Home ／ Insights on entering the Indian market
2026.09.19
Try to sell food or daily necessities in India, and the word "kirana" is bound to come up. These are the independent shops found all over town. They make up the overwhelming majority of stores by number, and as of 2022, JETRO still wrote that "kirana remain the center of retail." However, when a Japanese manufacturer tries to place products in kirana stores, going to the store itself gets you nowhere -- because several layers of wholesalers sit in between.
This article sorts out how many layers sit between a manufacturer and a kirana shelf, what each layer handles, and where a Japanese company should realistically start. For how to choose your overall sales channel, see Where should you start developing sales channels in India?.
A JETRO survey report (June 2019) estimated that India has more than 14 million retail stores nationwide, with traditional trade accounting for more than 90% of that number. The leading example is kirana, with more than 12 million family-run micro-shops estimated to exist across the country. JETRO has continued to write since then that "the center of retail remains the unorganized small shops known as kirana," and while the share of modern retail and e-commerce is increasing, it has not replaced them.
The word "unorganized" is the important part. There is no chain headquarters, and each store has a different owner. There is no single counterpart you can sign a contract with to get into hundreds or thousands of stores at once.
What goes on a kirana's shelf is decided by the shop owner. Stores are small, and there is a limit to how many products they can carry. So the owner judges based on "will it sell" and "how much is my cut." In a door-to-door interview survey conducted by Dentsu Institute from July to August 2011, covering small and medium independent shops and independent supermarkets in Delhi and Mumbai (243 FMCG-carrying stores), 75% of stores cited "a high margin" as a criterion for deciding whether to stock a new product.
Even if a Japanese manufacturer explains "please stock it because the quality is good," that alone won't move the shelf. For the shop owner, it's a question of what to use their limited shelf space for. The same survey put the margin for FMCG-carrying stores at around 10%.
Since this is a survey of two cities from 15 years ago, the figures cannot be used as current numbers as they stand. That said, the underlying structure -- that the shop owner judges based on their own cut -- has not changed in various commentary written since.
At kirana shops, detergent and shampoo are sold in single-use sachets for people who cannot afford to buy a full bottle. JETRO cites this as "a service suited to local needs." Bringing over Japanese sizes and packaging as they are means the shelf price simply won't match local price levels. Before choosing where to sell, you need to think about whether you can adapt the product itself.
When thinking about "how many layers there are," conflating the trading partners through whom ownership of the product passes with the sales function of visiting stores leads to confusion. Laying them out separately gives the following.
| Category | Name | Role |
|---|---|---|
| Trading partners | C&F agent | Holds the manufacturer's stock on a state-by-state basis and ships it downstream. Often a consignment arrangement with no transfer of ownership. |
| Trading partners | Super stockist | Buys in bulk for a wide area or rural region and distributes to lower-tier wholesalers. Sometimes skipped in urban areas. |
| Trading partners | Distributor (stockist) | Covers a city or district, and handles stock, delivery, and payment collection. |
| Trading partners | Small wholesaler | Covers even smaller shops within a district. |
| Trading partners | Kirana | Sells to consumers over the counter. |
| Sales function | Beat sales | Visits stores in an assigned area on a set schedule by day of the week to take orders. Often the distributor employs the people who do this. |
Not every layer is always present. In urban areas, C&F agents or super stockists are sometimes skipped, while in rural areas, additional layers are added instead. The combination varies by product category and region.
The distributor is at the center of day-to-day operations. They keep track of the stores in their assigned district and take on stock, delivery, and payment collection.
A "beat" refers to a sales rep's rounds. The person in charge covers a set area on a set day of the week, visits each store one by one to take orders, and delivers them on the next run. This is not an independent wholesale layer -- it's a sales function held within the distributor. Unless your product gets onto this network of rounds, it won't make it onto the store shelf.
For products imported from Japan, an importer sits in front of the structure above.
| Layer | Role |
|---|---|
| Japanese manufacturer | Exports. Sets the FOB price, minimum lot size, and shelf life. |
| Indian importer | Customs clearance, import license, applying local labels, domestic inventory. |
| Distributor | Distribution to the district, extending credit to stores and collecting payment. |
| Retail (kirana, supermarket, e-commerce) | Sells to consumers over the counter. |
Because an importer is inserted into the chain, the costs stacked up between Japan and the store shelf are heavier than for domestic products. The first question is whether you can compete on price with the local brands sitting on the same shelf.
There are many layers because distribution cannot function unless someone bears the cost of inventory, credit, and delivery.
Each layer's cut varies greatly by product category and region, and there is no published, standardized figure. So building your price assumptions on another company's numbers will never work out. The only way is to have a candidate distributor provide the terms for a similar category they already handle, and rebuild the numbers around your own product.
In Indian business negotiations, prices are given a different name at each layer. The price the distributor pays is called PTS (Price to Stockist), and the price the retailer pays is called PTR (Price to Retailer); both are discussed separately alongside the MRP printed on the package. The order you build them in runs the other way -- you subtract backward from the shelf price.
The MRP is a ceiling price that the Legal Metrology Act requires to be displayed, and it isn't necessarily the same as the actual selling price. Who bears the cost when a discount is given is something to be decided in the contract. Starting without settling this leads to disputes every time there's a promotion. For how to build up the landed price, Import and licensing support we work through the calculation for individual products.
The order lot per kirana store is small, and once you add the cost of importing, customs clearance, and domestic delivery, direct dealing doesn't work out. To reach any real number of stores, you have no choice but to go through an intermediary.
Kirana business runs on the premise of selling on credit. It isn't realistic for a Japanese head office to take on the role of holding receivables and absorbing the loss if they go bad. If you start distribution without deciding who bears the risk, sales may show up on the books but won't be collected. The cold chain is weak, and damage and delays happen in transit. An importer of Japanese food interviewed by JETRO said that transport delays and packaging damage occur several times a year.
The reality is that it's effectively difficult for a Japanese company with no legal entity or base in India to become the importer. Obtaining the Importer-Exporter Code (IEC) required for importing needs an Indian PAN, and a food import license also presumes you are a business registered within India. Import and licensing support we sort out the conditions by product.
When a foreign company sets up a local entity, wholesale (Cash & Carry) is allowed with 100% foreign ownership. It can't sell to consumers, but selling to businesses that hold things like GST registration is fine, and this form is used as the route for wholesaling to kirana.
Single-brand retail is also allowed with 100% foreign ownership, but this is a form where you sell your own brand to consumers yourself, and you have no right to wholesale to a third party's store. If foreign ownership exceeds 51%, there is also an obligation to source 30% of purchase value domestically from India. There are also conditions such as the brand being sold internationally under the same name, so it isn't a form a food manufacturer can lightly choose.
Which form you should take depends on whether you want to reach kirana or sell in your own stores.
A plan to distribute a product imported from Japan straight into kirana stores nationwide doesn't work out. The unit price doesn't match up, and there isn't enough gross margin left to support every layer of the distribution chain.
There is a useful example. Daily Need Exim, an importer JETRO featured in March 2021, was registered in India in 2017 and had four bases in total in major cities such as Delhi, Mumbai, Bengaluru, and Kochi. Its main clients were foreign-owned hotels and upscale restaurants. In February of the same year it opened an e-commerce site and also entered retail, but at the time this was an experimental rollout centered on food-service-grade products. The company, prefacing its remarks with "this is just a sense of it," said that more than 80% of the food it supplies is consumed not by Japanese people but by Indians.
This is a single company's example, so it doesn't apply to every product. Still, the sequence of building a track record in food service before expanding into retail makes sense for high-unit-price imports.
A JETRO report cites the view of Naho Shigeta, representative of InfoBridge Group, who is well versed in the situation in India, writing that "a model of exporting an existing product from Japan as-is is particularly hard to make work in the Indian market," and recommends starting with test marketing. The right order is to first confirm whether the product itself can be adapted to local price ranges, before deciding on the sales channel.
With the introduction of GST, India's tax system itself became unified nationwide, but GST registration is done state by state, and the logistics network, business customs, and trading partners all change from state to state. If you aim for the whole country from the start, every layer tends to be spread thin. It's usually faster in the end to build a working setup in a single city first and then expand sideways. For sales channels in the Delhi capital region, see Indian malls where Japanese brands have a presence.
Kirana distribution is now being shaken from outside. This is because quick commerce, promising 10-minute delivery, is spreading in urban areas, and existing wholesalers and kirana stores are pushing back.
On March 6, 2025, AICPDF (the All India Consumer Products Distributors Federation), an industry body for consumer goods distributors, filed a complaint with the Competition Commission of India (CCI), alleging that Zepto, Blinkit, BigBasket, and Swiggy Instamart were competing unfairly through deep discounting and "cash-burn" style operations. The group has continued lobbying the authorities since then, including calling for storage standards to be set for dark stores.
This is a claim from the existing distribution side, not neutral statistics.
That the interests of the parties involved are colliding over urban sales channels is itself apparent from the ongoing complaints and calls for regulation. For Japanese companies, though, it isn't a binary choice between kirana and quick commerce. Quick commerce has narrow shelves that only leave room for fast-turning products, while kirana is a world of low-unit-price goods. It comes down to choosing whichever fits your product's turnover and unit price. For the reality of quick commerce, see India's quick commerce.
If you skip this order and start distribution anyway, collection and inventory problems will surface before sales do. We can help you from the very start, sorting out where to begin. Local marketing support We offer guidance on an approach that starts from in-store activity and events.
That's not realistic. The order volume per store is small, and the cost from importing through delivery doesn't add up. India's consumer goods distribution is structured so that products reach stores through layers such as super stockists, distributors, and beat sales, and you need to get onto this network to reach any meaningful number of stores.
A 2019 JETRO survey report estimated more than 14 million retail stores nationwide in India, of which more than 12 million are kirana. Traditional trade accounts for more than 90% of the number of stores. Since this is unorganized retail with no chain headquarters, there is no single counterpart you can sign a contract with to get into a large number of stores.
Yes. The introduction of GST made the tax system itself uniform nationwide, but registration is done state by state. The more states you hold inventory in, the more registrations and filings you incur. This is one reason it's better to narrow your first target city down to just one.
This varies greatly by product category and region, so there is no published, standardized figure. Even though the distributor's own gross margin may be small, bad debt from credit, the burden of promotions, and returns are all stacked on top. Have a candidate business provide terms for a similar category, and rebuild the numbers around your own product. Assuming another company's figures won't work out.
Yes, if it's set up as a wholesale (Cash & Carry) entity. It can be established with 100% foreign ownership, and since it sells to businesses that hold things like GST registration, kirana are covered. Single-brand retail, on the other hand, is a form where you sell your own brand to consumers yourself, and you have no right to wholesale to a third party's store. With foreign ownership above 51%, there is also an obligation to source 30% of purchase value domestically from India.
The trading terms for a similar category they already handle (each layer's cut, credit days, how returns are handled), the district they cover and the number of beats, the number of sales staff they employ, and a list of the brands they carry. A candidate who can't provide these four things may not actually have real distribution capacity. Be sure to check this before granting any exclusivity.
In March 2025, AICPDF, an industry body for distributors, filed a complaint with the Competition Commission alleging that Zepto, Blinkit, BigBasket, and Swiggy Instamart were competing unfairly through deep discounting. This is a claim from the existing distribution side, not neutral statistics. Still, the fact that complaints and calls for regulation keep coming shows that interests are colliding over urban sales channels. For Japanese companies, it isn't a binary choice -- it comes down to choosing the sales channel that fits your product's turnover and unit price.
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