Home ／ Insights on entering the Indian market
2026.08.27
The first stumbling block when trying to sell a product in India is “where to place it.” Even if you approach a major retailer with the same mindset you'd use in Japan, the shelf space you're offered will be limited. That's because independent shops make up a large part of distribution, and conditions change every time you cross a state line.
This article covers how India's distribution system works, the sales-channel options and how to choose among them, and how to find your first partner.
Before thinking about sales channels, you need to understand what the retail landscape actually looks like. Bringing in Japan's distribution logic as-is will lead to a flawed design.
Independent shops known as kirana still make up a large part of retail in India. Modern supermarkets and convenience stores are growing in urban areas, but their share of nationwide sales remains limited. This also means a large portion of the market doesn't show up clearly in statistics.
The introduction of the GST unified the tax system across state borders, but practice on the ground is not uniform. Transit times, warehouse placement, and business customs all differ by state. A distribution setup that works in the north won't necessarily work as-is in the south.
The character of individual cities is Gurugram and Chennai covered in the articles on each city.
This is where India differs most from Japan. Foreign investment in retail is restricted, and which sales channels you can choose is determined in advance by your investment structure. E-commerce is where the most misunderstandings arise.
| Form | Treatment of Foreign Investment | What It Means |
|---|---|---|
| Marketplace-model e-commerce | Up to 100% permitted | Only provides the platform; cannot own the goods being sold |
| Inventory-based e-commerce | Not permitted | Cannot hold your own inventory and sell directly to consumers |
| Single-brand retail | Permitted, subject to conditions | Stores that carry only your own brand |
| Multi-brand retail | Up to 51%; government approval required | Requires a minimum investment of 100 million dollars, half of which must go toward back-end infrastructure. Stores can only open in areas the state has agreed to accept, and only in cities with a population of more than one million |
In other words, an entity with foreign investment holding its own inventory and selling directly to consumers — inventory-based e-commerce — is, as a rule, not permitted. If you want to use e-commerce, the approach is to list on an existing marketplace through an Indian sales entity. Single-brand retail, however, falls under a separate framework, and if you carry only your own brand you can enter the market once you meet the relevant conditions. Note that companies with foreign investment operating multi-brand retail are not permitted to sell via e-commerce at all.
Start your sales-channel planning by confirming these rules. Do it in the reverse order, and the plan you build will fail to hold up in the end. How to Choose a Market-Entry Structure should be considered together with this.
There are broadly five sales channels available in India. Each differs in how quickly it can get off the ground and how much investment it requires.
| Sales channel | Suited to this stage | Numbers to track | Caveat |
|---|---|---|---|
| Distributor (exclusive agent) | When you want to cover the whole market at once | Number of stores stocking the product, sell-through rate by region | Leaving it all to a single distributor cuts you off from what's happening on the ground |
| Regional wholesalers | When testing in a limited number of cities | Reorder rate by wholesaler | Requires developing each state separately, which increases the management workload |
| Direct dealing with modern retailers | Once the brand is established | Weekly sales per store | Shelf fees, promotional costs, and payment terms are all steep |
| E-commerce (marketplace) | Initial test sales | Purchase rate, order distribution by city, return rate | Foreign investors cannot use the inventory-based model, and must go through an Indian sales entity |
| Foodservice and B2B | Products aimed at restaurants or food processors | Monthly volume per customer | Lot sizes are large, and price negotiations are tough |
Many companies commit to a single exclusive distributor from the very start, but this decision needs to be made carefully. If the contract terms are too restrictive, it becomes difficult to switch if things don't work out.
The advantage of e-commerce is that you can sell even at a stage when you can't secure shelf space. Negotiating with distribution channels after you've seen the market's response also puts you in a stronger position on terms.
As noted above, however, a foreign investor cannot hold its own inventory to sell. In practice, you partner with an Indian sales entity, and that entity is the one that lists on the marketplace. Who holds the inventory is the key regulatory dividing line, so make sure to confirm it when structuring the contract.
If it's a food product, the distribution of Japanese ingredients and how it moves can also be a useful reference. Specialty online stores already have delivery networks across multiple cities, and such operators can sometimes be candidates for a sales channel themselves.
Once you've decided on the shape of your sales channel, the next step is finding a partner. In many sectors in India, unlisted local companies are the strongest players, and searching from Japan won't give you a real sense of who they are.
The main routes to finding candidates are: direct contact at trade shows, introductions through JETRO or the Japan Chamber of Commerce & Industry in India, information from other Japanese companies already active in the same industry, and the local subsidiary of an existing business partner. How to assess a potential partner is How to find a local partner covered in detail in, so here we'll focus narrowly on the contract and operational steps needed to make it work as a sales channel.
A sales channel in India involves multiple parties. Before signing a contract, put each party's role and who holds the inventory down on paper. Leaving this ambiguous can also develop into a regulatory problem.
| Sales channel | Local Parties You Need | Who holds the inventory |
|---|---|---|
| E-commerce (marketplace) | The importer, and the sales entity that lists the product | The Indian sales entity |
| Distributor | Often also serves as the importer | Distributor |
| Regional wholesalers | The importer and wholesalers in each region | Passes from the importer to each wholesaler |
| Direct dealing with modern retailers | The importer, under contract with retail headquarters | Depends on whether the retailer buys outright or takes goods on consignment |
| Item | Why It Needs to Be Fixed |
|---|---|
| Scope and duration of exclusivity | Grant nationwide exclusivity with no end date, and you'll have no recourse if the partner fails to perform |
| Minimum purchase quantity | Tie it to a condition that lifts exclusivity if the target isn't met |
| Approach to setting the sale price | Prevents prices from collapsing; decide this including the price gap between e-commerce and physical stores |
| Sharing of sales data | Without visibility into where and to whom something sold, you can't plan your next move |
| Conditions for termination | Put it in writing up front so there's no dispute if you want to switch partners |
Sharing sales data in particular tends to get overlooked. Leave it entirely to the partner, and time will pass without you ever understanding why something sold or didn't.
What determines the outcome isn't whether something sold, but whether the payment actually comes in. Late payment is not unusual in business dealings in India, so settle the terms in advance.
There are also periods when public holidays make it hard to predict how much will get done. The reality that holidays differ from one location to another is "India's Holiday Calendar" covered in that article.
Even once your sales channel is settled, a product won't make it onto the shelf if the price doesn't work. When importing, first get a clear picture of everything that stacks on top of your ex-factory price from Japan.
For food products, remaining shelf-life requirements also affect your pricing. At the point of customs clearance, either 60% of the product's total shelf life or three months — whichever is shorter — must still remain, so you need an inventory plan that accounts for transit time.
SoJapan provides end-to-end support, from consumer research and strategy development to finding local partners and executing sales. It's designed on the premise of staying with you all the way to actual sales, not stopping at research.
Start by checking the foreign investment rules. India restricts foreign investment in retail, and formats where you sell directly to consumers yourself are regulated. Because the sales-channel options available to you are determined by your investment structure, failing to settle this first can cause your plan to fall apart in the end.
Judge it carefully. There's an advantage to covering the whole market at once, but granting nationwide exclusivity with no end date leaves you with no recourse if the distributor fails to perform. It's safer to limit the scope and duration of exclusivity and to include a contract clause allowing termination if minimum purchase quantities aren't met.
No. Inventory-based e-commerce, where a foreign investor holds inventory and sells directly to consumers, is not permitted. What is permitted is the marketplace model, where you only provide the platform and don't own the goods; this allows up to 100% foreign investment. In practice, you partner with an Indian sales entity, and that entity lists the product on the marketplace.
Because you can sell even at a stage when you haven't secured shelf space. You can start with limited inventory, and seeing which cities orders come from gives you material for choosing your next target region. The track record you build there also becomes leverage when negotiating terms with distribution partners.
The main routes are direct contact at trade shows, introductions through JETRO or the Japan Chamber of Commerce & Industry in India, information from other Japanese companies already active in the same industry, and the local subsidiary of an existing business partner. Because unlisted local companies are the strongest players in many sectors in India, and searching from Japan won't give you a real sense of who they are, going through personal connections is the realistic approach.
You can't tell just by meeting and talking. Check the registration details with the Ministry of Corporate Affairs, and go see with your own eyes which stores actually carry the brands they claim to handle. If they tell you they can “handle the whole country,” ask specifically which states they have their own sales staff in. It also helps to check with other companies in the same industry whether payments have been delayed.
Five things: the scope and duration of exclusivity, the minimum purchase quantity, the approach to setting the sale price, the sharing of sales data, and the conditions for termination. Sharing of sales data in particular tends to get overlooked; leave it entirely to the partner, and time will pass without you ever understanding why something sold or didn't.
Developing a sales channel in India starts with checking the foreign investment rules, since the sales-channel options available are determined up front. From there, given that independent shops still make up a large part of distribution, the realistic order is to sell on a small scale via e-commerce or a single city's wholesaler, build a track record, and then use those numbers to negotiate with distribution partners.
Grant nationwide exclusivity from the very start, and you'll have no recourse if the partner fails to perform. Be sure to fix the scope and duration of exclusivity, as well as the sharing of sales data, in the contract.
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