CAIT seeks separate law to monitor direct selling businesses

Confederation of All India Traders (CAIT) has urged the government to create a separate law to regulate direct selling businesses in India. The direct selling business is a source of employment and it should be regarded as a vertical of retail trade like ecommerce, CAIT) has said. “In an inter-ministerial meeting convened by Ministry of Consumer Affairs recently, CAIT has sought specified legislation to regulate direct selling business in India,” it said, adding, “The direct sellers should be given facilitation to set up manufacturing plants. The industry is growing at a phenomenal rate and has a huge growth potential.”

Policy flexibility to boost retail

Meanwhile, the government has decided to allow single-brand retailers with foreign investment to sell online, paving a way for companies such as Swedish furniture retailer Ikea and fashion retailer Hennes and Mauritz (H&M), who wish to launch their own ecommerce platforms in the country. Another big development is changes in the 30 percent mandatory sourcing norms under single brand FDI. While companies will now get more time to meet local sourcing requirements. The rule that mandates single-brand retailers to locally procure 30 percent of their goods sold in India over a span of five years remains. But, the new policy will allow the retailer to meet the norm from the time it opens the first store. Until now, the five-year deadline started from the date of receipt of foreign direct investment (FDI).

So far, single-brand retailers with FDI were shut out of online trading in any form. Foreign companies such as sportswear retailer Adidas and Swiss watch maker Swatch have already received permission to set up fully-owned stores in India, while others like Nike are awaiting approval. The latest move will allow the companies to sell online through their own online platforms. Ikea, which plans to open 25 stores in the country at an investment of Rs10,500 crores will be at advantage since at a recent meeting with Modi, Ikea’s Global Chief Peter Agnefjall had said the company needed more time to procure 30 percent goods locally.

The new norms will help FDI proposals of companies such as Tommy Hilfiger and Furla that were stuck with the Department of Industrial Policy & Promotion (DIPP) for years because they had planned to set up their own stores and sell products through franchisees, which was not allowed earlier. These companies can now get the green signal with change in the policy.