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Direct selling, one of the oldest and traditional forms of selling, is likely to reach Rs 64,500 crore billion in India by 2025, a FICCI-KPMG report said on Tuesday.
Direct selling has already emerged as a successful industry in over 100 countries, with a market size of USD 180 billion. In India, the market was estimated at Rs 7,500 crore (2013-14), and forms around 0.4 per cent of the total retail sales in the country.
The report ’Direct 2015 – Direct selling: Mapping the industry across Indian states‘, highlights the current challenges faced by the industry and the potential that the industry holds in select Indian states. The report was released by Amitabh Kant, Secretary, Department of Industrial Policy and Promotion, Union Ministry of Commerce and Industry.
He said that direct selling will have to be given a great thrust as it empowers women, MSMEs and promotes manufacturing in India. The industry has a potential to grow to Rs 1 lakh crore by 2025 much beyond the FICCI-KMPG report projection of Rs 64,500 crore.
According to the report, the industry has recorded high double digit growth of about 16 per cent over the past four to five years. The market has grown to become a key channel for distribution of goods and services in the country, especially for health and wellness products, cosmetics, consumer durables, water purifiers and vacuum cleaners.
Dr. A Didar Singh, Secretary-General, FICCI, said FICCI is working with the Central and State Governments in this regard.
While the direct selling industry in India is estimated at Rs 7,500 (2013-14), it is far lower than other comparable economies (one-half of direct selling market size of China and one-tenth of Malaysia), Rajat Wahi, Partner and Head, Consumer Markets, KPMG in India.
In the last five years, the industry has recorded strong growth rates, especially in Assam, Delhi, Punjab and West Bengal. North India emerged as the largest region by market size and accounted for Rs 2,200 crore in 2013-14 with South India holding the second highest share at Rs 1,900 crore.
The growth has primarily been driven by rising income levels, high rate of urbanization and growing consumerism in the states.
The report also lists the challenges faced by the direct selling industry, including the lack of a regulatory clarity.
The direct selling industry has significantly contributed to women empowerment, skill development, technology percolation and the growth of the SMEs sector in the states, besides contributing to the state exchequer. Total indirect tax contribution by direct selling industry to the government in FY14 alone is estimated at Rs 74-79 crore. In addition, the industry also provides a viable means of alternative income, which promotes self-employment.
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