Significantly, on January 22, 1999, Tupperware made a detailed presentation to the Commerce Ministry-which outlined the modalities of direct marketing operations, and the pros and cons of the different direct marketing structures. ``Legitimate companies should be allowed to do business. The government should have no fear from us. We will encourage it to institute legislation, to ban the pyramid system as has been done worldwide,'' says Pradeep Mathur, managing director, Tupperware India.

Reacting to the government's newthinking, the Indian Direct Sellers Association (IDSA) is going to step up its ``education process'' with the government and advise it not to go ahead with any drastic methods that may affect the future of direct marketing companies.

Tupperware had filed an application for an Foreign Investment Promotion Board (FIPB) approval in November last, to set up a small scale manufacturing unit with a local joint-venture partner in India. It is believed that the application was put on hold by the Commerce Ministry as it was `investigating' the operations of the direct selling companies in India before giving a go-ahead to any investment projects.

Concerned that there was some misinformation within the Ministry about the way direct marketing companies operate, Tupperware presented a position paper to the Commerce Ministry on January 22 to convince the government about the genuine--and not-so-genuine--modalities of the direct marketing system.

It is believed that the company even briefed and explained to, firstthe Commerce Secretary and then the Chairman of the FIPB, clearly, the difference between the three different ways of direct marketing: pyramid, multi-level marketing and single-level marketing.

Of the three, Tupperware is believed to have informed the government that the pyramid scheme has been banned worldwide by the World Federation of Direct Selling Association because of its fraudulent nature. In India too, the IDSA has prohibited its members to engage in pyramids.

Under the multilevel scheme, compensation is based on the number of distributors and products sold, while in under single-level marketing-no recruitment of distributors is made, and commission is earned only on the basis of products sold. The single level system was initially banned in China but the ban has now been lifted.

With the new development, however, Tupperware fears a further delay in the approval of its proposal. ``We are begging the government to allow us to start a manufacturing unit but it could be delayed,'' says Mathur.

Ironically, Tupperware's presentation could have tipped the scales in favour of a ban of pyramidal marketing. ``Investigations about the direct marketing companies have been on for about a month now,'' insists Mathur.

Pertinently, Tupperware has not been importing products in India but has been sourcing its entire range from local vendors, for the last two years. The company's retail sales turnover for the year ending December 1998 was Rs 29 crore.

Meanwhile, the Indian Direct Sellers Association (IDSA)--which comprises companies such as Avon, Oriflame, Amway, Tupperware, LB Publishers & Distributors, and Lotus Learning--is swinging into action. An IDSA sub-committee will meet on March 8, in the Capital and draft a position paper clarifying the character and the status of the direct selling business in India and present it to the government before the end of March.

The paper will dwell on details like what direct selling is all about, highlight what it contributes to the economy and how the membersself-regulate themselves by adopting their own code of ethics. ``We hope the government will not do anything hasty,'' says Laxmi Narain, chairman, IDSA. Narain claims that no member of IDSA is following the pyramid scheme and that IDSA is in favour of banning the scheme in the country.

``If the government were to ban the pyramid operations, IDSA would welcome that step. But genuine direct selling companies should not be affected. A distinction should be made between a legitimate and non-genuine direct selling company,'' he adds. The total turnover of the industry is guesstimated to be around Rs 150 to Rs 200 crore and has generated income opportunities for about 2 lakh people so far.

Reacting to the news of a proposed ban, Lajinder Bawa, chief executive, Oriflame India Ltd, said that the company had nothing to fear since it was a legitimate company. Favouring regulation of the industry, he said ``Being a new industry, it should be legislated and regulated and we'll help the government in framinglegislation.''

A statement issued by Amway India says that while the company has no official communication from any government department, it is in the process of seeking clarifications from the concerned ministries. ``As a mature industry leader across 80 countries including China, Amway would welcome any government initiative to regulate the industry,'' says the Amway spokesperson. Sources at Avon India, refused to comment until they got a clearance from headquarters in New York.