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What Ails Direct-selling Businesses in India?
The law pertaining to direct-selling businesses prevailing in India is in dire need of transformation. A critical examination of the definitions (related to direct-selling), the primary cause of concern, followed by the inept Direct Selling Guidelines issued in 2016 by the Ministry of Consumer Affairs is undertaken here. Focusing on the regulatory aspect of this business model, a case is made for a specialised regulator for direct-selling entities.
This work is in association with Strategy India.
Direct-selling entails the sale of goods and services directly at the doorstep of the customer. The customer is, thus, absolved from the inconvenience of going to retail stores. While various models of direct-selling prevail in India, there are no set formats for the business models of direct-selling companies. This possibility of variation in the models has encouraged entrepreneurs to opt for direct-selling more often, resulting in a surge of profits recorded recently throughout the world (WFDSA 2019).
In India, direct-selling businesses (DSBs) have tapped into the potential of entrepreneurship. According to the Indian Direct Selling Association (IDSA), India’s direct-selling industry was valued at around `1.3 million in 2018–19, growing at approximately 13% from `1.16 million in 2017–18 (IDSA 2019). As per the Global Direct Selling 2019 Retail Sales report, India was ranked 15th globally for its record sales via direct-selling (Economic Times 2020). These figures are encouraging and speak volumes about the acceptance of DSBs in India.
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