Direct sellers move out of Kerala in state of fear as cops not allowing agents to operate

NEW DELHI: Direct selling firms such as Amway, Modicare, K-Link and DXN are cutting down their operations in Kerala significantly due to police harassment since the arrest of Amway India CEO in May, two executives of the Indian Direct Selling Association (IDSA) said.

Officials of the IDSA, which represents all the top direct sellers in the country, said distributors of most these companies are being questioned by the state police at regular intervals.

“In case the situation does not improve for the operational feasibility aspects, few of them might consider to move out of the state of Kerala,” Chavi Hemanth, secretary general at the IDSA, told ET. “We hope we are able to convince the government to provide a safe environment where people can carry out their business without the fear of police,” she said.

According to the association, the four southern states contributed 39 per cent to the Rs 6,385-crore direct selling industry in 2011-12, and some companies get up to 40 per cent of their revenues from Kerala.

There is no specific legislation in India to regulate the directselling industry and that is the biggest worry for operators. The Kerala police sent shockwaves across the industry this summer when it booked Amway India Chairman and CEO William S Pinckney and two company directors under the Prize Chits and Money Circulation Schemes (Banning) Act over some distributors’ complaints.
Direct sellers have been demanding a separate legislation and exclusion from laws regulating chits. A clear policy framework will help differentiate authentic players from those that disappear after taking money from agents, they have said. Earlier this year, American direct selling cosmetics firm Mary Kay withdrew from India citing lack of regulation.

A Modicare spokesperson said the home-grown direct seller is facing business challenges in Kerala due to ambiguous steps taken by various authorities. “A clear direction from the central Government on this front is much needed for the growth of direct selling industry,” the person said.

Amarnath Sen Gupta, IDSA chairman and India country head of Malaysian direct seller DXN, said the association is continuously negotiating with the Kerala government, adding that the decision to continue operations in the state will depend on what legislation the government introduces. Companies that had active business in Kerala include Amway, Modicare, Tupperware, K-Link and DXN. Hindustan Unilever’s direct selling arm Hindustan UnileverBSE 0.42 % Network too has a presence in Kerala.

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