clear industrial classification
the sector to drive out fly-by-night operators
Hyderabad|India|May'2012: In an initiative to create
awareness on the direct selling sector, Indian Direct Selling Association
(IDSA) hosted a Knowledge Forum in Hyderabad. This was addressed by Mr S
Subramanian, Chairman, Ms Chavi Hemanth, Secretary General and Mr Devadas,
At the Knowledge Forum, Indian Direct Selling Association (IDSA) also
released the Annual Survey 2010-11 on the Indian direct selling industry
done in association with PHD Chamber of Commerce and Industry.
Chavi Hemanth, Secretary General, IDSA highlighted the differences between
the fraudulent companies taking the advantage of ignorant consumers in
India and the legitimate Direct Selling Companies which has played an
important role in Socio-Economic impact.
Chairman and Secretary General, IDSA both explicated their concerns about
the mushrooming fly by night operators under the garb of direct selling
Hence, in purview of above, IDSA is conducting ‘Knowledge Forum’ for the
first time in Hyderabad to create awareness and educate people on what is
the difference between genuine direct selling company and illegitimate
Mr S Subramanian, Chairman, IDSA informed that the industry is estimated
to double by 2014-15 reaching upto INR 108.4 billion from the current
level of INR 52.3 billion in 2010-11. The industry is slated to grow at an
average of more than 20% in the next four years”.
Mr S Subramanian further informed, “Direct selling companies have been
active in contributing to the social and economic development of the
country, with over Rs.6.5 billion paid as taxes to the Government
exchequer by IDSA member companies alone”.
The survey findings states that the products sold through this segment are
appealing to consumers for its high quality standards. Direct selling
sector helps cater to consumers who would want to have products of their
choice delivered at convenient locations other than at usual retail
Mr S Subramanian expressed that “As the direct selling industry offers
alternate employment opportunities, it has contributed significantly in
employment generation for the country over the years. This year (during
2010-11) the total distributor base of the Indian direct selling industry
stands at around 4 million marking a growth of around 24% over previous
year. Out of this 3.2 million distributors have been employed by member
companies generating a growth of 25% and 0.8 million distributors have
been employed by the non-member companies generating a growth of 22%
Chavi Hemanth, Secretary General, IDSA stated “IDSA collaborated with PHD
Chamber in furthering an on-going process of monitoring the direct selling
sector in India. The report assesses the current state of the direct
selling industry in India across several key parameters encompassing
revenues, sales force employed, product category coverage, distribution
reach and most importantly the contribution of this industry to the
government exchequer. The report also addresses the challenges faced by
this sector and the overall future outlook.”
Ms Chavi Hemanth mentioned that the survey indicates that the industry has
displayed a robust 27% growth at INR 52.3 billion in 2010-11 turn over.
The robust growth in the segment has been contributed by 28% growth in
organised and 17% growth in the unorganized segments of the industry
during 2010-11. The industry grew at 24% during 2009-10, 17% during
2008-09, 13% during 2007-08 and 9% during 2006-07.
She also stated that out of the wide variety of product sold through the
organised direct selling industry, products related to wellness
contributed to the highest share of sales (40%) while cosmetics and
personal care products (32%) were also very high in demand.
Further she mentioned that on an average, the direct selling firms earned
profits of around 21% during the last three years. As per the survey, the
main drivers of growth in this sector are high quality standards of
products, reliability/durability and good demonstrations and trainings.
Ms Chavi Hemanth expressed that the industry is exploring new
opportunities using the social media tools to reach out to large consumer
base. “Though the industry is two decades old but with focussed efforts
and strategise of our member companies over last five years, direct
selling has emerged as a medium for the sale and marketing of product and
services across a range of consumer needs, with the associated industry
encompassing a size of Rs 52.3 billion for 2010-11”.
Mr S Subramanian said, “The Indian direct selling industry has contributed
largely to the growth of Indian SME sector by way of outsourcing their
manufacturing process to these enterprises in order to produce the
products domestically. The companies own manufacturing facilities produce
only 30-35% of the total produce, the remaining is majorly sourced through
contract manufacturers which are SMEs”.
The forum was concluded by IDSA representatives and mentioned that that
this year also, the momentum has continued and number of direct sellers
has also increased.