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Eight states have constituted committees to monitor direct selling as efforts continue to boost the regulatory framework to weed out entities floating fraudulent schemes and protect the interest of direct sellers and their companies.

It will help protect the direct selling industry in the respective states and provide policy clarity for the industry, said Indian Direct Selling Association (IDSA) Chairman Rajat Banerji.

The Consumer Protection (Direct Selling) Rules as notified by the central government in December 2021 have a provision to set up a monitoring committee by state governments to supervise the activities of direct sellers and direct selling companies.

The country’s direct selling industry, estimated to be worth Rs 19,000 crore, has been facing headwinds amid instances of entities floating schemes to defraud people in the guise of direct selling activities.

Governments from Andhra Pradesh, Himachal Pradesh, Madhya Pradesh, Chhattisgarh, Kerala, West Bengal, Goa, and Punjab have finalised and notified monitoring committees in their respective states.

“While in five states, IDSA has been included as a member in the monitoring committee,” Banerji told PTI on the sidelines of an event.

Besides, IDSA is also in dialogue with some other state governments for setting up similar monitoring committees and discussions are at an advanced stage with some of them.

“Tamil Nadu and Maharashtra are likely to notify the monitoring committee soon,” he added.

Maharashtra is the leading contributor in total sales from direct selling. In FY22, it contributed 12%, followed by West Bengal and Uttar Pradesh with 10% each.

IDSA has approached all state governments and has informed them about the notification of the rules and requirements of forming a monitoring committee.

“What we are trying to communicate with the states is that ease of business should remain. We are hopeful on this as we are getting full support from state governments on this,” he added.

IDSA has also partnered with National Law School of India University, Bengaluru to develop the modules for the monitoring committee, which will be later shared with state governments.

As per the latest IDSA report, the Indian direct selling industry crossed Rs 19,000 crore in FY22, registering over 5% growth.

In FY22, the industry also added more direct sellers, taking the total count to around 84 lakh—registering a growth of 6% from 79 lakh in the previous year, the report said.

IDSA believes that India has a “vast untapped market potential” for the industry, and the rising middle class, estimated at 25 crore, “has higher disposable income and is more receptive to purchasing premium products”.

The Consumer Protection (Direct Selling) Rules, 2021 also mandates direct selling company must be the owner, holder or licensee of a trademark/service mark of the goods or services.

Besides, it directs the direct selling company to upload all important details like balance sheet, licence issued by FSSAI and appoint grievance redressal officers for the redressal of consumer’s grievances within one month from the date of receipt of the complaint.