The arrest of the MD and CEO of Amway India William S Pinckney has prompted the Indian industry to call for clear regulations for an industry that logs a turnover of over Rs 6,000 crore and employs over 60 lakh people as distributors or selling agents of which almost 70 per cent are women.
Currently, direct selling companies come under the Prize, Chits and Money Circulation Schemes (Banning) Act which clubs direct selling companies in the same category as the companies like the now infamous Saradha and many other such companies which mop up money through money circulation schemes with promises of very high returns.
Shourya Mandal, President of Indo American Chamber of Commerce said that the body is going to meet government officials to impress upon them the need to make regulations for genuine direct selling companies doing business in the country which will distinguish them from companies selling Ponzi schemes.
FICCI , another industry body , termed the action on the Amway officials as unjustified since no criminality was involved and pointed out that such action is likely to give an inappropriate message to the global business community. It added that the chamber has already written to the chief secretary of Kerala requesting a re-look into the matter.
S Subramanian, Finance director of the Swedish direct selling company Oriflame with significant operation in India termed the arrest of the top officials of a company as unjustified when they have been supporting all investigations. He also urged the government to clarify laws for direct selling as quickly as possible as it has created nervousness in the direct selling industry in the country after the unfortunate incident with Amway.
Ujjwal Mukhopadhyay, Treasurer of the Indian Direct Selling Association and MD of AVON India, pointed out the difference between the Ponzi schemes and the ones persued by the direct selling agencies and added that the government has assured that it is working on it. Chavi Hemanth, Secretary General of Indian Direct Selling Association expressed disappointment at the continuing lack of clarity between the direct selling business model and fraudulent pyramid schemes, and urged the government to provide clarity immediately.