1.4 billion buyers, 4 sales regions: where do you start selling in India?

India has more than 1.4 billion people and one of the fastest-growing middle classes in the world. But India is not one market: it is closer to a continent of markets. A successful sales strategy for India starts small: one customer segment, one region, one partner and one local salesperson. Here is how to decide where to start selling in India.

Many European companies see India’s population figures and assume there is a huge market waiting for their product. Then they find out that the figures don’t apply to them, at least not without the right sales strategy. India has its own languages, cultures, levels of purchasing power and buying habits from state to state. The companies that succeed don’t try to sell to all of India at once. They choose where to start. Before you start selling in India, make these five decisions.

Key takeaways

• Segment: start with the high-end segment in the largest cities (Delhi, Mumbai, Bangalore). Move to the mid-market later.
• Region: India is usually split into four sales regions (North, West, South and East). Pick one region and one state first.
• Partner: no single distributor covers all of India. Start with one distributor in your priority state.
• Team: start with one business development manager, not a full national sales organisation, and avoid a permanent establishment risk.
• Service: Indian buyers weigh service and after-sales support as heavily as the product itself.

Step 1: Define your real target market in India

India’s middle class is growing fast. According to the ICE 360° survey by the research institute PRICE, the share of Indians in the middle class rose from 14 per cent in 2004-05 to 31 per cent in 2021. These consumers often see European products as better quality, which opens doors for international brands.

Still, most Indians don’t yet have the purchasing power for high-end international products. In practice, the market for most European products looks like this:

• The high-end segment is your starting point. In sectors such as fashion and electronics it is a sizeable market. These consumers are concentrated in and around the largest cities, such as Delhi, Mumbai and Bangalore.
• The mid-market is tempting, but its purchasing power is much lower than in Europe. Leave it aside at first. Once you have built a position in the high-end segment, adapt your product and price to the mid-market. That step can almost triple your sales market in India.

Before you invest, do thorough market research to find out how big your market really is.

Step 2: Choose your first sales region in India

India has 22 official languages and large differences between states, and those differences are often underestimated. It helps to think of Indian states as separate countries:

• Uttar Pradesh, India’s most populous state, has as many inhabitants as Brazil.
• Tamil Nadu in the south has an economy as large as Hungary’s.

The demographics vary just as much. Southern India’s population is older, better educated and has more to spend. Northern India is younger and relatively poorer. People in the north mainly speak Hindi, while people in the south prefer English or their state language, such as Kannada or Malayalam. Read more about the differences in doing business between Indian states.

For this reason, sales organisations in India usually divide the country into four regions: North, West, South and East. Your first decision is which region, and which state within it, matters most for your product. Start selling in India in that one state, prove your model, and then expand.

Step 3: Pick the right distribution partner for that region

No single distributor can give you nationwide coverage in India because the country is too large and too diverse. Choose your first distributor in the state that matters most to you, and add partners in other regions once the business there is running.

Keep in mind that distributors work for many companies at once. European products usually sit in the higher price segment and sell in smaller volumes, so they often get less attention than products that sell in bulk. Many exporters see their sales flatten after the first few years for exactly this reason. Read more in Exporting to India through third-party distributors and on our sales and distribution page.

Step 4: Start small with your own sales team in India

A full Indian sales organisation has national, regional and local sales managers. You don’t need all of that on day one. Start with one person who knows your product segment, can find Indian customers, understands how distribution works in India and takes responsibility rather than delegating.

Think carefully about the job title. In India, titles come with salary expectations: a national sales manager earns more than €50,000 a year on average and expects a team below them. A business development manager has the same duties, without the higher salary or the expectation of a full sales structure. That leaves you room to grow the team at your own pace.

Watch out for permanent establishment. If you hire an agent or salesperson in India who works only for you, without having your own Indian entity, you risk being classified as a permanent establishment by the Indian tax authorities. The fines, back taxes and interest can be several times what you earned in India.

With a business incubator, your own sales team works on a local partner’s payroll. You avoid that risk, and you don’t need your own subsidiary, audits or share capital.

Read more in How to build a successful sales team in India.

Step 5: Win on service, not just product

Indian buyers decide on the experience as much as on the product. According to Salesforce research cited in our Sales Guide India, 79 per cent of Indian consumers say a company’s service matters more than its product. Trust, accessibility and reliable after-sales service in India are among the strongest arguments for buying, so plan for them from your first customer onwards.

Frequently asked questions about a sales strategy for India

Where should a European company start selling in India?

Start with the high-end customer segment in one priority state, usually around a large city such as Delhi, Mumbai or Bangalore. Prove your sales model there before expanding to other regions or to the mid-market.

What are the four sales regions of India?

Sales organisations in India usually divide the country into North, West, South and East. Each region differs in language, demographics and purchasing power, so most companies focus on one region first.

Can one distributor cover the whole of India?

No. India is too large and too diverse for one distributor to give nationwide coverage. Start with a distributor in your most important state and add regional partners as sales grow.

Who should be my first salesperson in India?

Hire one business development manager who knows your product segment and understands Indian distribution. A “national sales manager” title raises salary expectations above €50,000 a year and implies a team below them.

How do I avoid a permanent establishment risk when hiring sales staff in India?

Don’t employ an agent or salesperson who works only for you without an Indian entity. A business incubator lets your sales team work on a local partner’s payroll, without your own subsidiary, audits or share capital.