The absence of a regulatory framework has affected the growth of the direct selling industry. Rajat Banerji, chairman, Indian Direct Selling Association (IDSA) and National Head-Corporate Affairs, Amway India, says the direct selling industry offers self-employment to over 40 lakh persons, a majority of whom are women and the industry was hoping for full or partial exemption in excise duty on commodities such as cosmetics, nutrition and skin care products in the Union Budget.
Q: What is the view of the direct selling industry on the Budget proposals?
A: In the Budget speech of 2015, Finance Minister Arun Jaitley had announced amendments to the Prize Chits and Money Circulation Schemes (Banning) Act, 1978. That did not take place and was a disappointment for the direct selling industry which offers self-employment to over 40 lakh persons, a majority of whom are women. In the Budget speech of 2016, the Finance Minister has promised tightening of laws with regard to collective investment schemes. At the IDSA, we believe the two are inter-linked as current financial frauds are often booked under the Prize Chits and Money Circulation Schemes (Banning) Act, 1978, and from our perspective, incorrectly applied to the direct selling industry from time to time. Mary Kay, an IDSA member company, had closed its India operations, after the MD of a leading direct selling company was arrested in Kerala in 2013.
Q: What more could have been done?
A: The direct selling industry was hoping for full or partial exemption in excise duty on commodities such as cosmetics, nutrition and skin care products. Direct selling FMCG industry has a visible imprint on the country’s social and economic lives. There are various areas that have been supported by the industry from health and human services, education to women empowerment.
We expected the Finance Minister to make a pitch for progressive tax reforms which can improve productivity of all the sectors which contribute to the FMCG direct selling industry. This will prepare India as a destination which apart from sustaining its own population in urban and rural India can also look towards becoming a source of consumer goods produce for other countries.
Q: What is the size of the direct selling industry?
A: According to the IDSA-PHD Chamber of Commerce and Industry Survey 2014-15, the gross sales for the industry stood at Rs 7,958.3 crore in FY’14-15. The industry registered a growth of 6.5% as compared to 2.5% growth in 2013-14. In the light of various reforms announced by the government, we expect double-digit growth rate in the coming 3-5 years.
Q: What is the growth projection?
A: The size of the industry is estimated to reach up to Rs 23,654.3 crore by 2019-20 on account of conducive environment in the form of policy framework in our country. Our survey says the industry has the potential to enter double-digit growth, going ahead, on account of strong legislation, reviving investments in economy and expanding consumer base across all segments of the economy.
Q: How much employment is being created by the industry?
A: In the fiscal 2014-15, there were around 40 lakh direct sellers associated with the industry. Though the industry witnessed a decline in its workforce, we are hopeful to add more sales force in the coming years on the back of government’s emphasis on ‘Skill India.’ Due to the absence of regulatory framework, some unfortunate incidents happened in the country. These incidents affected the approach of direct sellers. Therefore, the number of direct sellers has come down from 43.83 lakh in 2013-14 to 39.29 lakh in 2014-15. However, we see a huge potential in the sector for employment and that also with dignity and higher income especially for our women.