report on direct selling industry in indiaficci.in/spdocument/20237/report-mark.pdfreport on direct...

Report on Direct Selling Industry in India

Direct selling in India:Appropriate Regulation Is the Key

Author: Bibek Debroy

FICCIIndicus Analytics

April, 2013

CONTENTS

Executive Summary ................................................................. 3

Section 1: De ning direct selling ........................................... 6

Section 2: The Numbers ........................................................ 11

Section 3: Single level, Multi Level and Pyramid .............. 15

Section 4: Second Best Solution ............................................ 20

Section 5: First Best Solution ................................................. 23

Section 6: Concluding Note – Way Forward ...................... 27

3 Indicus White Paper Series

S

This paper sets the base for a good understanding of thedirect selling model, its advantages, and its limitations, andhow government policy needs to deal with this growingemployment opportunity for the masses. It argues thatgood and sustainable growth oriented governmentpolicy needs to protect the interests of the consumers andalso promote cost reducing, and e ciency enhancingactivities of employment generation. It shows that this ispossible simply by appropriately di erentiating betweenthe desirable and the undesirable.

The paper rst makes clear that the way data arecollected by the Government of India itself providesa good indication of what Direct Selling (DS) is, andwhat it is not. All sales of goods that are not through aphysical location such as stores, stalls and marts, andalso not through mail order, internet, etc. In other words,Direct Selling is the residual and involves selling usuallythrough ‘explanation and demonstrations’ by a directseller and not through any other means.

Within the DS model there may be a multi-levelmarketing (MLM) model however that is very di erentfrom the pyramid schemes that the Government needsto protect consumers against. (These pyramid or Ponzy


schemes involve promises of abnormal returns/bene ts)To contrast, the DS model even if it is in the MLM modeis about sales of goods and sometimes services.

These de nitional issues are important to be coded in allcurrent and future policy and legislation if India is to fullybene t from the e ciency enhancing and employmentgenerating advantages of DS and of MLM. Andinternational evidence shows that there are bene ts.

DS through MLM is a form of disintermediation andhas the obvious advantage of reduction in transactioncosts and bridging the gap between consumer prices andmanufacturer prices, facilitated by the use of technology.It is because of this that as countries move up thedevelopment ladder (as re ected by per capita income)direct selling increases in importance. The bene ts arefurther enhanced when we consider the impact as anadditional source of employment, often to untrainedand otherwise unemployable persons and also often towomen.

India needs to operate at the central level. It needsto amend the Prize, Chits and Money CirculationSchemes (Banning) Act, making the distinction clear.First, direct selling, including multi-level marketing,has to be defined. Second, there has to be an explicitqualification explaining that direct selling is not to


be interpreted as a money circulation scheme. Third,a pyramid scheme has to be defined, so that oneknows what is being prohibited. This will protectdirect selling companies, protect consumers and alsomake the task of enforcement easier.

Other than de ning and allowing direct selling andde ning and prohibiting pyramid schemes, a formalregistration system should be put in place, there need to bewri en contracts between the direct seller and the directselling company that make the relationship transparentand specify sales practices in the ethical domain.

Overall, India needs a more systematic policy on DS thatis based on its own constitutional structure and also therealities and idiosyncracies of the Indian economy. Fastgrowing countries such as Thailand, Malaysia, Korea,Indonesia, China, Vietnam, Japan, Taiwan and Singaporeall have a speci c statute that regulates, and moreimportant, facilitates direct selling.


1: D

There is no unambiguous de nition of direct selling.De nitions can be of three types and they don’t necessarilyoverlap.

First, there is a statistical kind of de nition. Forexample, consider the United Nations Central ProductClassi cation (UNCPC). In the current version 2 of this1,the 2-digit code 62 stands for retail trade services andthe further classi cations 621 and 622 are retail tradeservices through specialized and non-specialized stores.Everything else (623, 624, 625) is a residual category andcan be interpreted as direct selling.2 623 is explained as,“This group includes:- mail, catalogue or Internet salesservices by stores that accept orders of new goods bymail,telephone, e-mail, etc., and ship or deliver productsto the customer’s door.” 624 is explained as, “This groupincludes:- retail trade sales through vending machines;- retail trade services of market stalls- retail tradeservices of door-to-door sales or direct sales, de ned as

1 h p://unstats.un.org/unsd/cr/registry/docs/CPCv2_explanatory_notes.pdf2 However, Socio-Economic Impact of Direct Selling: Need for a Policy Stimulus,

Arpita Mukherjee, Tanu M. Goyal, DivyaSatija and NirupamaSoundarajan,ICRIER, undated, equates direct selling with code 624.


a method of consumerproduct and services distributionvia sales in a person-to-person manner/way from a xed retaillocation primarily through independent

salespeople and distributors who are compensatedfortheir sales and for their marketing and promotionalservices, based on the actual use orconsumption of suchproducts or services.” Finally, 625 is explained as, “Thisgroup includes:- retail services of commission agentswho negotiate retail commercial transactions for a fee oracommission; - services of electronic retail auctions.” TheIndian statistical counterpart is the 2008 version of theNational Industrial Classi cation (NIC).3 At the 2-digitlevel, 47 covers retail trade, with the exception of motorvehicles and motor-cycles. Sub-divided further, 471through 478 are sales through stores, stalls and marts.Everything else (479) is a residual category and comesunder direct selling. The code 479 is de ned as, “retailtrade not in stores, stalls or marts”. One can sub-dividea bit further, but that is at best arti cial. For example,4791 is de ned as “retail sale via mail order houses orvia Internet” and explained as, “In retail sale activitiesin this class, the buyer makes his choice on the basisofadvertisements, catalogues, information provided on awebsite, modelsor any other means of advertising. Thecustomer places his order by mail, phone or over the

3 h p://mospi.nic.in/mospi_new/upload/nic_2008_17apr09.pdf


Internet (usually through special means provided byawebsite). The products purchased can be either directlydownloaded fromthe Internet or physically delivered tothe customer.” This leaves 4799 as a residual categoryof other retail sales not through stores, stalls or martsand interpreted as, “This class includes retail sale ofany kind of product in any way that is notincluded inprevious classes (by direct sales or door-to-door salespersons, through vending machines etc.), direct sellingof fuel (heating oil, re woodetc.), delivered directly tothe customer’s premises, activities of non-storeauctions(retail), retail sale by (non-store) commission agents.”Subject to that point about unnecessary silos in a seamlessword, 4799 rather than 479 then becomes a de nitionof direct selling in the Indian context, at least from thestatistical point of view.

The second kind of de nition is one formulated bydirect selling associations. Regional and country-speci c associations or federations often have their ownde nitions. Since this is paper is about India, let’s stick tothe Indian Direct Selling Association’s (IDSA) de nition.4

“Direct Selling means the marketing of consumerproducts/services directly to the consumers generally intheir homes or the homes of others, at their workplace

4 h p://www.idsa.co.in/WhatIsDirectSelling.html


and other places away from permanent retail locations,usually through explanation or demonstration of theproducts by a direct seller.” But for the quali cation“usually through”, this corresponds to 4799.

Statistical de nitions, or those articulated by federationsand associations, don’t amount to law and policy. For thatpurpose, one has to look at speci c legislation and theproblem in India is that none exists. This is partly becauseof the Seventh Schedule. Entry 33 in the Concurrent Listtalks about trade and commerce and speci cally mentions“the products of any industry where the control of suchindustry by the Union is declared by Parliament by law tobe expedient in the public interest, and imported goodsof the same kind as such products.” However, subject tothis, trade and commerce within the State is in the Statelist. This has led to arti cial compartments between FDIin wholesale and FDI in retail and FDI in multi-brandand FDI in single-brand. Such compartmentalizationis impossible to enforce and is certain to be violated,deliberately, or inadvertently. It is not just developedcountries like the United States and the United Kingdomthat have speci c statutes on direct selling. So dodeveloping countries like Thailand, Malaysia, Korea,Indonesia, China, Vietnam, Japan, Taiwan and Singapore.Union-State relations do not come in the way of a speci cstatute on direct selling either. There are instances (land,


labour, contract farming, education) where the Union hasformulated model legislation as a template for States toadopt, or alternatively, enacted such legislation. Nor isthe Seventh Schedule cast in stone. Down the years, it hasbeen amended several times. We will return to this pointlater.


2: T

The origins of India’s direct selling industry are datedto 1995 or 1996, 1996 being the year when IDSA wasformally established. IDSA membership is not thebest indicator to determine the importance of directselling. For instance, IDSA directly has 18 membersand indirectly, more than 1 million independentsalespeople. However, the number of direct sellersis estimated to be almost 4 million in 2010-11.5 Forthat same year, sales revenue was estimated at 1149million US dollars, accounting for 35.8% of non-storeretail sales, 4.41% of organized retail sales and 0.07%of GDP. These numbers are subject to a caveat. TheIndian economy has an organized/formal segmentand an unorganized/informal segment. The NationalCommission for Enterprises in the Unorganized Sector(NCEUS) was set up in 2004 and one of its reports hada very good discussion of de nitional and statisticalissues in analyzing India’s informal economy.6

For purposes of this paper, let us use the terms

5 The Indian Direct Selling Industry, Annual Survey 2010-11, PHD Chamber ofCommerce and Industry and IDSA, 2012.

6 Report on Conditions of Work and Promotion of Livelihoods in the UnorganizedSector, NCEUS, 2007, h p://nceuis.nic.in/Condition_of_workers_sep_2007.pdf


organized and formal synonymously, just as the termsunorganized and informal are used synonymously.Outside of agriculture, informality can be de ned inone of three di erent ways. First, there is a de nitionin terms ofexemptions from paying indirect taxes.Second, there is a de nition in terms of small-scaleindustry(SSI) or MSME (micro, small and mediumenterprises). Third,there is a de nition in terms oflabour laws. That is, an enterprise is unorganized if ituses power and employs fewer than 10 people or doesnot use power and employs fewer than 20 people.7

Without ge ing into the ni y-gri y of those de nitions,there are an estimated 407 direct selling companiesin India, of which, 157 (38.6%) are in the organizedsector.8 This has implications for enforceability of lawand regulations, though in any process of economicdevelopment, there is a natural transition from theunorganized/informal to the organized/formal. Withthat caveat, for the organized sector, most revenue isfrom segments like wellness, cosmetics and personalcare, home improvements, home care and householdgoods.9 And most revenues occur in the South, followedby the West, the East and the North, in that order.

7 Strictly speaking, this is a Factories Act de nition.8 Ibid.9 Ibid.


There are reasons for the increase in the importanceof direct selling. As an additional channel, it can leadto disintermediation, reduction in transaction costsand bridging the gap between consumer prices andmanufacturer prices, facilitated by the use of technology.Urbanization, income and consumption growth, higherfemale work participation rates and dual income familiesincrease the importance of transaction costs and theirdecline. Figures are often cited about the importance ofdirect selling in providing employment, especially towomen, and its contribution to tax revenue.10 While true inprinciple, this is a counter-factual. The contribution to taxrevenue is based on a premise that growth occurs in theorganized sector, not the unorganized. This is a plausibleassertion, but not axiomatic. Similarly, the employmentcreation argument is also based on the assumption thatthere is a net creation of sales, not a diversion of sales fromconventional channels to direct modes. However, we doknow that as countries move up the per capita incomeladder, direct selling increases in importance. This hasnot only happened in developed country markets like theUnited States, Japan, Germany, United Kingdom, France,Australia and Singapore, but also in emerging marketslike Brazil, Korea, Russia, Malaysia, Argentina, SouthAfrica, Indonesia and Hong Kong. Therefore, logically,

10 See both the ICRIER and PHD reports mentioned earlier.


three propositions do follow. First, direct selling is goingto increase in importance in India. Second, it will providean additional source of employment, often part-time andoften to women. Third, its contribution to tax revenue willalso increase. As has been said earlier, these are empiricalpropositions, not theoretical. While these observations arebased on cross-country numbers, a limited survey in thePHD study also indicates a positive correlation betweenuse of direct selling and monthly household income.11

Often, law and regulation do not keep pace with economicdevelopment, but follow it. That seems to be happeningin India’s direct selling industry too.

11 Ibid.


3: S ,

We begin this section with three answers fromParliamentary questions, since they highlight the natureof the problem. The questions do not ma er, since theyare obvious enough. The rst was LokSabhaUnstarredQuestion No. 4875, dated 20/12/2002. “Proposals werereceived from the Indian Direct Selling Association aswell as M/S Frontier Trading etc. requesting to enact aseparate legislation to cover direct selling/multi-levelmarketing/network marketing. The main contention ofthe representation was that members of Direct SellingAssociation are being targeted due to vagueness of the“Prize Chits and Money Circulation Scheme (Banning)Act, 1978” in distinguishing between Prize Chit Fundsand genuine agencies involved in direct marketing.This ma er was examined in detail in consultation withconcerned Ministries. The need for a separate legislationwas not felt in view of the fact that there were adequateprovisions in the Sale of Goods Act, 1930 (for regulatingthe sale of goods); the Indian Contract Act, 1872 (for thesale of services) and the Consumer Protection Act, 1986(to promote and protect the rights of the consumers).The provisions of the Prize Chits and Money Circulation


Scheme (Banning) Act, 1978 seek to ban the promotion orconduct of Prize Chits and Money Circulation Schemes.The provisions of this Act had come up for scrutinybefore the Honourable Supreme Court of India who haveruled that the “Network Marketing Plan” and direct saleof goods and services by the direct selling companies donot fall within the mischief of the aforesaid Act.” The Saleof Goods Act and the Indian Contract Act don’t reallyconstitute the problem. But in so far as the ConsumerProtection Act and the Prize Chits and Money CirculationScheme (Banning) Act are concerned, especially thela er, this answer in 2002 clearly failed to anticipate theproblems due to court interventions. Second, there wasLokSabhaUnstarred Question No. 4062, dated 23/08/2005.“As per Indian Direct Selling Association (IDSA) thereare more than 200 direct selling rms opening12 in Indiaand most of them are small and regional players. The rms account for over 50% of all goods sold through

direct selling route in India. The direct selling rms arepredominantly unorganized and the information on theapprovals taken by such rms is not available. The IDSAis a self regulating industry association that mandatesits members to operate within the strict provisions ofa Code of ethics prescribed by the World Federation ofDirect Selling Association. The Code of ethics sets out

12 Sic, probably meant to be “operating”.


fair and ethical principles that induce a congenial andhealthy environment for the direct selling industry.Consumers are protected against illegal or unethicalpractices through the enforcement of the Code.” So far, sogood and indeed IDSA does have a Code of Ethics.13 Butthat code is only binding on members and membershipcannot be mandatory. That apart, as the answer itselfacknowledges, elements of direct selling do take placevia the unorganized channel mode, even if its share inrevenue is not proportionate, and enforcement of anylaw or regulation for the unorganized sector is di cult.Third, there was LokSabhaUnstarred Question No. 4683,dated 7/8/2009. “During 2003, Department of Consumer

airs had received requests from Indian Direct SellingAssociation and other persons for enacting a separatelegislation to cover Direct Selling/Direct/Network/Multi-Level Marketing. In consultation with the Ministry ofLaw, Department of Consumer A airs has issued a le erto all the Chief Secretaries of States and Union Territoriesclarifying that if the Direct/Network/Multi-LevelMarketing Companies do their activities lawfully, thentheir activities would not a ract any of the provisions ofthe Prize, Chits and Money Circulation Schemes (Banning)Act, 1978. The Central Economic Intelligence Bureau, theinvestigating agency dealing with economic o ences, had

13 h p://www.idsa.co.in/images/pdf/CodeOfEthics.pdf


drawn a ention of the Department of Consumer A airsto the fact that companies using pyramid schemes to selltheir products were taking shelter under this le er toprotect themselves from possible legal action. In furtherresponse, Department of Consumer A airs clari ed toall the States and Union Territories that the instructionsissued earlier did not cover pyramid structure marketingscheme. Reserve Bank of India has also separately clari edthat it is for the State Governments to seek advice of theirLaw O cers/Public Prosecutor to decide whether anygiven scheme a racts the provisions of the Prize, Chitsand Money Circulation Schemes (Banning) Act, 1978.”

There is thus recognition that there is a double kind ofproblem. First, stated explicitly, companies indulgingin pyramid structure marketing schemes were claimingexemption from the Prize, Chits and Money CirculationSchemes (Banning) Act. Second, left implicit and notexplicitly stated, since direct selling can also be multi-level, companies indulging in multi-level marketingwere being equated with those that dabbled in pyramidstructures. In pyramid structures, people are persuaded tojoin and pay money, because they gain from the paymentsmade by people who join later. In practice, it shouldn’tbe di cult to distinguish between the two. For instance,there is often no clear product in a pyramid structure andcommissions are paid on registration and entry fees, not


on sales of products. Even if there is a product, it may beof dubious value. Having said this, does the Prize, Chitsand Money Circulation Schemes (Banning) Act clearlydistinguish between the two, without having to go in forjudicial interpretation?


4: T

In the present context, the relevant part of the Prize,Chits and Money Circulation Schemes (Banning) Actis the bit that concerns “money circulation schemes”.The relevant part is Section 2C of the de nitions. Thisstates, “Money circulation scheme means any scheme,by whatever name called, for the making of quick oreasy money, or for the receipt of any money or valuablething as the consideration for a promise to pay money,on any event or contingency relative or applicable tothe enrolment of members into the scheme, whether ornot such money or thing is derived from the entrancemoney of the members of such scheme or periodicalsubscriptions.” The question to ask is the following.Given the clause “on any event or contingency relativeor applicable to the enrolment of members etc”, is itimmediately obvious that this statute does not applyto multi-level marketing schemes? The answer has tobe in the negative. Therefore, an amendment is neededto the Prize, Chits and Money Circulation Schemes(Banning) Act, making the distinction clear. First,direct selling, including multi-level marketing, hasto be de ned. Second, there has to be a quali cation


explaining that direct selling is not to be interpretedas a money circulation scheme, as long as there isno pyramid structure involved. Third, a pyramidscheme has to be de ned, so that one knows whatis being prohibited. This will protect direct sellingcompanies, protect consumers and also make the taskof enforcement easier.

In addition to amending the Prize, Chits and MoneyCirculation Schemes (Banning) Act, it is also necessaryto amend the Consumer Protection Act. For instance,Section 2® of the Consumer Protection Act is againstunfair practices and “unfair trade practice means a tradepractice which, for the purpose of promoting the sale, useor supply of any goods or for the provision of any service,adopts any unfair method or unfair or deceptive practiceincluding any of the following practices…” Althoughthis listing is meant to be indicative and not exhaustive,it is sometimes interpreted as being exhaustive, the pointbeing that a pyramid scheme is not explicitly mentionedas an unfair trade practice.

These two amendments are the bare minimum that isnecessary. However, there is a reason why these havebeen described as a second-best solution. Laws areenacted at various points in time, to cater to a speci cneed. Tinkering with sections and amending them here


and there, to cater to a new need, is often a bad idea.Such amendments fail to take a holistic view. Given theimportance of the direct selling industry, an importancethat is only likely to increase in the future, a fresh piece oflegislation is needed.


5: T

Many countries in the world (Singapore, Malaysia,United Kingdom, United States, Thailand, Malaysia,Korea, Indonesia, China, Vietnam, Japan, Taiwan,Singapore) have speci c pieces of legislation on directselling and there are reasons for this. They addressissues beyond the ones mentioned in Section 4 andlegally formalize some of the principles IDSA has inthe Code of Ethics. For example, these cover conducttowards consumers, conduct towards direct sellers andconduct towards companies. One must also rememberthat direct selling need not always be B2C. It can alsobe B2B. If one scans the legislation in these di erentcountries, they generally tend to involve a licensingcum registration system for direct sellers, prohibitionson certain categories of products, restrictions oncollecting money, a cooling-o period (during whichconsumers can cancel the contract), restrictions onmulti-level marketing modes and prohibitions onpyramid schemes. In some form, they are also part ofguidelines that have been issued in the State of Kerala.Other than de ning and allowing direct selling andde ning and prohibiting pyramid schemes, these could


involve a registration system for the direct sellingcompany (regardless of the speci c statute under whichthe company is registered), wri en contracts betweenthe direct seller and the direct selling company andimpose conditions on both the direct selling companyand the direct seller.

But given what was said about the importance of theunorganized/informal segment, one cannot drive theregistration/licensing requirement too hard, especiallybecause this isn’t a requirement that can be readilyenforced. Though not a gure for direct selling, in 2004-05, 84.9% of own account enterprises in India werenot registered and this needs to be agged, becauseregistration also bringsa endant bene ts, such asaccess to credit or government subsidies on marketingand technology.14Why aren’t own account enterprisesregistered? The answer isn’t entirely lack of information.Opting out of registration is probably a consciousdecision, because the bene ts from registrationare notcommensurate with the costs. Not only are proceduresconnected with registrationcomplicated and tiresome,registration brings with it the a endant problemof bribery and rent-seekingfrom the government

14 Report on Conditions of Work and Promotion of Livelihoods in the UnorganizedSector, NCEUS, 2007, http://nceuis.nic.in/Condition_of_workers_sep_2007.pdf

http://nceuis.nic.in/Condition_of_workers_sep_2007.


machinery. The non-registration issue spills overinto the existence of the unorganized sector ingeneral. It is often presumed that rigid labour lawsin the organized sector encourage informality. Butthis is a partial explanation. There are other reasonsbehind informality – avoidance of taxes, complicatedtransaction costs associated with registration, rent-seeking and few perceived bene ts from formalization.The 3rd SSI (small-scale industry) Census was heldin 2000-01. When asked about the reasons for non-registration, 53.13% said that they weren’t aware of theprovisions, while another 39.8% said that they “werenot interested”.15 After the MSMED (Micro, Smalland Medium Enterprises) Act of 2006, the SSI censusbecame a MSME Census, conducted in 2006-07.16 Thiscontinued to show very high levels of non-registration.Therefore, while registration/licensing is a good ideaand ensures the transition from unorganized/informalto organized/formal, with its a endant bene ts, thisneeds to be incentivized.

As has been mentioned earlier, the Seventh Scheduledoesn’t come in the way of the Union piloting such a freshpiece of legislation, piloted by the Ministry of Consumer

airs, Food and Public Distribution. All that is required

15 h p://dcmsme.gov.in/ssiindia/census/highlights.htm16 h p://www.dcmsme.gov.in/publications/FinalReport010711.pdf


is for two-thirds of States to opt for such legislation.Failing that, it is always possible to formulate a modelpiece of legislation, which can be adopted by whicheverState wishes to.


6: C N - W

Policy and legislation that do not adequately understandthe nuances of any industry have the potential of not onlyadversely impacting that industry, but other complementaryupstream and downstream industries as well. Recentmovements in the policy domain [REFERENCE] pertainingto pyramid schemes are being framed such that a largenumber of important sales and marketing activities maybecome illegal. Direct sales and multi-level-marketingare all being inadvertently bracketed with pyramidand Ponzy schemes; consequently consumer protectionconsiderations are being imposed on perfectly legitimateand bene cial economic activities with signi cant positiveexternalities. The adverse outcomes of such awedpolicy could be many - increase in cost of sales, reducedcompetition, greater ine ciencies and increased cost ofentry for new rms being some. Not only developed, evenfast growing developing countries have recognized thisand have drafted a facilitative structure for Direct Salesand Multi-level Marketing that clearly distinguishes themfrom Pyramid schemes.

However recent draft guidelines issued to the states showno such vision; they could be construed to be describing


direct productsales as disguised form of a pyramid / moneycirculation schemes. This only re ects that policy-makersneed to be er understand the nuances of the DS and MLMindustry, and also appreciate its current and potentialimportance. It is critical for the government to understand thatany economic activity that is based on ‘regular consumptionof real consumable goods or services’, irrespective of the costof the goods, cannot be simplistically classi ed as a ‘disguisedform of money circulation’.

The current draft guidelines envisage eliminating all directselling activity where the entity higher in the hierarchy is ableto earn commission’s basis the sales e orts of those down theline, without having to work equally hard. This is of course arather naïve form of identifying an undesirable or undesirableeconomic activity – by this route insurance agents, almostall of trade, and most forms of economic activity could beconsidered to be undesirable. The guidelines also allude topricing and premiums being inordinately high, pricing ofcourse,is a function of market forces, and never can a productof regular consumption in a non-monopolistic se ing bebought and sold consistently at high premiums over years.

It is obvious that direct selling and MLM are formsof economic activity that could play a very importantrole in a country like India. These are low transactioncost mechanisms for sales that have a very high valueadded component, and are not very resource intensive


unlike other forms of sales and marketing. DS and MLMtherefore allow rms, small and large to use businessmodels that preclude the need for building largephysical retail infrastructure. It is also obvious, that acompetitive economy needs to allow various options ofslaes and marketing, as it needs to allow various optionsfor investment and production.

Unlike business models however, the economic policyframework needs to be evenly spread across thecountry, and therefore the central government needs toplay a leadership role in many areas. DS and MLM isone such domain, since sales and maketing in the neweconomy will necessarily be many times across borders,a common framework would help in creating a fracture-less marketplace.

Ensuring the correct delineation by speci c de nitionsin policy and tort would be the rst step. Removing suchfuzziness from some laws would be another importantstep. A registration and regulatory regime would need tobe built up over a period of time. All of this would needto be done, while not sti ing small scale or unorganizedenterprise, rather they should be able to see the bene tsof being the registered and regulated domain andbene ts from larger scales and lower transaction costs.That needs to be the objective of economic policy.


FICCI

Established in 1927, FICCI is the largest and oldest apexbusiness organisation in India. Its history is closelyinterwoven with India’s struggle for independence, itsindustrialization, and its emergence as one of the mostrapidly growing global economies. FICCI has contributedto this historical process by encouraging debate,articulating the private sector’s views and in uencingpolicy.

A non-government, not-for-pro t organisation, FICCI isthe voice of India’s business and industry.

FICCI draws its membership from the corporate sector,both private and public, including SMEs and MNCs; FICCIenjoys an indirect membership of over 2,50,000 companiesfrom various regional chambers of commerce.


I

Indicus Analytics is an economics research and dataanalysis rm. Indicus follows the progress of the manyfacets of the Indian economy at a sub-national and sub-state level on real time basis. It conducts monitoring andevaluation studies, indexation and ratings, as well aspolicy analysis.

Our multidisciplinary team draws from the analyticalinputs developed in several elds – economics, statistics,demography, management, engineering, sociology, etc.We have been working with range of Internationallyrenowned organizations such as World Bank and variousUN organizations, academia such as Harvard, Stanfordand Cambridge Universities, government organizationssuch as Finance Commission, Competition Commissionof India and Reserve Bank of India, top media houses suchas India Today group, Outlook group, Indian Expressgroup, and the topmost national and multinationalcompanies.


The information contained in this document representsthe current views of the author (s) as of the date ofpublication. This White Paper is for informational purposeonly. The author (s) and Indicus makes no warranties,express, implied or statutory, as to the information in thisdocument. No part of this document may be reproduced,stored in or introduced into a retrieval system, ortransmi ed in any form or by any means (electronic,mechanical, photocopying, recording, or otherwise), orfor any purpose, without the express wri en permissionof the author (s). Indicus Analytics Private Limited doesnot accept responsibility for any loss arising from relianceon it.

report on direct selling industry in indiaficci.in/spdocument/20237/report-mark.pdfreport on direct...

Documents