Public CompanyDirect selling firms demand industry-specific laws
The direct selling industry in India has pitched for direct selling laws in India on the lines of the legislation prevalent in countries like USA and UK for the benefit of the industry as well as the consumers.
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The Indian Direct Selling Association (IDSA), the representative body of the direct selling companies in the country feels that the enactment of laws will protect the consumers and the ethical direct selling companies.
In the absence of specific laws on direct selling, the consumers are unable to differentiate the legitimate direct sellers from the fly-by-night operators, said William S Pinckney, managing director and chief executive officer of Amway India Limited, a member firm of IDSA. “The legitimate direct selling companies sell products which they manufacture and pay commissions to the distributors only on the basis of the sale of products. The legitimate companies also make substantial investments in the form of manufacturing facility and office. For instance, Amway has so far invested Rs 151 crore on its India operations”, he added. IDSA has already approached the Centre and is in regular talks for framing of laws on direct selling. The association has also handed over copies of laws on direct selling in other countries to the Centre.
The size of the direct selling industry in India is estimated at Rs 3,330 crore and this excludes insurance.
Out of this, organized direct selling accounts for Rs 3027 crore and the remaining comes from the unorganized sector. In the organized sector, the member companies of IDSA contribute revenue of Rs 1884 crore.
Amway India is the market leader in the direct selling industry in the country with a share of about 35 per cent.
The size of the direct selling industry in the country is projected at Rs 5328 crore by 2012-13. The key growth drivers are transition of households to higher income levels, shift in consumption patterns from essential to discretionary products and growing awareness on direct selling activities.
According to a recent survey conducted by Ernst and Young, the metropolitan cities contribute to 57 per cent of the total revenues of the IDSA member companies but faster growth has been recorded in the Tier-II cities.
South India has emerged as the key hub of activity for the direct selling companies closely followed by the northern region.
The study points out that the eastern region in the country has the maximum potential for growth propelled by a rise in entrepreneurial activity.
The eastern region presently accounts for around 18 per cent of the market for the direct selling companies and the share of this region is expected to go up to 22 per cent by 2012, says Pinckney. Presently, there are 1.82 million sales consultants associated with direct selling in India and 72 per cent of these sales consultants are associated with the IDSA member companies.