| "We want a regulatory mechanism, whereby there is a check on who is entering the industry. The government, if required, can introduce a licensing system to ensure that only genuine players operate in the sector," said P Sanker, chairman, IDSA. |
| Elaborating on the focus of the regulation, he said it should ensure that remuneration came from sales only and a guarantee of returning back the products. It should also ensure that no income accrues to people promoting dealership chains. |
| The income of distributors should be based only on their sales performance. |
| "We would expect a business model to be incorporated in the regulation. Only manufacturers (with a capital base) should be allowed in the business," he added. |
| On the problems of the industry, he said operators promoting supply chains had entered the sector and were spoiling the environment for genuine players. |
| "The Sale of Goods Act, the Contract Act and the Consumer Protection Act protect the consumer's interest but they are remedial in nature. We are proposing a pro-active regulation," P Sanker said. |
| On growth potential of the sector, he said it grew to 31,000 crore in 2006 from Rs 27,000 crore in 2005. |
| "At present, the direct selling industry stands at Rs 34,000 crore. The growth in the sector provides scope for large scale employment also. A distributor has a wide manpower chain at his disposal. Any traditional company, for which setting up a distribution network is a Herculean task, can utilise the established chain of our distributors, who are present even in the remotest areas of the country," he added. |
| Globally, the direct selling industry has registered phenomenal growth in Mexico and Brazil. |
| The turnover of 65 companies that are involved in direct selling operations in Mexico is $3.03 billion. Over the past three years, the direct selling industry has been growing at an annual rate of 29 per cent. |
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