Direct Selling Industry Faces Credit Crunch, Regulatory Issues: ASSOCHAM | CORPORATE ETHOS

Direct Selling Industry Faces Credit Crunch, Regulatory Issues: ASSOCHAM

By: | April 25, 2018
Apr 25: The $1 bn direct selling industry in India is facing credit crunch as banks refuse to recognise the business as an entrepreneurial venture besides harassment from local authorities due to lack of clarity on regulatory issues, according to ASSOCHAM.
The industry body has suggested to the Union Government to refurbish status of direct sellers and entrepreneurs by introducing necessary regulations and policy reforms to facilitate growth of the direct selling industry which generates employment for about six million entrepreneurs.

They also urged the Centre for speedy implementation of Direct Selling Guidelines notified by Union Government’s Department of Consumer Affairs in 2016 to facilitate ease of doing business in this sector.

“The Department of Consumer Affairs must advise all states for speedy implementation of centre’s Direct Selling Guidelines in letter and spirit as that would help in recognising the sector and removing all misconceptions,” said ASSOCHAM secretary general, Mr D.S. Rawat in a communication addressed to Ram Vilas Paswan, Union Minister for Consumer Affairs, Food and Public Distribution.
 Direct selling industry is often mistaken as pyramid and money circulation schemes which is adversely affecting growth of industry. “At grassroots level, complaints falling under the ambit of Consumer Protection Act are being redressed under the harsh provisions of criminal law or the Prize Chits and Money Circulation Schemes (Banning) Act 1978.”

It also highlighted that direct selling sector in India is facing harassment by local authorities on a variety of issues, mostly pertaining to wrong interpretation of subject matter thus there is a need for framing a separate law for the industry. Besides, facilities of payment gateway are also not easily made available to direct selling entities.