SC order gives new life to direct selling segment

Former World billiards champion and Padma awardee Michael Ferreira, a shareholder in Vihaan, the Indian arm of Qnet.   | Photo Credit: Imtiyaz Sheikh

Hong Kong-based direct selling major Qnet, which was entangled in regulatory and criminal cases in India for long, has got a major relief with the Supreme Court ordering a stay on all further proceedings against the company and its sub-franchisee Vihaan Direct Selling.

The court also granted bail to Michael Ferreira and Malckolm Desai, the Indian shareholders of Vihaan, who have been in jail for about six months.

The interim order comes close on the heels of the model Direct Selling Guidelines issued by the Department of Consumer Affairs for proper functioning of such direct selling companies in India. Reports suggest that around 40 lakh people in India are part of the direct selling industry, that generated around $1.18 billion revenue in 2015.

Globally, the direct selling industry size is pegged at $183.7 billion with more than 100 million people involved in it. The Asia-Pacific region is responsible for 46% of global direct sales, followed by the Americas (34%), Europe (19%) and Africa-Middle East (1%).

Meanwhile, it is believed that the Supreme Court order will further boost the direct selling sector in India. The court ruled that the model adopted by the company is not a money circulation scheme and does not fall under the purview of the Prize Chits and Money Circulation (Banning) Act 1978.

Incidentally, the ‘Direct Selling Guidelines 2016’ framework released by the government prohibits pyramid as well as money circulation schemes. The framework defines legitimate direct selling and differentiates it from pyramid and money circulation schemes to help investigating agencies identify fraudulent players.

“Direct selling means marketing, distribution and sale of goods or providing of services as a part of network of direct selling other than under a pyramid scheme,” according to the guidelines.

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Printable version | Dec 3, 2021 5:56:37 AM |

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