Key takeaways
- Buy-sell distributors usually carry less tax exposure than commission agents.
- Check filed accounts, GST and customs history, other brands and the warehouse before signing.
- Register your trademark in India in your own name first.
Distributor or agent?
| Distributor (buy-sell) | Commission agent | |
|---|---|---|
| Who sells to customers | The distributor, in its own name | You — the agent finds customers |
| Tax exposure for you | Generally low if it acts independently | Higher — an agent who habitually concludes contracts for you can create a permanent establishment |
| Control over pricing | Limited (competition law applies) | Greater |
Choosing and checking a distributor
- Read its filed accounts: revenue, receivables, debt — can it pay you?
- Check GST filing, import-export code and customs history for your product category.
- Which other brands does it carry? Any conflicts with your competitors?
- Visit its warehouse and sales team; meet two or three of its customers.
- Full process: partner checklist · done for you: partner due diligence.
Tax, customs and payments
- The distributor imports and pays customs duty and IGST; your sale is an export from your country.
- Keep the distributor genuinely independent — no authority to sign contracts in your name — to manage permanent-establishment risk.
- Marketing support, rebates or service fees you pay the distributor can carry Indian tax and GST questions — structure them deliberately.
- Payment terms: advance, letters of credit or credit insurance until you trust the distributor’s credit.
Contract points to agree with your lawyers
- Territory and exclusivity, minimum purchase targets and what happens if missed.
- Termination rights and notice; stock buy-back on exit; who owns the customer data.
- Trademark use and registration of your marks in India in your name.
- Anti-bribery clauses and audit rights — see US and UK rules.
- Governing law and dispute resolution (arbitration seat).
Sources
Frequently asked questions
How do I find and check a distributor in India?
Shortlist through trade fairs, export-promotion bodies and your existing customers, then check each candidate's filed accounts, GST and customs history, other brands carried, warehouse and sales team, and references from its customers.
Does appointing an Indian distributor create a permanent establishment?
Generally not if the distributor buys and resells in its own name and acts independently. A dependent agent who habitually concludes contracts on your behalf can create one.
Should I register my trademark in India before appointing a distributor?
Yes — register your marks in India in your own company's name, and make the distributor's right to use them end with the agreement.
Please note: this guide is general information based on the rules as they stood on the review date above. Regulations and RBI/CBDT procedures change often — please get advice on your specific facts before acting.