A new report by FICCI-KPMG states that the Indian Direct Selling industry has nearly doubled in the last five years. The report titled ‘Direct Selling: Kerala’ says the industry has grown to Rs 75 billion from Rs 41 billion since 2010, and is further poised to occupy a dominant position in the international and domestic markets.
The North Indian market is in the leading position with a share of 29 per cent in the industry, followed by the South, East, West and North-East with market shares of 25 per cent, 18 per cent, 16 per cent and 12 per cent respectively.
In Southern India, Kerala has been a key market worth Rs 700-750 million in 2013-14. The growth in this market since its early days has been attributed to the state’s high literacy rate, increasing per-capita incomes, urbanisation and consumption-oriented population, says the report.
Noting that South India has been a key market for several direct selling companies, the report says Kerala showed tremendous growth in the last decade.
“However, there has been a consistent wane in the growth over the past five years, largely because the state is deficient in a systematic policy that clearly defines the regulatory framework of the industry.”
“No clear definition for legitimate direct selling to differentiate it from fraudulent schemes has significantly wedged the working environment of major industry players. This has led to top industry players either curtailing their operations or completely discontinuing their activities,” the report says.
It says a glimmer of hope for Kerala lies in the draft of the Kerala Multi-Level Marketing (Control and Regulation) Bill, 2013.
The draft lays down detailed guidelines for regulating direct selling activities, to help guarantee that business activities are conducted without any violation of The Prize Chits and Money Circulation Schemes (Banning) Act, 1978.
Key observations of the report :
- Dire need for clearly defining Direct Selling
- Requirement of a Multi-level Marketing Regulatory Authority
- Need for clear provisions for the protection of consumer interests
- Constitution of a welfare fund for benefit of distributors
The report strongly suggests that there is an imperative need for a governing ministry and clear legislation.
“A series of reforms are required ranging from immediate short-term reforms in the nature of framing state level rules and/or standard operating procedure for law enforcement agencies to long-term measures of enacting a specific governing legislation for the sector or making amendments in the existing Acts/policies,” says the report.
Source: KPMG Report