Corporate Tax cut to push direct selling industry: MoS Finance

India has huge potential for growth of direct selling as it has world’s largest youth population and with youth oriented schemes of the government, the industry can achieve even faster growth

Corporate Tax cut to push direct selling industry: MoS Finance

Women and youth are leading the direct selling industry and corporate tax cut along with a slew of economic measures taken recently will add momentum to the sector, Anurag Singh Thakur, Minister of State, Finance and Corporate Affair said while releasing the Indian Direct Selling Association (IDSA) Annual Survey 2018-19 in New Delhi Wednesday.

“The direct selling industry engages around 60 lakh people involved as either distributors or direct sellers and I have been told this number could grow to two crore by 2025. During the past few years and as a part of recent economic reforms and measures announced, our government too has taken a host of initiative to boost the corporate sector, support MSMEs and nurture startups,” the minister said in his keynote address.”

The minister further said, “This is a commendable achievement and it aligns with our government’s vision of encouraging and facilitating the role of women and youth in New India’s growth story.”

The Indian Direct Selling Industry has witnessed a compounded annual growth rate (CAGR) of approximately 16 percent and grown from Rs 8,308 crore in 2015-16 to Rs 13,080 crore in 2018-19, according to a report released by IDSA.

IDSA Annual Survey (2018-19) Report highlighted New India Aspirations and contributions of Direct Selling with recent developments and trends such as use of efficient use of technology, introduction of new products, and usage of social media and enhanced confidence of direct selling industry and consumers with new model guidelines of the Centre and other policy reforms, adoption of guidelines by 13 states.

IDSA partnered with Kantar IMRB to come up with a detailed Annual Report 2018-19 which revealed that the Indian Direct Selling Industry’s contribution to the exchequer stood at around Rs 2,500 crore in 2018-19.

Earlier, highlighting the contributions of the Industry Vivek Katoch, Chairman, IDSA said, “The Industry turnover figures have surged to around Rs 13,000 crore registering double-digit growth. The government had issued model guidelines which have particularly boosted the confidence of the people”

The report is a clear indication of the fact that direct selling sector has been able to successfully grow in an overall scenario of economic slowdown as more and more people are taking up direct selling as an alternate career.

The number of direct sellers in India is also on a rise. The number of women direct sellers has gone up by 0.15 million in last two years which roughly translates to nearly 200 women becoming part of direct selling industry every day. Same is the case with overall number of direct sellers which has gone up by nearly 0.3 million in last one year alone. The report pointed out that the number of direct sellers was around 5.7 million in 2018-19, grew at 6 percent from 5.4 million in 2017-18.

Wellness products such as weight management supplements, meal replacement bars and drinks contribute more than half of the Indian direct selling sales by IDSA members. This is followed by cosmetics and personal care which include cosmetics, skincare, fragrances, contribute more than one-fourth of the sales by IDSA members during 2018-19.

According to the report, the global direct selling industry stood at around US$ 192.9 billion in 2018 showcasing a growth of 1.2 percent from the industry value US$ 190.5 billion in 2017. China is the leading country in terms of direct selling sales in 2018 with a direct selling sale of US$ 35,732 million contributing around one-fifth of direct selling sales globally. It is closely followed by the United States of America having a direct selling sale of US$ 35,350 million in 2018. China along with the USA contribute more than one-third of direct selling sales globally in 2018.

Speaking on the occasion, Tamuna Gabilaia, Executive Director & COO, World Federation of Direct Selling Associations (WfDSA) said, “India has huge potential for growth of direct selling as it has world’s largest youth population and with youth oriented schemes of the government, the industry can achieve even faster growth,”

Indian direct selling industry is now facing a critical challenge from e-commerce websites which sell direct selling products without its consent, revealed the IDSA Annual Survey Report. 

Along with the challenges, the report also highlights recent trends such as the use of efficient use of technology, policy reforms, introduction of new products, and usage of social media.

With the increase in adoption of innovative technologies and direct selling market targeting majorly the age group of 25-44 years, the organisations have been able to make efficient use of technology to attract and retain their direct sellers.

The IDSA report also examines each regional market in India separately, leading to a more complete understanding of the Indian market. North region contributed to around 27 percent of the direct selling sales in 2018-19. This was closely followed by the West region with approximately 25 percent. Maharashtra has the highest share of sales across the country with 13.3 percent, of the gross sales in 2018-19, followed by West Bengal contributing more than 9 percent of the sales in the country.

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