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Guide · India market entry
India commercial due diligence: a checklist
Financial diligence tells you the numbers are real. This tells you whether the growth story is.
Overseas investors examining Indian targets consistently under-test the commercial thesis relative to the financial and legal work. The numbers get audited, the contracts get reviewed, and the assumption that the market will keep growing at the rate the management deck asserts goes largely unexamined.
This checklist covers the commercial questions. It is not a substitute for financial, legal, tax or regulatory diligence, all of which are separate disciplines requiring qualified specialists.
Market and competition
- Is the category actually growing, and what is driving it? Are those drivers durable or cyclical?
- Who are the real competitors, including unbranded, regional and low-cost domestic players that rarely appear in a management deck?
- Has the competitive set changed in the past three years, and is it about to?
- What is the price trajectory in the category, and is the target's position defensible against it?
- Are there structural changes — regulatory, technological, channel — that could reset the competitive picture?
Revenue quality and concentration
- Revenue concentration by customer, by channel and by geography. What happens if the largest relationship ends?
- Is revenue recurring, repeated or one-off? These are frequently conflated in Indian growth stories.
- How much revenue depends on relationships held by specific individuals rather than by the company?
- What are the actual contract terms — duration, exclusivity, termination — behind the stated customer base?
- Are receivables and channel inventory consistent with reported sell-through, or is there stuffing?
Channel and customer validation
- Do customers describe the relationship the way management does?
- Are distributors carrying stock willingly or under pressure?
- What is the target's reputation among channel partners on pricing, support and payment?
- Would customers switch, and what would it take?
- Is the sales organisation capable of the growth being projected, or does the plan assume a capability that does not exist?
The recurring red flags
- Growth that is all in the projection — historical growth flat, projected growth steep, with the inflection attributed to a plan not yet executed.
- Channel inventory disguised as sales — sell-in reported as performance while sell-through is unknown or unavailable.
- A single relationship carrying the business — one customer, one distributor or one promoter relationship that everything depends on.
- Marketing spend with no attributable outcome — significant budget with no measurement, which usually means it is buying nothing.
- Management unable to explain their own competitive position — if they cannot articulate why customers choose them, growth assumptions built on that choice are unsupported.
Questions
What overseas teams ask
How long does commercial diligence take?
Three to eight weeks depending on depth and the number of primary conversations required. Compressed timelines are possible but reduce the primary work, which is where most of the value sits.
Can this be done without alerting the target?
Largely yes. Most of the market, competitive and channel work can be conducted at category level without naming the target. Customer reference calls necessarily reveal it and normally happen late, with your approval.
Does this cover regulatory and investment approval questions?
No. Whether a particular investor can invest in a particular sector, through which route and with what approvals, is a legal question for counsel qualified in Indian foreign-investment law, and should be resolved before commercial diligence is commissioned.
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Talk it through before you commit budget
Thirty minutes is usually enough to tell whether India is a real opportunity for your category, what the sensible first step is, and what it should cost. No deck, no preamble.