Amway India`s troubles do not seem to be going away soon, and the most recent charge by “The Enforcement Directorate (ED)” is money laundering. The ED is now accusing Amway of money laundering activities to the tune of thousands of crore rupees (US$10 million) and is in the process of registering a case against the company. As it stands, Amway already has cases registered in Kerala, Karantaka and Chandigarh.

The ED accusation is that Amway is running a major cheating and looting business under the guise of a multi-level marketing company pretending to sell a product, and suspects that Rs. One lakh crore (US$ 10 billion) has been repatriated to foreign countries without check. The direct selling sector in India is currently governed by "The Prize Chit and Money Circulation Schemes (Banning) Act of 1978", "The Consumer Protection Act 1986", and "The Sale of Goods Act 1958".  All these are now outdated and no longer applicable. This accusation comes in the wake of the rise and fall of companies like Southern Wonder World Resorts Limits, Japan Life India, Mihira Magic New Working Co and more recently Speak Asia, having duped millions of innocent Indians of their hard earned cash.

The India Direct Selling Association IDSA represents eighteen reputed Indian and multinational direct selling company`s. On September 22, 2011 in Bangalore for the first time, IDSA held a Knowledge Forum aimed at creating awareness about the direct selling sector which is a miss-understood sector in India. This will help participants know the difference between legitimate operators and financial pyramid schemes. During the event this message from WFDSA was released, “Direct selling is one of the most vibrant forms of micro-enterprise on the planet, transforming not only the lives of individuals, but also improving communities, and driving positive change in society at large.”

In further support of the industry, Ms. Chavi Hemanth, Secretary General further affirmed that India was ranked 11th in the world in 2009/2010 in the direct selling industry. This sector offers self employment to a large number of people especially women, in both urban and rural areas. Turnover is expected to have reached Rs.7,100 crore (US$7,100 billion) by 2012/2013.

There are several barriers preventing the growth of this very promising industry. Some of these problems can be addressed by the IDSA. Others, however, will need government intervention, namely (a) the provision of a clear definition of direct selling (b) streamlining of the Foreign Direct Investment (FDI) policy (c) the enactment of a governing legislation for the sector and (d) the establishment of a nodal ministry or single point of contact.

The IDSA and WFDSA have plans underway and have begun to take steps to create an environment that supports direct selling where independent entrepreneurs can create fulfilling careers similar to people living in 150 other countries.

2011-10-07

Comment on this article