Arrest of Amway India CEO 'big blow', govt must clarify policy: IDSA

Kochi: Describing the arrest of Amway India Chairman and CEO William Pinckney as a "big blow", Indian Direct Selling Association (IDSA) today sought from the Centre immediate operational clarity and a separate legislation for the industry.

The arrest of Pinckney, an American national, and two directors of the network marketing company in Kozikode recently was a "big blow" and has not only "dazed" the industry, but also risked the future of lakhs of independent sale distributors in the direct selling industry in India, IDSA said.

It is a "big dampener" and "unfortunate" incident, IDSA Secretary General Chavi Hemanth told reporters here.



The Amway officials were booked under the Prize Chits and Money Circulation Schemes (Banning) Act based on complaints by distributors in 2011. The three have been granted bail.

In an attempt to clear the cloud over the operational ambiguities for Direct selling Industry in India, the IDSA has sought from the government a clear policy framework and exclusion from the PCMC (Prize chits and Money Circulation schemes) Act.

The industry pledges to stand together against the continued harassment because of the collapse happening often between the fraudulent financial pyramid schemes and Direct selling companies, Hemanth said. Such arrests would send wrong signals to the global companies in India and will affect the investment floatinginto the country, she added.

Four cases had been registered in Wynad and one in Kozhikode against Amway, which were all consumer redressal cases, she said. The association sought clarity over the legal framework to promote, facilitate and regulate the industry to protect the public and to prevent unscrupulous elements operatingunder the garb of direct selling business.

"There is confusion between Financial Pyramid schemes and direct selling entities due to lack of clarity on the operational aspects," Hemanth said.

"Direct selling sector follows a multi-level compensation structure to incentivise the independent sales which is distinct from Financial Pyramid schemes who camouflage the same as a cover up to their scheme," she said, adding that the lack of clarity and definitional ambiguity hinders the growth of Direct selling in India.

S P Sharma, Chief Economist and Head of Research, PHD Chamber of Commerce and Industry said the industry had grown by over 20 per cent in the last 5-6 years and is expected to grow over 20 per cent in the coming years.

The size of the industry in India was Rs 34,000 crore and is expected to grow by over 30 per cent by 2030.

The industry was providing on an average 8 lakh self employment opportunities and it was anticipated that it would provide 10 lakh opportunities every year and 10 million jobs in the next 10 years.


Updated Date: Dec 20, 2014 21:27 PM

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