The Government of India is considering a revision of the policy regulating direct selling in India. According to an official notification from the consumer affairs ministry, the draft rules identifies agents of direct selling companies like Amway and Tupperware as ‘direct sellers’. The companies would also be prohibited from charging entry or registration fees or costs of equipment and materials used by their agents for sales demonstration purposes.
Through the introduction of the new draft rules, the government wants to ensure the protection of the direct sellers and making direct selling companies more accountable. At the moment, there are no concrete rules directing the operations of such entities. Earlier in 2016, the ministry had introduced a set of guidelines for the sector but these were exactly what the name suggests – guidelines. There were no enforcing provisions and were advisory in nature. Now, under the proposed changes to the rules, the Consumer Protection Act will be legally binding and failure to comply or violations will attract stringent penalties.
Under the draft rules, all direct selling companies will have to register with the Department for Promotion of Industry and Internal Trade (DPIIT) before they can carry out any business activity in India. Another non-negotiable provision is that such a firm needs to have at least one office in the country. The registration number provided by the industries department has to be clearly displayed in all websites and invoices as well.
Addressing customer grievances through 24X7 dedicated customer services will become compulsory under the proposed rules. The Centre also hopes to crack down on ‘Pyramid Schemes’ with the draft rules. No direct selling companies will be allowed to participate in what the authorities call ‘Money Circulation Schemes’.
Additionally, direct selling companies cannot refuse to take back damaged goods and will have to refund the amount paid for the said product. It also proposed that agents or sellers should be provided with a ‘cooling off period’ during which they can change their minds about previous agreements without it resulting in a breach of contract.
Direct selling companies currently operating in India will have 90 days to comply with the new guidelines as per the draft rules.