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January 05, 2018

World News

Study Suggests India’s Direct Selling Sector May Reach $2.5 Billion by 2021

According to The Economic Times, a study by Assocham, the Associated Chambers of Commerce of India, expects the country’s direct selling channel to reach Rs 159.3 billion rupee (US$2.5 billion) by 2021. However, the organization suggests certain reforms are necessary for the channel to see sustainable growth.

Assocham reports India’s direct selling channel has almost doubled since 2011. According to the World Federation of Direct Selling Associations, India generated $1.18 billion in sales for 2016, placing it at No. 22 in DSN’s Billion Dollar Markets for 2017.

To further the growth of the channel, Assocham made three recommendations. The first is relaxation of the Foreign Direct Investment policy; FDI is the monetary source for economic development in India, with foreign companies investing directly in private Indian businesses to take benefits of cheaper wages. The second recommendation concerned the enactment of Consumer Protection Bill, which provides for the establishment of consumer councils and other authorities for the settlement of consumers’ disputes. The final recommendation was in regard to an amendment to the Prize Chits and Money Circulation Act, which is the banning of prize chits and money circulation schemes.

“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,” the Assocham states. The organization believes the channel is “the most misunderstood and unacknowledged business activity” despite substantial growth over the years and a number of ways in which it has contributed to Indian economy.

Direct sales in India is dominated by the health and wellness segment, closely followed by beauty and personal care segments. According to the study, the average sales of each direct selling participant in India is about Rs 20,000 per year (US$300), while the global average is about Rs 10,000 (US$150) per month, adding that there is more scope for growth.