Direct Selling industry expected to reach INR 108.4 billion by 2014-15

Posted on May 2, 2012

    Direct Selling industry expected to reach INR 108.4 billion by 2014-15
IDSA – PHD Chamber Annual Survey Findings 2010-11
New Delhi, May 2, 2012
Key Findings:
The total size of the direct selling industry in India at Rs 52.3
billion for 2010-11
Overall direct selling industry grew by 27% in 2010-11 as compared
to 17% in 2009-10
Northern region in average turnover moved from 12% in 2009-10 to 15%
in 2010-11
On the contrary, average sales turnover of Southern region has
reduced from 48% in 2009-10 to 44% in 2010-11
.Total distributor base reported 24% growth, IDSA member companies
generating a growth of 25% and non-member companies generating a growth of
22% employment
.Wellness has emerged as a leading product category contributing to
the highest share of sales (40%) followed by cosmetics and personal care
products (32%).
The growth in tax collection from the direct selling firms has
jumped to 58% in 2010-11 from 11% 2009-10 and 18% in 2008-09
Around 65% products are sourced through contract manufacturers which
are SMEs; contributing largely to the growth of Indian SME sector.
The regulatory framework is overlapped by rules and regulations at
district level, state level and central level; govt. should provide
incentives to the industry in terms of lowering costs of doing business
.A 20% YOY growth rate is expected for the overall industry in the
next four years.
Addressing the press, Indian Direct Selling Association (IDSA) in
association with PHD Chamber of Commerce and Industry, released Annual
Survey 2010-11 on the Indian direct selling industry today in New Delhi.
The survey was unveiled by Shri. Manoj Parida, Joint Secretary, Department
of Consumer Affairs, Govt. of India,  Mr. S. Subramanian, Chairman &  Ms.
Chavi Hemanth, Secretary General, IDSA  and  Ms. Susmita Shekhar, Secretary
General and  Mr. SP Sharma, Chief Analyst, PHD Chamber.
The survey indicates that the industry has displayed a robust 27% growth at
INR 52.3 billion in 2010-11 turn over.  The robust growth in the segment has
been contributed by 28% growth in organised and 17% growth in the
unorganized segments of the industry during 2010-11. The industry grew at
24% during 2009-10, 17% during 2008-09, 13% during 2007-08 and 9% during
2006-07.
Dr. S P Sharma, Chief Economist, PHD Chamber of Commerce and Industry, “The
Indian direct selling industry has scaled remarkable growth over the years
and has been expanding its horizons in India as a rapidly emerging alternate
distribution channel”.  The annual survey reveals that the concentration of
sales of direct selling industry in the Southern region has now started
diversifying to the other regions of the country.
Mr S Subramanian, Chairman, IDSA informed that the industry is estimated to
double by 2014-15 reaching upto INR 108.4 billion from the current level of
INR 52.3 billion in 2010-11.  The industry is slated to grow at an average
of more than 20% in the next four years”.
Mr S Subramanian further informed, “Direct selling companies have been
active in contributing to the social and economic development of the
country, with over Rs.6.5 billion paid as taxes to the Government exchequer
by IDSA member companies alone”.
The survey findings states that the products sold through this segment are
appealing to consumers for its high quality standards.  Direct selling
sector helps cater to consumers who would want to have products of their
choice delivered at convenient locations other than at usual retail stores.
Mr S Subramanian expressed that “As the direct selling industry offers
alternate employment opportunities, it has contributed significantly in
employment generation for the country over the years. This year (during
2010-11) the total distributor base of the Indian direct selling industry
stands at around 4 million marking a growth of around 24% over previous
year. Out of this 3.2 million distributors have been employed by member
companies generating a growth of 25% and 0.8 million distributors have been
employed by the non-member companies generating a growth of 22% employment”.
Chavi Hemanth, Secretary General, IDSA stated “IDSA collaborated with PHD
Chamber in furthering an on-going process of monitoring the direct selling
sector in India.  The report assesses the current state of the direct
selling industry in India across several key parameters encompassing
revenues, sales force employed, product category coverage, distribution
reach and most importantly the contribution of this industry to the
government exchequer. The Report has also addresses the challenges faced by
this sector and the overall future outlook.”
She also stated that out of the wide variety of product sold through the
organised direct selling industry, products related to wellness contributed
to the highest share of sales (40%) while cosmetics and personal care
products (32%) were also very high in demand.
Further she mentioned that on an average, the direct selling firms earned
profits of around 21% during the last three years. As per the survey, the
main drivers of growth in this sector are high quality standards of
products, reliability/durability, promotional schemes and good
demonstrations and trainings.
Ms Chavi Hemanth expressed that the industry is exploring new opportunities
using the social media tools to reach out to large consumer base. “Though
the industry is two decades old but with focussed efforts  and strategise of
our member companies over last five years, direct selling has emerged as a
medium for the sale and marketing of product and services across a range of
consumer needs, with the associated industry encompassing a size of Rs 53.2
billion for 2010-11″.
.Mr S Subramanian said”The Indian direct selling industry has contributed
largely to the growth of Indian SME sector by way of outsourcing their
manufacturing process to these enterprises in order to produce the products
domestically.  The companies own manufacturing facilities produce only
30-35% of the total produce, the remaining is majorly sourced through
contract manufacturers which are SMEs”.
The forum was concluded by Mr Amarnath Sengupta, Vice Chairman, IDSA.  He
conveyed his gratitude to Joint Secretary, Shri Manoj Parida, Media, PHD
Chamber and IDSA Secretariat and said that he looks forward to the support
of Govt. & Media to overcome the challenges faced by the sector.