurring shipments an ordinary open cover handles.

A project cargo policy typically covers the full journey on an all-risks basis (subject to the usual marine exclusions), from the overseas factory, through ocean carriage, discharge at an Indian port, inland transit to site, and intermediate storage, up to and including arrival and unloading at the project site. The cover follows the equipment across every leg and every change of conveyance and handling, because the risk of damage is concentrated at the transitions: loading, discharge, transshipment, the lift onto the road trailer, the road movement and the final placement at site. Defining the policy to cover the whole door-to-site journey, rather than stopping at the port, is essential for project cargo, because a great deal of project-cargo damage happens after the port, on the inland leg and at site delivery.

Heavy-lift and over-dimensional cargo

Capital equipment is frequently heavy-lift and over-dimensional cargo (ODC), single pieces weighing tens or hundreds of tonnes and exceeding ordinary road and rail dimensions. This changes the risk profile and the policy conditions:

• The pieces require specialised lifting (heavy-lift cranes, special discharge arrangements at the port) and specialised transport (multi-axle hydraulic trailers, sometimes route modifications, removal of obstructions, even temporary bridge strengthening), and a failure at any of these points can cause severe, hard-to-repair damage.
• The over-dimensional inland movement is slow, exposed and route-specific, and the underwriter will want to understand the route, the method and the contractors handling it.
• The indivisibility of the pieces means a damaged component often cannot be partially replaced; the whole long-lead item may have to be re-manufactured, which is precisely what drives the delay loss the DSU cover responds to.

Because of these features, project-cargo underwriting for heavy-lift and ODC is detailed and engineering-led, not a simple rate on value. The underwriter assesses the nature of the pieces, the packing and securing, the lifting and transport method, the route, the contractors' competence and the storage at site, and may impose conditions and warranties (covered in the final section) on how the cargo is handled. The cover is real protection, but it is conditioned on the cargo being handled the way the underwriter was told it would be.

Sum insured on the physical cargo

The sum insured for the physical cargo should reflect the full landed cost the company would have to spend to replace and re-deliver a lost or damaged item: the CIF value, the duties, the inland transport, the handling, and the cost of getting a replacement to site. Insuring only the invoice value of the equipment understates the real cost of a loss, because the replacement has to be re-shipped and re-delivered, which is a substantial added cost on a heavy-lift item. The physical sum insured and the DSU sum insured are different things, addressed separately, and both have to be right.

An imported machine does not travel under one policy from start to finish. It passes through two distinct custody handovers on its way to earning, and each handover is a seam where a carelessly-assembled programme tears. The first handover is at site delivery, where the marine project cargo policy lets go and the erection-all-risks (EAR) or contractors-all-risks (CAR) policy picks up; the second is the policy-to-policy boundary in the delay extension that rides on both. The procurement team's job is to make sure neither custody handover opens a gap, because that is precisely where an importer discovers it was uninsured at the worst moment.

The physical handover at the site gate

The marine project cargo policy governs the equipment from the point the importer's risk begins, under the Incoterms, through ocean carriage, port discharge, the inland over-dimensional haul and unloading at the project site. The EAR or CAR policy then governs storage at site, assembly, erection, installation and commissioning. The danger is the literal moment of arrival: a transformer dropped off the trailer at the site gate can fall into a dispute over whether it was still in transit (marine) or already in the erection cover's custody. A well-drafted programme overlaps the two covers across the unloading-at-site operation so neither insurer can disclaim it as the other's, rather than drawing a hard line at the gate that leaves the handover itself unowned.

Why a great deal of import delay is uninsurable at the outset

The sharp point an importer has to internalise is that most import delay never had a physical-damage cause at all, and no delay extension on either policy answers a delay without insured physical harm behind it. A consignment held in customs clearance, an import-licence or BIS-certification hold, a port-congestion wait, a documentary mismatch that strands a unit at the bonded warehouse, or a supplier that simply ships late, none of these is insured physical damage, so none of them is a recoverable delay under either the marine or the erection extension. The delay extension answers delay caused by harm to the imported plant, never delay in the import process itself. This is why the procurement and clearance plan, not the policy, is the real defence against the most common import delays.

The two damage phases the delay extension must span

1. The voyage and delivery phase. Harm to the imported equipment during ocean carriage, discharge, inland over-dimensional haulage or site delivery is a marine project cargo loss, and the marine-linked extension answers the delay it forces on the plant's arrival.
2. The erection and testing phase. Harm during assembly, installation and commissioning of the imported plant is an EAR or CAR loss, and the erection-linked extension answers the delay it forces on commissioning.

On an import-driven project the DSU sum insured and the indemnity period have to be built around one number above all others: how long it takes to re-procure, re-fabricate and re-import a destroyed critical item from an overseas manufacturer. That procurement lead time, not a generic delay assumption, is what sizes the cover.

The re-import lead time drives the indemnity period

When a critical long-lead item imported for the project is destroyed in transit, the replacement re-enters the foreign manufacturer's order book, is re-fabricated, is re-shipped on the next suitable heavy-lift sailing, clears customs again, and is re-hauled over the inland route, before erection can even restart. For a gas turbine, a reactor train or a large fabricated column this re-import cycle commonly runs to many months and can exceed a year, and it is lengthened by the very features that make the item an import: the manufacturer's global queue, the limited number of heavy-lift vessels and sailings, and the customs and clearance steps that repeat on the replacement. The indemnity period must be set against this real re-import cycle for the project's most critical imported items, because a period set short (say six months when the re-import cycle is twelve) leaves uncovered the tail of the delay, which is exactly where the loss concentrates.

The financial basis reflects the imported plant's role in the project

The DSU sum insured is built on the project's expected gross profit (or the agreed financial basis) over that indemnity period, plus the standing and increased costs to be covered. What is distinct on an import-led project is that the items most likely to trigger a DSU claim are the imported critical-path machines, so the gross-profit figure should be scaled to the output those specific machines unlock and the period their re-import would consume, drawn from the project's financial projections rather than a round assumption. Under-stating it under-insures the delay loss and can bring an under-insurance adjustment, so the figure should be revisited as the project's start date, output and procurement schedule firm up.

The time excess against the import schedule

DSU carries a time-based deductible (a time excess), a number of days at the front of the delay the policy does not pay, so a short slip within the excess is borne by the company and the cover answers the longer delays beyond it. On an import programme the time excess should be read against how much float the procurement schedule already holds: where the import plan has little slack on the critical items, a long time excess simply transfers more of a realistic delay back to the company. The time excess and the indemnity period together define the band of import delay the policy actually pays for, and both belong to the procurement plan, not to a default.

Two practical questions decide whether a project-cargo and DSU programme is in force at the moment a loss happens: who has the insurable interest and the risk in the equipment at each point of the journey, and when in the project timeline the cover is placed. Getting either wrong can leave the importer exposed precisely when the equipment is most at risk.

Incoterms and where risk passes

The Incoterms agreed in the supply contract determine the point at which risk in the goods passes from the overseas seller to the Indian buyer, and therefore who needs to insure which leg of the journey. Under a term such as EXW or FOB, risk passes to the buyer early (at the seller's works or on loading at the origin port), so the Indian importer bears the transit risk for most of the journey and needs the cover from that early point. Under CIF or CIP, the seller arranges carriage and a measure of insurance to the destination, but the cover the seller provides is often the minimum and may not extend to the inland Indian leg, the site delivery, or the DSU exposure the buyer actually cares about. The importer should not assume a CIF seller's insurance protects it adequately; the seller's minimum cargo cover rarely matches the project's real exposure and almost never includes DSU. The safer course for a capital-equipment importer is usually to control its own project-cargo and DSU placement so the cover follows the equipment door to site on terms the importer has chosen, rather than relying on a seller's cover scoped to the seller's interest.

Insurable interest along the journey

The importer must have an insurable interest in the equipment for the cover to respond, and the interest follows where the risk and the prospective benefit sit. Once risk has passed under the Incoterms, the importer has an interest in the goods arriving safely and in the project starting on time, which is the basis for both the cargo and the DSU cover. The DSU interest is the importer's, because it is the importer who loses the profit if the project is delayed, so the DSU is the importer's cover to arrange even where a seller insured the cargo leg. Aligning the insurable interest, the Incoterms risk transfer and the cover so that the importer is insured for the legs and the loss it actually bears is the foundation of a programme that responds.

When to place the cover in the project timeline

The timing of placement matters because the cover has to be in force before the exposure begins, and the DSU sum insured depends on the project plan being settled enough to estimate gross profit and the indemnity period:

1. Place the marine project cargo cover before the first shipment leaves, covering from the point at which the importer's risk begins under the Incoterms, so no leg of the journey is uninsured.
2. Arrange the DSU at the same time as the underlying cargo and erection covers, because DSU is an extension of them and because the project's schedule and economics, which set the indemnity period and the gross-profit sum insured, need to be reflected from the start.
3. Coordinate the marine and the erection-all-risks placements so the handover from transit to erection, and the DSU spanning both, is arranged as one programme rather than two policies bought at different times by different parties.

Placing the cover late, after shipments have begun or after the project plan has firmed up, risks an uninsured leg or a DSU sum insured that does not reflect the real economics. The discipline is to arrange the cargo, erection and DSU covers together, early, against the settled project plan and the agreed Incoterms, so the programme is in force and correctly sized from the first movement of equipment to the commissioned plant.

Whether a project-cargo and DSU programme actually pays at a loss turns heavily on the survey and warranty conditions the policy carries, because these covers are conditioned on the cargo being handled and the project being run in defined ways. A buyer who treats these conditions as boilerplate can find a real loss reduced or declined for breach of a condition that was in the policy all along.

Survey warranties on heavy-lift and ODC

Project-cargo policies for heavy-lift and over-dimensional equipment commonly carry survey warranties: requirements that the loading, lashing and securing, the discharge, and sometimes the inland movement be surveyed and approved by a qualified marine surveyor or warranty surveyor, and that the surveyor's recommendations be followed. The rationale is that most serious heavy-lift damage comes from inadequate securing, lifting or transport method, so the underwriter requires independent verification that the operation is done correctly. A warranty survey before loading and at critical handling points is both a loss-prevention measure and a condition of cover, and a loss arising from an operation that was not surveyed as required, or that ignored the surveyor's recommendation, can be challenged.

Warranties on method, route and contractors

Beyond survey, the policy may warrant specific aspects of the operation: that the heavy-lift and transport be done by named or suitably-qualified contractors, that the agreed route and method be followed, that route surveys be carried out for the over-dimensional movement, and that the equipment be packed and prepared to the manufacturer's specification. These warranties reflect what the underwriter was told during underwriting, and departing from them, using a different contractor, a different route, an unapproved method, can breach the cover. The practical discipline is to align the actual operation with what the policy warrants, and to seek the insurer's agreement before changing the method, route or contractor, rather than discovering at a claim that a deviation breached a warranty.

The survey at the loss and the claim chain

When damage occurs, prompt survey of the loss matters as much as the pre-shipment survey. A loss surveyor (a marine surveyor or loss adjuster) should be appointed quickly to inspect the damage, establish the cause, and document the extent, because the cause determines whether the underlying physical cover responds, which in turn determines whether the DSU is triggered. For a DSU claim the chain is exact: the survey has to establish that the delay was caused by physical loss or damage covered under the marine or erection policy, and the quantum of the delay loss then has to be established against the project's gross profit and the indemnity period. Good documentation at the loss, of the physical damage, its cause, the resulting delay, and the financial effect, is what carries the claim through, and it is far easier to assemble at the time of loss than to reconstruct later.

Coordinating the physical and DSU claim

Because the DSU is tied to the physical cover, the two claims are handled together: the physical claim establishes the covered loss and its cause, and the DSU claim establishes the delay and its financial consequence flowing from that same covered loss. The buyer should expect the insurer and its surveyors and adjusters to examine the causal link closely, since the whole DSU trigger depends on it, and should be ready to demonstrate that the delay genuinely flows from the covered physical loss and not from unrelated project causes (a financing delay, a permitting delay, a contractor dispute) that are not insured. Keeping the project's own delay causes documented and separable from the insured physical-loss delay is part of presenting a clean DSU claim.

Meeting these conditions and structuring the marine, erection and DSU covers so they actually respond depends on reading the wordings closely: the transit scope, the survey and warranty clauses, the DSU trigger and its tie to the underlying cover, the indemnity period and time excess, and the exclusions that would otherwise hollow out the delay protection. Sarvada gives commercial insurance brokers structured, searchable access to insurer policy wordings so they can compare project-cargo, erection-all-risks and DSU terms, warranties and exclusions across insurers as they place and service capital-equipment import programmes. Request Access to ground your project-cargo and delay-in-start-up placements in the real wording detail that decides whether the claim pays.