IDSA blames ambiguous laws for Amway’s troubles

Hyderabad: Claiming that the arrest of Amway India CEO William Scott Pinckney in AP came as rude shock for Rs 8,000-cr direct selling industry in the country, Indian Direct Selling Association (IDSA) on Wednesday blamed lack of clarity in legislation and policy framework for the sector’s troubles.

The industry body, which represents the interests of direct selling industry and has membership base of 20 companies including Amway India, has also sought immediate amendment to the Prize Chits and Money Circulation Schemes (Banning) Act, 1978 (PCMCSB Act), which is being invoked time and again to book the companies and people involved in direct selling business.

“Unfortunately, direct selling industry is equated with fraudulent financial pyramid schemes and money circulation schemes for which the PCMMCB act was enacted. This is totally untrue and misrepresentation of the facts. Direct selling companies including Amway practice globally accepted and ethical business model.

They appoint independent distributors to sell their products. It’s just like outsourcing marketing functions,” said Ms Chavi Hemanth, Secretary-General, IDSA, told media here. As there is no legislation and policy in India that give operational clarity on the concept of direct selling, our industry is being harassed, she added. According to her, the direct selling industry has been in existence for the past two decades. “The industry has been requesting for regularity and policy clarity since 2007, but we have not got it till now. However, we are hopeful of getting the clarity soon,” she said.

Ms Hemanth further said that government should create a conducive environment for the efficient operation of genuine direct selling companies and at the same time ensure that the consumers are not cheated by the fraudulent players.

“The direct selling business is a genuine trade and commerce activity but not a financial transaction that enables people to earn quick and easy money. People who are appointed as independent distributors should work very hard and make visits to the consumers’ house regularly to earn money. All the people who are earning decent income in the industry have experience in the excess of 15 to 20 years,” said Amarnath Sengupta, former Chairman, IDSA.

He further said companies made huge investments to set up plants in the country. “They manufacture high quality and useful products which will be sold through the independent distributors at reasonable prices,” he added.

According to IDSA, the industry’s turnover which stood at Rs 7,164 crore during the fiscal year 2012-13 is expected to touch Rs 10,450 crore in the current fiscal. It estimates the turnover to reach Rs 30,000 crore by 2019-20. Over 60 lakh self-employed people are working for the industry across India. Of them, women account for major chunk.

“The industry is rapidly emerging and boosting self-employment opportunities besides encouraging women empowerment. The sector holds immense importance to the overall economic system in the country,” said Ms Hemanth.