Direct selling players say draft norms to boost sector

By: |
July 06, 2021 9:35 PM

Earlier in 2016, the ministry had come out with a set of guidelines for these companies which were advisory in nature. The draft rules now propose penalties for violations.

direct sellingAs per the draft rules, direct selling companies are banned from promoting pyramid schemes or money circulation schemes.

Leading direct selling companies and industry body IDSA on Tuesday said the government’s move to draft regulations for the sector is a progressive step and will help the industry get proper recognition.

After this, India would join the list of countries that have regulations for the direct selling industry, the Indian Direct Selling Association (IDSA) said while welcoming the development.

The consumer affairs ministry has framed the Consumer Protection (Direct Selling) Rules, 2021, and sought public comments by July 21.

As per the draft rules, direct selling companies are banned from promoting pyramid schemes or money circulation schemes.

Earlier in 2016, the ministry had come out with a set of guidelines for these companies which were advisory in nature. The draft rules now propose penalties for violations.

According to IDSA Vice-Chairman Rajat Banerji, this culminates efforts that started with the Direct Selling Guidelines notified in 2016.

“It is a progressive step to include registration of Direct Selling Entities (Companies), under these proposed Rules, as this would be a validation. India would join the list of countries that have clear regulations for the Direct Selling industry,” he said.

As per the draft norms, direct selling companies have to register themselves under relevant Indian laws and also with the Department for Promotion of Industry and Internal Trade (DPIIT) for allotment of a registration number.

They should have a minimum of one physical location as a registered office in India.

Vivek Katoch, Director – Corporate Affairs (Asia) for Oriflame, said the draft rules have provided a clear distinction between pyramid schemes and direct selling networks, which will go a long way in building a business-friendly environment for the industry.

“Further, the registration mechanism will act as a filtration process to weed out the bad elements from the industry.

“While the other provisions like appointing a nodal contact person for 24×7 coordination with law enforcement agencies is another significant step that is likely to bring a positive change in the industry,” he said.

Amway India, the leading player in the direct selling industry, said the regulations protect the interest of the direct sellers and consumers.

“We stand with the Government of India and believe that the rules will go a long way in ensuring that consumers have a satisfactory brand experience,” said Amway India CEO Anshu Budhraja.

The rules will pave the way for the recognition of the direct selling industry as an integral part of the Indian economy, he added.

“Once the rules are notified, they will not only allow our direct sellers to fully focus on growing their business and but also protect consumers from fraudulent enterprises,” he said.

However, Katoch, who is also chair, Direct Selling Task Force – FICCI, said some compliances prescribed therein can be amended or removed to make the rules more industry-friendly.

According to Banerji, there are one or two minor issues on which it would seek clarifications.

In 2019, the Indian direct selling industry recorded sales of USD 2.47 billion and was ranked at the 15th position in a report by the World Federation of Direct Selling Associations (WFDSA).

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