Direct Selling Industry Gets A Boost On ‘Ease Of Doing Business’

The Direct Selling Guidelines issued by the Ministry have been a huge step forward for the industry which has been reeling under the pressure of a regulatory vacuum for a long time. It has come as a major respite for companies in the sector which have been facing some problems with reference to their business models coming under the scanner. But the new regulation will boost the industry going forward.

Enlisting the achievements and initiatives taken by the Ministry of Consumer Affairs, Food & Public Distribution in last three years, Ram Vilas Paswan, Union Minister for Consumer Affairs, Food & Public Distribution reiterated in a press note that guidelines for direct selling were issued after detailed deliberations by an Inter-Ministerial Committee with the intention of facilitating `Ease of doing business’. The guidelines are in the form of an Advisory to State Governments and provide transparency, ease to consumers and establishing a grievance redressal mechanism for consumers.

Commenting on the development, Trevor Kuna, Global CEO of QNet said: “Since the Indian government has just introduced new guidelines for the direct selling industry, this is an exciting time to be here in India.” A report from the World Federation for Direct Selling Associations (WFDSA) shows that India is now part of the ‘billion dollar club’ in the direct selling industry having generated approximately $1.18 billion in revenues in 2015.

Despite multiple hurdles over the years due to lack of legislation and awareness that has caused a great deal of challenges impacting their reputation negatively, direct selling companies have stood by their commitment to distributors in India. “I believe that the true potential for direct selling in India is yet to be realised,” said Kuna commenting on the development.

Thanks to the new Direct Selling Guidelines, the overall business environment will improve, making it viable for direct selling companies and direct sellers to do fair business, and in the long run, ambiguity surrounding this industry will finally be clarified.

According to Kuna, QNet is aligned with the “Make in India” initiative and supports several SMEs in India who develop exclusive products for them. Around 70 per cent of QNet’s product portfolio comprises products made in India. “Our product development team is already working on sourcing and introducing at least 8-10 new products the next financial year,” said Kuna.

The biggest challenge the industry has faced in the last 10-15 years in India is a lack of regulatory framework, which has led to a lot of confusion, and comparisons to pyramid schemes. The guidelines are a big step forward for the direct selling industry in India. India is among the largest direct selling markets in the world.

When any industry is regulated its potential for growth is immense. These guidelines will help weed out fraudulent players, allow serious companies to grow, and ensure the protection of consumers. Both Singapore and Malaysia have specific and strict direct selling and MLM legislation. QNet, for instance, is fully compliant in these heavily regulated countries.

The need of the hour is to formulate clear-cut laws to govern the direct selling industry in India which has been generating large scale self-employment and contributing to the exchequer. The draft guidelines are a good first step, but there is a long way to go before India can compare with these international laws.

“There is still no protection for genuine direct selling companies from the application of the Prize Chits and Money Circulation (banning) Act or other investment related acts. Media reports continue to refer to direct sellers as investors, which is misleading and incorrect,” says Kuna.