Direct Selling-A global industry empowering millions in India

Direct selling

A global industry empowering millions in India

in

Table of contents

01

Foreword

01

02

Executive summary

03

03

Global direct selling market

11

04

Direct selling market in India

39

05

The Indian direct selling opportunity 2025

57

06

Challenges faced by the industry

67

07

Recommendations and way forward

69

08

Direct selling market in select states

77

09

Annexure

79

1 | Direct selling

Foreword

Direct selling | 2

FICCI

With a developing economy, and growing consumerism, various store and non-store formats have evolved to cater to the growing retail sector in India. The direct selling market at INR72 billion (201213) is one of the fastest growing non-store retail format, recording a double digit growth of more than 20 per cent over the past five years. The growing Indian market has attracted a large number of local and foreign direct selling companies.

Though direct selling is a relatively new industry in India, in less than two decades it has provided self-employment opportunities to more than 5 million people, out of which nearly 60 per cent are women. Besides providing additional income opportunities to direct sellers, the industry also generates direct employment. Majority of the direct selling companies outsource production, packaging and distribution of their products, thus generating direct employment across the value chain while enabling the development of the SME sector. The industry also contributes to the exchequer and in 2012-13 alone the industry generated INR10 billion in taxes. Many direct selling companies have been in the forefront by actively contributing towards social activities.

However, there has been a lack of clarity on the legislations governing this industry. We strongly believe that a clear distinction between fraudulent companies and legitimate businesses should be drawn.

We at the direct selling sub-committee give professional insight into the issues pertaining to this labour intensive direct selling industry. The sub-committee within itself has an advisory board of neutral and experienced people.

My colleague, at FICCI worked as a connectors between the industry and the researchers and adhered to quality and the timeline. I would like to express my gratitude to KPMG in India for this report.

FICCI is hopeful that this report can provide insights and actionable recommendations for putting together a conducive legal environment for the industry.

Dr. A. Didar Singh Secretary General, FICCI

KPMG in India

Direct selling is one of the oldest, most traditional forms of selling globally, involving a direct interaction between the seller and the buyer. Today, it is a successful industry operating in over 100 countries with a market size of USD167 billion.

The direct selling industry in India is estimated to be INR72 billion (2012-13), and forms only around 0.4 per cent of the total retail sales. This is far lower than other comparable economies (one-half of China and one-tenth of Malaysia). With growth in consumer markets and increase in its penetration to globally comparable levels, the industry has the potential to reach a size of INR 645 billion by 2025.

In India, the industry has contributed significantly to women's empowerment, skill development, technology percolation and the growth of the SME sector, besides contributing to the exchequer. In addition, the industry also provides a viable form of alternative income, which promotes selfemployment. Over five million people are already associated with the industry as direct sellers.

With the success of the industry, which relies on individuals to accomplish sales, a number of fraudulent businesses have also tried to emulate the form, but with malicious intentions and outcomes. This has impacted the industry, which recognises this as one of the biggest challenges to its growth. There is a need to revisit existing laws and bring about regulatory clarity to build an environment of trust in order to reap multiple benefits that the industry has to offer.

Rajat Wahi Partner and Head Consumer Markets

3 | Direct selling

Executive summary

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