William S Pinckney, Managing Director and CEO of Amway India, said that the Union Government may soon come out with draft guidelines on direct selling.
The Ministry of Corporate Affairs has constituted a committee for drafting regulatory framework for the direct marketing sector.
Direct selling refers to a non-store retail format, where companies sell the products to agents, who then sell them to consumers at their doorstep. According to an Ernst and Young report, direct selling industry in the country is estimated to touch Rs 7,120 crore by the end of 2012-13.
“The inter-ministerial committee comprising of people from corporate affairs and consumer affairs, is expected to come out with draft regulatory guidelines for direct selling companies within 1-2 months and the final guidelines might be framed within the next one year,” Pinckney said at a press meet to announce the inauguration of the company’s second distribution centre in the city.
The direct selling market in the country has been recently caught in controversies on account of certain unfair practices and dubious schemes.
The regulatory framework, if implemented, would help genuine direct selling companies to operate and prevent fraudulent schemes. “Absence of such framework has resulted in mushrooming of many fraudulent schemes masquerading as genuine direct selling opportunities,” he said.
Manufacturing unit
Amway India, a direct selling FMCG company, plans to set up its first greenfield manufacturing facility in the country at an estimated investment of about Rs 550 crore.
“We have purchased 50 acres of land in Tamil Nadu and we hope to start construction by February 2013. The plant should be ready for production by end 2014 or early 2015,” he said.
The company also plans to set up an R&D centre to come out with India specific products particularly in the health and beauty categories.
It aims to achieve a turnover of Rs 2,400 crore in 2012 (it follows the January-December accounting year).