Global direct selling major Amway today batted for reduction of GST rate on food supplements saying prevention of health issues must also be given similar importance as curatives.

Set to complete 20 years of operations in India next year growing at a CAGR of 20 percent, the company also said it could have grown much faster in the country but for the lack of legislation for direct selling industry.

Amway, which expects its Indian operations to touch sales of USD 1 billion by 2025-26, will cross the Rs 2,000 crore turnover market next year with over half of its current sales coming from food supplements brand Nutrilite.

"Today GST on pharmaceuticals is 12 percent. If you strongly believe that prevention is better than cure, why should GST on supplements, which are preventive be more than double that on curative?" Amway Regional President- Europe, India & Africa Samir Behl told PTI. He said under the current GST structure, food supplements under which its brand Nutrilite brand falls, attract the top slab of 28 percent.

It has gone from 14 percent to 28 percent for Nutrilite and has impacted our topline," Behl added. Commenting on Amway’s journey in India, he said, "Next year we will complete 20 years...we have grown at a CAGR of 20 percent." Behl further said: "We would have actually grown faster out here but the big challenge the industry faces is about lack of legislation.

There is no law which governs the direct selling industry." In 2014, former Amway India MD and CEO William Scott Pinckney was arrested under the Prize Chits and Money Circulation Schemes (Banning) Act, (PCMCS) following a complaint alleging unethical circulation of money through its operations.

The company had then termed the arrest an unwarranted act on frivolous charges that gave a misleading impression about its business. Putting the bitter experience behind, Behl said last year after working closely with the direct selling industry, the ministry of consumer affairs the ministry issued guidelines for the sector, "which is a step in the right direction".

The industry is also working with the government so that Consumer Protection Act could be passed in Parliament, he said. "Once that can be converted into a law, that will make it that much stronger ... I think legislation combined with a more appropriate GST will add more to the growth momentum," Behl said.

Stressing on the need to have a proper law to govern the direct selling industry, he said: "Once we have a legislation in place for the industry, which I feel is currently the single biggest impediment for growth, will certainly help a lot in streamlining and growing the industry faster.

 03 Nov 2017, 12:17 PM