Nothing wrong with our business model: IDSA

Direct selling association backs Amway and says it did not see any inherent need for reviewing the operations

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The Indian Direct Selling Association (IDSA) on Wednesday said the body did not see any inherent need for reviewing the operations of Amway India and also other member sellers operating in the country.

“Amway India and other member direct sellers in the country have been following the best of ethics and the association feels nothing wrong in the business model of the industry,” said Amarnath Sengupta, former chairman of the 20-member IDSA, and added the arrest of Amway chief executive came as a shocker.

Amway India chief executive William Pinckney was  arrested by Kurnool police in Andhra Pradesh last month in a case filed by an advocate accusing  Amway of indulging in unethical practices of money circulation. Pinckney currently is in the custody of Khammam police in the state.

Sengupta said the association was disappointed with the allegations against Amway, which had confronted more issues in the last few weeks; in contrary to what the industry had to face in the last eight years. He confirmed the arrest of Amway India chief executive William Pinckney to be first in the industry since the formation of IDSA two decades ago. Despite these allegations, Amway was still a respected member of the association, he added.  

The grouse of the direct selling industry is with the inferences being drawn from the Prize Chits and Money Circulation Schemes (Banning) Act, 1978 (PCMCSB) to its operations. “The direct selling business is a trade and commerce activity but not a financial transaction allowing quick and easy money,” said Chavi Hemanth, secretary general of IDSA.

Lack of clarity on the applicability of PCMCSB had affected the flow of investments in the direct selling business, which employs six million individuals and had seen no interest from new players in the last few years. “Except a few cases of capital investments by existing companies, there has literally been no entry of new players in the last three years,” said Hemanth.

However, the association is hopeful of a law governing the industry in place as it was in consultations with the Centre, and expects a five-fold jump in business turnover at Rs 34,000 crore by 2019-20.     

Speaking to mediapersons, other members of the association said it was wrong to criminalise direct selling organisations and their officials based on simple consumer complaints. They said the contribution of South India to the industry’s turnover dropped 30 per cent in 2012-13, as against a share of 38 per cent in 2011-12. The direct selling industry in India is worth Rs 7,164 crore in 2012-13, and is expected to touch Rs 10,850 crore in 2014-15, according to the IDSA.