Tamil Nadu brings cheer for direct sellers, notifies industry guidelines

The guidelines will enhance the industry's contribution to the exchequer, which was Rs 1.37 billion in FY16-17

The Government of Tamil Nadu has notified the Direct Selling Guidelines 2018, following in the steps of various other states, in line with the Central Guidelines to regulate direct selling. The Indian Direct Selling Association (IDSA), the apex industry body, has welcomed the move, stating that this would help direct sellers grow confidently in the state. 

In 2016, the Department of Consumer Affairs had notified the Direct Selling Guidelines, a model framework, as guiding principles for state governments to regulate direct selling and multi-level marketing.   

According to the guidelines, the direct selling entity will be responsible for the quality of products and services and it will guide and help the direct seller to follow best practices in the interest of consumers. The scope and specific liabilities of the direct seller in such cases will be defined in unambiguous terms in the contract signed. By way of providing the contract, every direct selling entity shall define and develop some mechanism to monitor the practices being adopted by its direct sellers, it says. 

"These guidelines will certainly boost the confidence of 450,000 direct sellers and give a strong push to self-employment opportunities in the state. In addition, the guidelines will also promote entrepreneurship, especially motivating unskilled and semi-skilled individuals," said Vivek Katoch, chairman, IDSA.  

These guidelines will also drive the direct selling entities to further invest in the state, bringing products of international quality within the reach of consumers at very competitive prices, he said.

"Tamil Nadu is ranked third among the top-ten states in the country with Rs 9.12 billion in business, contributing about nine per cent to the total sales in the country. Direct selling has continued to perform better while the going was tough," said Rini Sanyal, vice-chairperson, IDSA.

The guidelines will also enhance the industry's contribution to the exchequer, which was Rs 1.37 billion in FY16-17. 

"Also, these guidelines provide a definition for 'pyramid schemes', drawing a distinction between direct selling business and fraudulent schemes, which would help people in making right business choices," said Sanyal.