Types of Inventory in India

India's Companies Act, 2013 (Schedule III) sorts inventories into seven heads: raw materials; work-in-progress; finished goods; stock-in-trade (goods acquired for trading); stores and spares; loose tools; and others, with the nature specified. The source is Schedule III, Division I, Note O (non-Ind AS companies) and Division II, Part B, Current Assets, I (Ind AS companies).

The seven Schedule III inventory heads

Inventory is any asset a business holds for sale, is producing for sale, or will consume in production or services (Ind AS 2, Inventories, para 6). Ind AS means Indian Accounting Standards.

Ind AS 2 para 8 includes "materials and supplies awaiting use in the production process". Para 9 values inventory at the lower of cost and net realisable value, which is the estimated selling price less the costs of completion and sale.

The common maintenance, repair and operations (MRO) category corresponds roughly to stores and spares plus loose tools.

By function, inventory is cycle stock, safety stock, anticipation stock, pipeline stock and decoupling stock. These describe why you hold the stock. They sit inside the Schedule III heads rather than replacing them.

• Cycle stock: stock used to meet normal demand between replenishments.
• Safety stock: extra stock held to handle uncertainty in demand or supply.
• Anticipation stock: stock built ahead of expected demand, such as festival-season merchandise.
• Pipeline (transit) stock: goods moving between locations or stages.
• Decoupling stock: stock held between two stages so one can continue if the other slows.

Ask what the item is for, and give each item exactly one head. Sort by purpose, not by price or storage place: the same steel sheet is a raw material in a factory and stock-in-trade in a dealer's yard.

Three checks show whether the sorting holds:

1. One head per item. Give 10 sample items to two people and have each assign a head from the table. Pass if all 10 match. Fail on any mismatch, and add a written rule for that item.
2. Transit flagged. Pass if goods you own that are still on the road show under their head, marked in transit.
3. Total reconciles. Pass if the heads add up to the closing stock value in your books.

The split depends on the business model, not a standard list. For the year ended 31 March 2026, Asian Paints reported six lines, Bajaj Auto (standalone) five, and Avenue Supermarts one stock line plus goods in transit.

• Asian Paints holds trading goods beside its own output. Stock-in-trade was 24.9% of its stock (₹1,201.57 crore), up from 15.6% of ₹5,848.23 crore a year earlier.
• Supplies are small by value. Packing materials plus stores, spares and consumables were 3.5% at Asian Paints. Stores, spares, packing and loose tools were 1.6% at Bajaj Auto. Count them anyway, because a missing spare can stop a line.

Each percentage is the line divided by the total stated in the filed note, with transit amounts added across lines for Asian Paints. These are three large listed companies, so read them as patterns, not benchmarks for a small firm.

Packing material, consumables and ordinary spares are inventory when you hold them. Goods in transit are not a separate head. Schedule III, Note O(ii), requires them to be disclosed under the relevant sub-head, for example raw materials in transit under raw materials. Only large spares tied to one machine need a closer look.

• Packing material. Asian Paints carries it as its own inventory line. Bajaj Auto groups it with stores and spares. Both treat it as inventory, not as an expense booked on purchase.
• Consumables. Oil and grease are consumables, which Asian Paints reports within stores, spares and consumables.
• Spares. Under Ind AS, a spare is property, plant and equipment only if it meets that definition; otherwise it is inventory. Confirm large, machine-specific spares with your accountant.
• Stock-in-trade versus finished goods. Stock-in-trade is bought to trade. Finished goods are what you made.
• Transit. Asian Paints shows in-transit sub-lines under raw materials, stock-in-trade, and stores and spares.

Arka Inventory tracks stock quantities and movements in one cloud system built natively on Salesforce. The Schedule III head is assigned in your accounts (Tally or QuickBooks Online), and it integrates with both.

As of October 2026, Arka Inventory costs $199 a month (Basic, 1 user) or $499 a month (Advance, 2 users), paid yearly, with Enterprise on flexible pricing, as listed on its pricing page. A 15-day free trial gives full access with no credit card.

• Raw materials: Inventory Visibility shows stock across warehouses, inventory on order, expected lead times and raw material availability.
• Work-in-progress, finished goods and kits: standard or order-based bills of material (the list of materials a product needs), material availability checks, consumption tracking, production and kitting, on the Advance plan.
• Traceability: lot and serial-number tracking is on the Enterprise plan.
• Stores and trading stock: low-stock alerts, multiple warehouses, purchase orders and transfers start on the Basic plan.
• Loose tools and others: tracked as stock items by quantity and movement, like any other item; you name the head in your accounts.