Indias direct selling industry may reach Rs 159.3 bln by 2021: ASSOCHAM

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New Delhi: The Direct Selling industry in India has almost doubled since 2011 to reach INR 126.2 billion in 2016 and is expected to grow at a compounded annual growth rate (CAGR) of about 4.8% to reach INR 159.3 billion in 2021, reveals the study undertaken by ASSOCHAM.

The average sales of each participant in India is about said USD 300 per year i.e. Rs. 20,000, where the global average is about USD 1700 per participant per year or about Rs. 10,000 per month, reveals the ASSOCHAM paper.

“Direct selling opportunities can be enhanced in India provided we create a conducive environment which is protecting all the stakeholders within the framework of the regulatory framework”, adds the study.

The top markets depicting the highest sales globally are USA (20%), China (19%) and Korea (9%). India’s ranking in the industry in terms of the size of the sector improved from 22nd in 2014-2015 to 20th in 2015-2016. Direct selling industry accounted for more than USD 183 Billion in retail sales globally in the year 2015- a new sales record for the industry. Every region in the year 2015-2016 reported growth in its sales and 80 per cent of the countries around the world reported an increase in both sales and people joining the industry, adds the study.

The Direct Selling industry’s contribution to the country can be mapped to various schemes introduced by the Government of India in the past two-three years. The industry has been playing a significant role in Skill India initiative by imparting soft skills, marketing and leadership trainings in its network. It has also contributed positively to several other flagship schemes launched by Government of India like Make in India, Digital India, Startup India and Women Empowerment, noted the study.

Despite of substantial growth over the years and a number of ways in which it has contributed to Indian economy, this industry is the most misunderstood and unacknowledged business activity. The main reason for the same is the use of networking and schemes through which the activity of direct selling is undertaken. In majority of cases (of course where credible entities/ promoters are involved) such network marketing schemes are means to increase the expanse of business. However, India and its public has been on receiving numerous unscrupulous schemes where people have lost money, credibility, honour and livelihood, noted the study.

Though the Guidelines received the overwhelmed response within the industry, there are certain other reforms which needs to be restructure to ensure a sustainable operating environment for the Direct Selling entities need for implementation of Guidelines at state level, need for relaxation under the Foreign Direct Investment (‘FDI’) policy, enactment of Consumer Protection Bill and need for amendment under the PCMCS Act.

Direct selling has been leaving imprints of its growth and success globally over the years. It has become an extremely popular self-employment model across the world. There are several reasons for this immense success, best quality products, personal connection and bonding with consumers and promotions of entrepreneurship are some of the major factors contributing to its growth. Apart from the minimum cost and low risk involved in direct selling, the popularity of this model stems from the fact that entrepreneurs engaged in direct selling are able to provide a personal touch to their interactions with customers through personalised and custom-made demonstrations and in turn, expand their professional network of contacts.

Countries such as the US, China, Japan, South Korea, Brazil, Germany, Mexico, France, the United Kingdom and Malaysia are already been listed as top direct selling markets. The reach of direct selling is spreading quickly in almost every country around the world. Direct selling, besides providing self-employment opportunities to numerous people around the world, also helps in advancing the overall trade and commerce of an economy; thereby it contributes in boosting the overall economic growth of a country. In countries like Mexico, which have similar socio-economic structures, with one-tenth of India’s population, the size of the direct selling industry is at least eight times bigger than the Indian market.

Direct selling industry makes an economic contribution to the lives of more than 30 million people across the world and an estimated 220,000 entrepreneurs join this industry every week. The international direct selling companies account for a dominant 90 per cent of the organised market. One of the most tangible impacts of direct selling in its new advent has been the fact that it has touched average individuals in a manner never experienced before. Giving freedom to people for doing business in the way they have always wanted is proving as a motivational factor to display their entrepreneurial skills. This is expected to accelerate further as the business grows and expands.

The sales in the direct selling sector in India is dominated by the consumer health segment, closely followed the beauty and personal care segment. Food and beverage category in direct selling registered strongest value growth of 34 per cent during 2014-2016. Wellness and healthcare category is emerging as a clear winner in direct selling industry with significant growth year on year.

In India, the Direct Selling Industry has existed for several years, but the entry of numerous international companies, during the last five years has accorded greater visibility to this industry, which is still in a nascent stage. According an Annual Survey 2015-2016, it is estimated that over the past five years, about 500,000 people benefited from the opportunities offered by the industry.