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Amway seeks extension for test-marketing

Ambarish Mukherjee

NEW DELHI, Nov. 3

AMWAY India Enterprises, the wholly-owned subsidiary of the US-based Amway Corporation, has sought extension of approval for test marketing by another two years, marking the third such extension sought by the company in six years of its operation in Indi a.

The Foreign Investment Promotion Board (FIPB), which took up the proposal at a recent meeting, deferred a decision on the proposal submitted by the direct selling company for two weeks. Earlier, the company's test-marketing approval had been extended twi ce, each time by two years.

Amway has cited reasons similar to those forwarded by other direct selling companies earlier for the delay.

The company entered the Indian market in the mid -1990s for setting up a wholly-owned subsidiary to establish and develop a direct selling business of products sourced from local manufacturers, particularly small-scale units by providing technological su pports to products of international standards within two years. The second extension ended in October this year.

The company, has arranged for technology transfer and sourcing of products from three domestic small-scale manufacturers based in Pune, Hyderabad and Daman.

Amway is one of the six foreign companies engaged in direct selling in India. Out of the remaining five, four are US-based, namely Avon, Tupperware and Herbal Life and Sunrider while the fifth is the Swedish firm, Oriflame.

The Government had been in correspondence with these companies during the last few months to ensure that they actually commence manufacturing in India fully. The follow-up action was warranted following complaints regarding some of these companies. These related to bypassing their obligations and delaying the manufacturing on various grounds.

Amway got approval for test marketing 17 products which ended in October. Now it claims that it has test-marketed only nine out of them.

In its application to the FIPB, the company has stated that it has initiated steps for setting up manufacturing facilities but, strangely, it has sought a further two-year extension for test-marketing these nine products.

Simultaneously, it has also sought a two-year test-marketing approval for 31 new products which include items such as daily multivitamin/multimineral, chewable C, chewable iron and natural B complex.

According to Indian laws, these products fall under the medicine category and are sold by retail medical shops only and are not meant for direct selling by manufacturers.