Using Agents and Distributors in India

Most Australian firms rely on agents or distributors to represent their businesses and sell their products in international markets. The roles of agents and distributors are often confused, so it is important to understand the difference between them.

The definition and responsibilities of agents and distributors can also vary depending on the country or industry in which you are involved, so you will need to confirm their specific roles and responsibilities. The information below is of a general nature. It is therefore important to make sure you have the role of the Indian party clearly defined and confirmed in the agreement or contract you have with them and not assume they will take on all activities that an agent or distributor may generally perform in Australia.

Agents

An agent is a representative of the supplier, but does not take ownership of the goods. An agent is generally paid a commission based on an agreed percentage of sales value generated. Agents tend to be based in India and often represent numerous service or product lines. They may operate on an exclusive basis, where they are the sole agent for a company’s goods or services in that market, or as one of a number of agents. 

Distributors

A distributor takes ownership of the goods by buying them and reselling them in India, either to local retailers or consumers directly. In some cases, the distributor may sell to other wholesalers who then sell to local retailers or end users. Distributors may carry complementary and competing lines and usually offer after-sales service. They earn money by adding a margin to product prices. 

Distributor margins are generally higher than agent fees because distributors have larger costs, such as for storage of inventory. Australian businesses considering a distributor in India should note that, although in some other international markets a distributor will generally take on the role and responsibility of marketing, this is rarely the case in the Indian context. Marketing needs to be discussed in detail with a potential distributor – in particular, whether they will do it or not. The more suitable option is often the use of a marketing company

Download a copy of the India Country Starter Pack to access more information on why to use an agent or a distributor, and the steps you should consider when choosing an agent or distributor.

Want to learn more? Explore our other India information categories or download the India Country Starter Pack.