‘Direct selling industry in Gujarat to touch ₹5,000 crore by 2025’

Driven by stability of income and increased participation of urban middle-income households, the direct selling industry in Gujarat is likely to grow multi-fold in the next decade.

According to a FICCI-KPMG India report titled ‘Direct Selling: Gujarat’ launched today, the multi-level and single-level marketing industry in Gujarat, has the potential to touch ₹4,800-5,000 crore by 2025 from the current market size of around ₹280-300 crore.

Growth drivers The growth is expected to come from the swelling share of middle-income households, growth in consumer markets and an increase in the penetration of direct selling to globally comparable levels, the report noted.

It said direct-selling industry facilitates self-employment opportunities and promote women empowerment. “Women constitute about 60 per cent of the total direct seller’s workforce of the state. It has been observed that with the rising costs of living, the direct selling business is gaining popularity among men too who are looking at it as a supplementary earning opportunity. The share of men in the workforce has increased from 38 per cent in fiscal 2012 to about 42 per cent in fiscal 2014,” it said.

The number of direct sellers in Gujarat has increased from 0.12 - 0.14 million in fiscal 2010 to 0.29 - 0.31 million in fiscal 2014.

Market size In India, the direct-selling industry is estimated at ₹7,500 crore and has been growing by more than 16 per cent over the past four years. It has attracted a large number of Indian and foreign direct-selling companies.

Rajat Banerji, Chair, FICCI Direct Selling Task Force, said, “We find in Gujarat an enhanced entrepreneurial spirit and keenness to pursue available business opportunities. This has led to a steady growth of this industry in the State.”

Gujarat has reported second-highest CAGR of 16.5 per cent between 2005-06 and 2011-12, leading to higher expenditure on consumer goods. The increasing working population in cities such as Ahmedabad, Gandhinagar and Vadodara also make Gujarat a good direct-selling market.

Rajat Wahi, Partner and Head, Consumer Markets, KPMG in India, said, “The industry’s functions heavily rely on individuals to accomplish sales which give rise to a number of fraudulent businesses emulating the form.”

Regulatory challenges However, the report also highlighted several regulatory challenges for the growth of the sector.

“There is no systematic and standard policy on direct selling that is based on the constitutional structure. In addition to this, there are other regulatory issues including a lack of definition and separate provisions for the industry, which can adversely affect the industry,” it added.