Mar 20, 2011

Network Marketing/MLM/Direct Selling news India report by ICRIER published in all major Newspapers

On 18th March Friday Indian Council for Research on International Economic Relations (ICRIER) released a report to the Media titled “Socio–Economic Impact of Direct Selling: Need for a Policy Stimulus” at The Claridges Hotel, New Delhi in the presence of Hon’ble Minister, Shri Ashwani Kumar, Minister of State (Planning, Parliamentary Affairs, Science & Technology and Earth Sciences).

The Hindu Report on the ICRIER on Network Marketing

To make this topic simple to you all let me explain that Wal-Mart (a foreign Company) wanted to open a multi brand Retail store(like Big Bazaar) in India but was not allowed by the Indian Government as Foreign Direct Investment(FDI) in India is Limited only to Wholesale, that means only retailers(shop owners) can buy from Wal-Mart(Business to Business) and not common customers(Business to consumers). This step was taken by Government to help the Indian Retailers to make profit.
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Now coming to Network marketing Industry there is no clear rule mentioned as it is not considered as an Industry yet. Department of Industrial Policy and Promotion (DIPP) classifies direct selling under wholesale trade for the purpose of FDI inflows. However, it was later clubbed with retail trade (non-store format retail) under NIC (National Industrial Classification), 2008. It also says direct selling is not clearly specified in DIPP's consolidated FDI policy. Since it covers both business-to-business and business-to-consumers aspects, some experts point out direct selling is neither wholesale nor retail, but only a specialized channel of distribution.

India is on the radar of many companies from all regions whether it is USA, Europe, and South East Asia. And many more are waiting for the government to pass legislation for Direct Selling industry in India, which is not considered as an industry yet.
RMP being a purely Indian company is allowed to market multi branded products and is the only company having maximum distributors and turnover in India.
India is expected to become the fifth largest consumer market by 2025 with an expanding middle class, which means lot of Foreign Multinational Companies want to sell their products here.

Now coming to what ICRIER reports tells is that -
India ranks 11th in terms of the number of direct sellers. However, when it comes to the value of sales, the 14-year old industry in India is ranked 47th. The sales volume clocked by the Indian direct selling industry in 2009-10 is estimated at Rs 4120 crore(Let me stress here that RMP an Indian company's turnover is 2600 cr0re half of the industry's turnover). The US, Germany and Japan are among the leading direct selling markets of the world.

The report concluded that the direct selling sector offers self-employment opportunities to a large number of people, especially women.
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Minister for planning, science & technology, Ashwani Kumar, after unveiling the report, said, “The government will examine the report.” He added government decisions are guided by both political and economic choices. DIPP, which falls under the commerce and industry ministry, is responsible for formulating FDI rules.

Well only Foreign companies have to wait for the FDI rules, I am sure that Indian government will be prudent enough to promote only Indian companies and think of the profit and advantage of only Indian companies.