Direct selling sector growth rate may cross Rs 64,500 crore mark in 10 years: KPMG

Admin   |   14 December, 2015   |   450   |   3980

The country's direct selling industry is expected to grow over eight-fold to cross the Rs 64,500 crore mark in the next 10 years, says a KPMG report.

"Factoring in growth in consumer markets and assuming the direct selling industry penetrates the market to touch globally-comparable levels, the industry has the potentials to reach a size of Rs 64,500 crore by 2025," the report titled "Direct selling - Mapping the industry across Indian states" said.

Direct selling companies are those that don't engage in much marketing and don't have retail outlets. Instead, they engage peer-to-peer marketers to sell their product(s). A good example is Amway.

The direct selling sector's worth stood at around Rs 7,500 crore in FY 2013-14.

The industry witnessed an average growth rate of 16% (y-o-y) from FY 2010-2013. The growth, however, slowed down to 4% in FY 2013-14 due to slowdown in the economy.

The direct selling sector in India consists only 0.4% of the total retail industry, which is far lower than its market share in other comparable economies as China and Malaysia, the report added.

The report further said that there are are several factors such as fly-by-night ponzi and pyramid schemes that are often confused with direct selling and hampering the growth and a clear definition of the industry is needed.

"In states such as Andhra Pradesh, Telangana and Kerala, direct selling business has been impacted due to lack of regulatory clarity. There is a need for the central as well as respective state governments to arrive at a comprehensive policy for the industry," it added.

KPMG said the direct selling business is also facing challenges like other consumer industries regarding setting up of manufacturing facilities and import related issues.