Direct Selling Legislation finalized by the Government

Key Highlights

• The new legislation for Direct Selling Industry finalized by the Government

• The state to issue guidelines as per their needs from the model guidelines

New Delhi : As per sources, the Centre has come up with the legislation for direct selling industry. This legislation will be effective for all direct selling companies such as Tupperware, Amway , Oriflame etc. As per this legislation, the direct selling companies cannot charge entry fee from agents. The company will also need to buy back unsold stocks.

Apart from this, the companies will have to guarantee a full refund and payback for goods and services that the direct sellers or agents are unable to sell.

The Consumer Affairs Ministry has prepared these guidelines  as part of the new Direct Selling Guidelines 2016 and will be notified soon.

Consumer Affairs Secretary Hem Pande told PTI that the ministers have finalized and approved the new guidelines. He also added that these are model guidelines and the states will issue the guidelines as per their needs.

What to expect from the new Direct Selling guideline

In this new proposed guideline, there is a clear definition of a legitimate direct selling and ponzi schemes. This will serve as a reference to the investigate agencies to differentiate between fraudulent players.

The government has specified several other conditions  for direct selling business in India in this new legislation.

According to sources, one main condition remains no entry fee to become a direct seller and the clause of compulsory buy back of any unsold inventory.

As on date, the direct sellers need to pay a registration fee along with purchasing products for selling. If they cannot to sell the products it becomes an extra burden on them.

The new proposed guideline suggests that the companies draw a proper agreement with their direct sellers or agents. The companies will also have to keep complete details of their direct sellers as well as provide them necessary training.

The Consumer Affairs Ministry will be responsible for monitoring the direct selling industry at the central level. The states will have to set up a regulatory mechanism for the same.

The guidelines have also underlined the obligation of direct seller, the relationship between direct seller entity and direct seller as well as consumer protection.

Due to the lack of clear legislation that defines the regulatory framework, the industry is under a lot of speculation. Hence, these new guidelines are framed to help smooth function of the industry which has been providing employment to many in the country.