Direct selling is one of the fastest growing non-store retail formats in India, recording double digit growth of more than 20% over the past five years as per the report release by FICCI-KPMG . As per the report, in the year 2012-13 it has been estimated to contribute taxes of INR 1,000 crore to the exchequer. Besides, the industry also has a significant impact on socio-economic parameters because of its nature. In less than two decades, since it took-off in India, it has provided self-employment opportunities to more than 50 lac people in India as direct sellers. Nearly 60%of these direct sellers are women, thus empowering them with additional income and transferable skills. The industry also generates direct employment through manufacturers and other service providers involved throughout the value chain of the industry. The industry has led to technology percolation and enhancement of many SMEs by association with international companies. Also, many direct selling companies have been in the forefront by actively contributing towards social activities.
Going forward, the industry has the potential to reach a size of INR 64,500 crores by 2025 driven by growth in the consumer markets and increase in the penetration of direct selling to globally comparable levels. This will have a cascading effect on the socio-economic parameters associated with the industry. There will be commensurate capital investments in manufacturing and in technology acquisition.
The report also highlights the need to bring regulatory certainty for the industry, which is mistakenly coupled with fraudulent money circulation schemes because of a lack of clarity in existing legislations. The report also lays out a roadmap for mitigating the regulatory challenge for the industry by recommending an immediate amendment in the governing legislation, followed by a clear definition and categorization as “wholesale cash and carry trade” to smoothen FDI inflow, and an independent legislation and nodal ministry for the industry thereafter.
At the release, Hon’ble Union Minister Ram Vilas Paswan said, “I acknowledge the contribution of Direct Selling industry towards offering greater choices to the consumers. My Ministry appreciates the need of creating a regulatory framework for the direct selling and e-commerce sectors. We have recently formed an Inter ministerial committee to deliberate on the need and framework of regulations for the Direct Selling industry. We feel it is important to distinguish between the genuine and fraudulent players, and any regulation that is proposed should keep in mind the interest of consumers as the first priority.