Warranty Policy for D2C Brands in India

Warranty is not a marketing line. It is a liability you carry on the balance sheet, and in India it exists whether you write it down or not.

Start from the category norm, not from generosity

Buyers compare your warranty to what the category already offers. Going shorter reads as a red flag. Going much longer rarely converts better and always costs more.

The rough Indian norms: mobile handsets and accessories one year, small kitchen appliances one to two years, large appliances one to two years on the unit with a longer sealed-component cover of five to ten years, mattresses five to ten years, furniture one to three years, footwear and bags three to six months, apparel usually nothing beyond manufacturing defect at delivery.

Pick the norm. Then decide whether a longer term is a real differentiator or a cost you have not priced. A two year cover on a product with a 3 percent annual failure rate roughly doubles claim exposure against a one year cover. If gross margin cannot absorb that, do not announce it.

The Consumer Protection Act 2019 does not care what your policy says

This is the part most founders miss. Section 83 permits a product liability action whether or not any warranty or guarantee was given. The buyer only has to show the product was defective, that the defect caused harm, and that you fall inside the definition of manufacturer or product seller. Your printed warranty card is not a ceiling on any of that.

Manufacturers and product sellers can be held jointly and severally liable. If you sell under your own brand, you are the manufacturer for this purpose even when a contract factory made the unit. Sellers pick up independent liability where they gave an express warranty or altered the product.

The Consumer Protection E-Commerce Rules 2020 add disclosure duties. Warranty and guarantee terms, country of origin, and seller details have to be visible before purchase. A listing that buries the warranty term is a compliance gap, not just a customer experience gap.

Consumer commissions sit at three levels by claim value: district up to fifty lakh, state above that to two crore, national above two crore. Limitation is two years from when the cause of action arose. Budget for a handful of commission matters a year once you cross meaningful volume. They are slow, and defending badly costs more than settling early.

Provision for claims before they arrive

Under Ind AS 37 you recognise a provision when a past event creates a probable outflow you can estimate reliably. Warranty is the textbook case. You do not assess each unit. You assess the class of obligations and use an expected value.

The working formula is simple. Units sold in the period, times expected claim rate over the cover period, times average cost to settle a claim. Average cost is not just the part. It is part cost plus labour plus inbound freight plus outbound freight plus the share of claims you close with a full replacement.

Run a provision roll-forward every month. Opening balance, plus charge for the period, minus claims settled, plus or minus revision to estimate, equals closing balance. If the closing balance keeps rising while claims settled stays flat, your rate assumption is too high and you are hiding margin. If the balance keeps draining, you are under-provided and one bad batch will land in a single quarter.

Proof of purchase when the sale happened on a marketplace

You did not sell to that customer. A marketplace seller did, and the invoice carries their GSTIN, not yours. If your policy demands the original invoice in your name, you will reject genuine claims and collect one-star reviews for it.

Three practical fixes. First, accept the marketplace order ID and the tax invoice PDF as valid proof. Second, put a serial or batch number on every unit and hold a dispatch record, so you can confirm the unit is yours and when it left your warehouse. Third, default the warranty start to invoice date, and where no invoice exists, fall back to a published rule such as manufacture date plus a fixed number of days.

Publish all of this on the product page and inside the box. Ambiguity in the policy is where claim handling time disappears.

The claim rate to model

Model it, measure it, then replace the model with your own data.

• Apparel, bags and footwear: under 1 percent of units within the cover window.
• Consumer electronics and accessories: 1 to 4 percent in year one.
• Small appliances with motors or heating elements: 3 to 6 percent over two years.
• Large appliances and anything with a compressor or pump: 4 to 8 percent across the full cover period.

Track four numbers monthly. Claims per thousand units shipped, by batch. Average cost to settle. Days from claim raised to claim closed. Repeat claim rate on the same unit.

Batch level tracking is the one that pays for itself. Warranty failure is rarely spread evenly. It clusters in specific production runs. If you only watch a blended rate, a bad batch of two thousand units vanishes inside a hundred thousand and you find out through reviews six months later.

Set a trigger. If any batch crosses twice your baseline claim rate, stop shipping it, pull the retained samples, and go back to the supplier while the commercial relationship still gives you leverage. That single control does more for warranty cost than any wording change to the policy.