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Regulator Planned For Direct Selling, Network Marketing $ e-Commerce Sector.

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According To FICCI-KPMG Report, Direct Selling Is One Of The Fastest Growing Non-Store Retail Formats In India That Has Grown Almost 20% In Last Five Years

New Delhi : Aiming to safeguard interest of consumers, the government is mulling a regulator for for emerging industries like e-commerce and direct selling sector, Consumer Affairs Minister Ram Vilas Paswan said here on Thursday.
The ministry of consumer affairs, food and public distribution has convened an inter-ministerial meeting network to discuss entire gamut of direct selling as there is need to evolve a very transparent and consumer friendly business model for the sector, he said at ‘DIRECT 2014′ organised by industry body Federation of Indian Chamber of Commerce and Industry (FICCI).  Paswan said the inter-ministerial committee will have its first meeting Dec 8 where it will be decided whether there is a need for separate regulator for the direct selling sector.  “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. I think the demand for regulator for direct selling sector is quite relevant and legitimate. We are considering it,” he said.  Direct selling is a fast growing sector especially in the Asia Pacific region and India is a big consumer market.  “I am aware that there have been many different business models adopted by the direct selling companies but in their garb fly-by-night operators have actually done frauds with innocent consumers in the country in absence of awareness and strict norms adopted by the industry itself,” Paswan added.
Direct selling refers to offering goods and services to consumers outside of the fixed retail outlet channels through sellers who carry out business activities generally from their homes, workplaces and so on. The FICCI-KPMG report on direct selling industry in India stated that it has the potential to provide self-employment to 18 million. The report indicated that with the right policy stimulus, this industry might well reach its potential of Rs.64,500 crore, a nine-fold increase in 12 years.
According to a report released at the event, direct selling is one of the fastest growing non-store retail formats in India that has grown almost 20% in the last five years. Direct selling industry in India has players like Amway India, Modicare, Oriflame India and Jafra Ruchi Cosmetics, among others.
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NEW DELHI: In a bid to reconcile the differing views of the corporate affairs ministry and consumer affairs department on the need for a regulator for the Rs7000-crore direct marketing industry, the government has set up an inter-ministerial group (IMG) to take a final call. 

Direct selling is offering goods and services to consumers outside of the permanent retail outlets through sellers. AmwayOriflameModicare and Herbalife are some of the prominent business entities engaged in direct selling. 
The IMG has representatives from corporate affairs ministry, besides the department of industrial policy and promotion (DIPP) and is chaired by consumer affairs secretary Keshav Desiraju. It is scheduled to meet next week. 
While addressing the industry leaders at an event organized by FICCI on Thursday, consumer affairs minister Ram Vilas Paswan said, "I think the demand for regulator for direct selling sector is quite relevant and legitimate. We are considering it." However, he had cautioned that there are dangers in the methods of direct selling as some companies are forming pyramid structure in the name of direct selling. "Many such cases have come in light, where the consumers were cheated by the companies in the name of direct selling. They vanished overnight by collecting their money," he had said. 
Desiraju had also said that there is a need to differentiate direct selling from other fraudulent schemes masquerading in the market as direct selling. "The industry needs to have a regulator to look at its issues more closely and resolve them," he added. 
According to a KPMG report, 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. In 2012-13, it has been estimated to contribute taxes of Rs 1,000 crore to the exchequer.

At present, the business is regulated under the provisions of Prize Chits and Money Circulation Schemes (Banning) Act and the Corporate affairs ministry feels the present law is adequate to deal with the direct marketing industry. However, the consumer affairs department believes a separate regulator is necessary.  
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