Direct selling sales up just 4.3%, policy uncertainty blamed

Tomojit Basu New Delhi | Updated on March 12, 2018 Published on November 27, 2014

The Indian direct selling industry grew 4.3 per cent in 2013-14 and achieved sales of Rs 7,472 crore, a sharp decline from previous fiscals, according to the industry’s annual survey conducted by the Indian Direct Selling Association (IDSA) and the PHD Chamber of Commerce.

Sales grew at 12.2 per cent (Rs 7,164 crore) in 2012-13 and 22 per cent (Rs 6,385 crore) the year before. The survey estimates industry turnover at about Rs 24,000 crore by 2019-20.

“The dip in sales is on account of lack of policy. There is no clarity and the industry faces much uncertainty. That’s what we’ve been asking the Government for over the last six or seven years,” said Chavi Hemanth, Secretary General, IDSA.

Reports indicate that the Finance Ministry is looking to make changes to the Prize Chits and Money Circulation Scheme (PCMCS) (Banning) Act of 1978 to prevent the spread of ponzi schemes. However, direct selling companies have often come under the scanner of the Act, evidenced by the arrest of Amway CEO William Pinckney and two company directors in Kerala last year.

“The Ministry of Consumer Affairs (MoCA) has also come forward to support the industry and frame a separate law. What shape it will take will only be known by next year. They’re consulting with us and other chambers of commerce and institutes like ICRIER. There are also changes being made to the Consumer Protection Act to clearly define direct sellers,” added Hemanth.

Only West zone sales show positive growth

The survey, based on responses from 52 direct selling entities and 3,580 consumers, found that while shares to gross sales had increased marginally across all zones except the south, only the western region had shown a positive growth rate in sales. 

Contributing Rs 1,197 crore, the region comprising Maharashtra, Gujarat, Goa, Rajasthan and two Union Territories, had increased its share to 16 per cent in 2013-14 and registered a growth rate of 11.4 per cent, up from 9 per cent the previous fiscal.

“Two years ago, I would get 3-4 enquiries each month from companies interested in coming to India. But with the policy uncertainty, those numbers have fallen. We are hopeful of a positive policy outcome in the next two years,” stated Hemanth, who believed that e-commerce establishments were not competitors and overlaps were inevitable.

Currently, 62.37 lakh direct sellers are registered with IDSA of which 43.93 lakh are active sellers. The ratio is skewed in favour of women who in 2013-14 made up 58.3 per cent of the workforce. IDSA members paid Rs 1,063 crore in taxes in 2013-14 as against Rs 986 crore a year earlier.

Published on November 27, 2014
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