Direct selling will be regulated under new consumer protection bill: Govt

Amid demands for a legal status to the direct selling industry, Consumer Affairs Secretary Avinash K Srivastava said today that it can be regulated by framing rules under the proposed consumer protection bill.

In 2016, the government had issued guidelines for the direct selling industry and differentiated it from Ponzi schemes.

Chattisgarh and Sikkim have already adopted them and few more are in the process of doing so. Since the guidelines are not binding, states have been slow in adopting them.

"Some states are adopting the guidelines. However, to regulate the sector properly, we have got a provision to frame rules under the consumer protection bill," Srivastava said at an event organised here by industry body Ficci.
 

A Parliamentary Standing Committee has also recommended regulating the sector under the proposed bill, which is likely to be passed by Parliament soon, he said.

"Once the bill is passed, we can frame rules," he said on the sidelines of the event.

Addressing the event, he emphasised upon the need to cap commissions paid to sales teams working under the direct selling structure.

"Why not cap commission paid by direct selling enterprise to direct seller? Amway has capped at 20 per cent. Think over this issue," he told the industry representatives from Modicare, Oriflame India and others at the event.

However, former Consumer Affairs Secretary Hem Pande and Oriflame India Senior VP & Head of South Asia and MD Sergei Kanashin pitched for "self-regulation" of the sector.

"Self-regulation is best. What is the point of having a law if it is not implemented by all states? Direct selling is India's DNA. It has great future," Pande said.

India's share in global direct selling industry is very small at present, though the country has large consumer base. At least, the country should aim to touch USD 10 billion by 2022, he added.

Echoing the view, Kanashin said that the direct selling industry in most countries including the US is self regulated and is doing well.

He also highlighted challenges being faced from cyber security and growing e-commerce platform.

The Confederation of All India Traders General Secretary Praveen Khandelwal said that there is an urgent need to grant legal status to the direct selling sector.

"Treat direct seller as traders. The status as retail trader or part of retail trade should be granted to direct sellers," he said, adding that states are slow in adopting the guidelines.

He also said that there is a need to evaluate the impact of Goods and Services Tax on the direct selling industry.