India’s Direct selling Industry has the potential to engage 18 million Direct Sellers by 2025 and to

reach a size of INR 64,500 crores by 2025

FICCI-Direct selling Task force is organizing its annual Direct selling Mega Event- “DIRECT 2014”

 South India is the largest market for direct selling in India

 The report suggests the need to revisit laws and bring about regulatory clarity
 Sector has the potential to engage over 10 million women as direct sellers by 2025
 Sector’s contribution to Government revenue expected to increase 9 folds to INR 9000 Crores by
2025

New Delhi, December 04, 2014: The FICCI-KPMG report on the direct selling industry in India, released
by Shri. Ram Vilas Paswan, Union Minister of Food, Public Distribution and Consumer Affairs, in Delhi
today at a FICCI conference - “DIRECT 2014”, indicates that the direct selling industry has the potential
to provide self-employment to 18 million. The report indicated that with the right policy stimulus, this
industry might well reach its potential of INR 64,500 crores, a nine-fold increase in twelve years.
Minister Paswan released this report along with Keshav Desiraju, Secretary Consumer Affairs, Sidharth
Birla - President of FICCI, Kurush Grant ED of ITC, as well as other industry representatives.

The FICCI conference was attended by a number of India and global industry dignitaries and other
stakeholders.Direct selling is a global industry, operating in over 100 countries with a market size of USD
167 billion. It refers to the selling of goods and services to the consumers away from a fixed retail outlet,
generally in their homes, workplace etc., through explanation and demonstration of the product by
direct sellers. USA, Japan and China are key markets for the industry. Back home in India the market is
estimated to be around INR 7,200 crores, which is a far smaller percentage of the size of the economy,
when compared to other countries. The FICCI-KPMG white paper launchedtoday highlights the
challenges faced by the industry in India, and suggests a roadmap for enabling the industry going
forward.

At the release, Hon’ble Union Minister said, “I acknowledge the contribution of Direct Selling industry
towards offering greater choices to the consumers. My Ministry appreciates the need of creating a
regulatory framework for the direct selling and e-commerce sectors. We have recently formed an Inter
ministerial committee to deliberate on the need and framework of regulations for the Direct Selling
industry. We feel it is important to distinguish between the genuine and fraudulent players, and any
regulation that is proposed should keep in mind the interest of consumers as the first priority.”

Secretary, Mr. Desiraju further said, “We are hopeful that the proposed changes to the Consumer Protection
Act will strengthen consumer welfare. There is a need to differentiate direct selling from other fraudulent
schemes masquerading in the market as direct selling. With internal trade falling under the Ministry of
Consumer Affairs as per the allocation of business the Ministry seeks to play an important role in regulating
activities which impact on consumers. The industry needs to have a regulator to look at its issues more closely
and resolve them.”

According to the report, direct selling is one of the fastest growing non-store retail formats in India,
recording double digit growth of more than 20% over the past five years. In the year 2012-13 it has been
estimated to contribute taxes of INR 1,000 crore to the exchequer. Besides, the industry also has a
significant impact on socio-economic parameters because of its nature. In less than two decades, since it
took-off in India, it has provided self-employment opportunities to more than 50 lac people in India as
direct sellers. Nearly 60%of these direct sellers are women, thus empowering them with additional
income and transferable skills. The industry also generates direct employment through manufacturers
and other service providers involved throughout the value chain of the industry. The industry has led to
technology percolation and enhancement of many SMEs by association with international companies.
Also, many direct selling companies have been in the forefront by actively contributing towards social
activities.

Going forward, the industry has the potential to reach a size of INR 64,500 crores by 2025 driven by
growth in the consumer markets and increase in the penetration of direct selling to globally comparable
levels. This will have a cascading effect on the socio-economic parameters associated with the industry.
There will be commensurate capital investments in manufacturing and in technology acquisition.

The report also highlights the need to bring regulatory certainty for the industry, which is mistakenly
coupled with fraudulent money circulation schemes because of a lack of clarity in existing legislations.
The report also lays out a roadmap for mitigating the regulatory challenge for the industry by
recommending an immediate amendment in the governing legislation, followed by a clear definition and
categorization as “wholesale cash and carry trade” to smoothen FDI inflow, and an independent
legislation and nodal ministry for the industry thereafter.

Mr. Sidharth Birla, President, FICCI commented on the occasion saying, “The industry holds large
potential not only for the economic, but also social development of India. With growth in the industry, it
is projected to employ nearly 1.8 crore direct sellers, with almost 1.1 crore of them as women. The
industry is also expected to contribute a tax of INR 9,000 crore to the exchequer. Hence, it is important
that the growing economy likeIndia should encouragerightful emerging businesses by creating a
favorable policy environment.”

Mr. Kurush Grant, Chairman FICCI FMCG Committee said, “Direct Selling to consumers has been one of
the oldest methods of distribution for FMCG and other consumer goods in India. Encouraging this
business model would promote employment in India at the economic level where employment is most
needed. Since most of the products sold through this channel are locally produced, this is also in
tandem with the 'Make in India' objective of the Government.
I recognize that there have been certain gaps which have restricted this channel to reach its true
potential. I am happy that the Ministry of Consumer Affairs has acknowledged these gaps and would
work towards bridging the same”.

Mr. Rajat Wahi, Partner, KPMG, mentioned in his address at the conference “The direct selling industry
is unique in the number of people it engages with directly. No other industry is able to touch so many
lives, or is as close to its customers as direct selling. The benefits of the industry have been recognized
globally, and it holds large potential in India as well. There is a need to create an enabling environment
for the industry to thrive.”

About FICCI

Established in 1927, FICCI is the largest and oldest apex business organisation in India. Its history is
closely interwoven with India’s struggle for independence, its industrialization, and its emergence as one
of the most rapidly growing global economies. FICCI has contributed to this historical process by
encouraging debate, articulating the private sector’s views and influencing policy.

A non‐government, not‐for‐profit organisation, FICCI is the voice of India’s business and industry. FICCI
draws its membership from the corporate sector, both private and public, including SMEs and MNCs;
FICCI enjoys an indirect membership of over 2,50,000 companies from various regional chambers of
commerce.

About KPMG in India

KPMG in India is the Indian member firm of KPMG International and was established in September 1993.
It strives to provide rapid, performance‐based, industry‐focused and technology‐enabled services, which
reflect a shared knowledge of global and local industries and its experience of the Indian business
environment. KPMG provides services to over 2,000 international and national clients in India and has
offices in Mumbai, NCR, Bangalore, Chennai, Hyderabad, Kolkata, Chandigarh, Ahmedabad, Pune and
Kochi.

KPMG International is a global network of firms providing professional services. We have 153,000
outstanding professionals working together to deliver value in 156 countries worldwide. The
independent member firms of the KPMG network are affiliated with KPMG International Cooperative
(“KPMG International”), a Swiss entity. Each KPMG member firm is a legally distinct and separate entity
and describes itself as such.

www.kpmg.com/in

For further information, kindly contact:

Subir Moitra
Director – Marketing & Communication
KPMG in India
Mobile: +91 9811199613
smoitra@kpmg.com