If i am setting up a heavy forwarder to monitor directories and tag indexes, do i need to create an indexes.conf on it or is specifying an index in inputs.conf sufficient?
It shouldn't be necessary.
you can have an heavy forwarder specifying index destinations based on props/transforms or in the inputs, but those indexes only exists on the indexers.
However, if you are using the CLI to specify a new input with a specific index, you may see an error about index missing. This is a bug and will be fixed, this is why it's better to use the configurations files.