Last
month, I was reading a
news-report wherein it was mentioned that the direct
selling sector has registered a growth of 12.2% in financial year 2012-13. I
was not surprised. Having spent quite some time in reading about the sector, I
was sure that direct selling industry has a promising future. But then, there
was a question that I asked to myself - whether there is a suitable legal
regime which can protect the continuous growth of direct selling industry in
India? To answer this question effectively, both for me and readers, I decided
to write this post.
I
will try to explain following key points pertaining to the existence of direct
selling industry:
(i)
What actually a ‘Direct Selling’ Industry is?
How is it different from other modes of selling?
(ii)
Whether Indian legal regime protects direct
selling industry? What are the legal issues and challenges?
(iii)
What are the solutions which have until now
been offered?
What is Direct Selling?
According
to Black’s Law Dictionary (9th Ed.), ‘direct’ means straight,
undeviating etc. and ‘sell’ means to transfer (property) by sale.[1]In
other words, a sale, which is channelled through a straight or undeviating
medium, can be considered as direct selling. For instance, presence of a buyer
and a seller would be sufficient to constitute this undeviating sale or direct
selling. The presence of ordinary retail shop, which one usually comes across,
is not required. In retail trading, retail shop act as a part of supply chain
between the seller and the buyer and is distinct from direct selling.
For
the sake of convenience, let me now refer to the explanation as provided by Indian
Direct Selling Association (“IDSA”), an autonomous and self-regulatory body for
direct selling industry in India. According to IDSA, ‘Direct Selling’ can be
understood as:
