Amway CEO arrest: IDSA to write to Modi Govt

Seeks intervention to bring the industry under corporate affairs ministry

A day after Amway India CEO William S Pinckney was arrested over alleged unethical practices of money circulation, the Indian Direct Selling Association of India (IDSA) has decided to write to the Narendra Modi government seeking intervention to bring the industry under corporate affairs ministry. At present the over 7000 crore industry, as of FY13, does not have an industry status and is not under purview of any ministry. The direct marketing industry is expected to swell to Rs 34,000 crore by FY 2019-20, according to industry data.

The matter has been long pending since the time of earlier government and a draft guideline was prepared but nothing has been implemented as yet.

"Our mechanism is ready and we would communicate the urgent need to the new government seeking industry status and bringing it under the ministry of corporate affairs.," said Ajay Khanna, chairman of IDSA.

"What we need is clarity to avoid incidents such as yesterday. The draft guidelines should be implemented soon," he said by adding that the association was hopeful of the new government's help over the matter.

IDSA has been trying hard to enact guidelines for the direct selling industry and has made presentations to the Ministries of Commerce, Finance and Consumer Affairs. IDSA, a self-regulated body of direct selling companies in the country, has formulated draft guidelines for the industry based on laws existing in countries such UK and Singapore.

The police had said on Tuesday that charges had been filed against Pinckney under the Prize Chits and Money Circulation Schemes (Banning) Act, 1978. This was the second time Pinckney has been arrested in this country. The Kerala police arrested him last year on similar charges .

Due to the lack of a legal framework for the direct selling sector, any case filed is being interpreted and booked under the 1978 law, which is meant to regulate financial schemes. The direct selling industry had been repeatedly seeking an amendment to the above law.

The association claims to explain to the government that no financial schemes are aligned with the business of direct selling companies such as Amway India's. "It is only product sells" added Khanna.

Amway India is one of the biggest direct selling companies in India with a topline of close to 2300 crore in fiscal year 2013.

While hopes are soaring sky high from Modi led government, it remains to be seen if the new government would pay heed to the long standing matter.