Amway set to begin manufacturing in India

The Hindu Business Line/August 2, 2004
By Ambarish Mukherjee and Sindhu J. Bhattacharya

New Delhi -- Nine years after the company arrived in India with a promise to set up a manufacturing facility, Amway India Enterprises, the wholly owned subsidiary of US-based Amway Corporation, has informed the Government that it is finally ready to begin production in the country.

According to sources, the products it will manufacture in India would be in the categories of personal care, cosmetics, home care and nutrition.

Amway is one of many foreign companies engaged in direct selling in India, such as the US-based Avon, Tupperware, Herbal Life and Sunrider, and the Swedish company, Oriflame.

All these companies are supposed to set up their own manufacturing facilities in India as per the entry level condition imposed by the Government but they have been skirting the issue on some grounds or the other, said Government sources.

Earlier, after non-compliance complaints, the Government had asked them to provide specific time frames. Amway had told the Government in 2001 that it was initiating steps to set up a manufacturing facility but had not done so, the sources said.

Also, while granting permission to Amway to commence manufacturing in India, the Foreign Investment Promotion Board (FIPB) has imposed several conditions on the company.

"The FIPB recommended the proposal for commencement of manufacturing activities and import of certain items (by Amway India Enterprises), subject to several conditions. Thus, Amway will have to obtain an import licence and undertake export obligation of 50 per cent for manufacturing of SSI reserved items," the sources said.

Also, the FIPB has permitted no retail trading of products manufactured by Amway at the proposed facility and asked the company to comply with provisions of all procedures and conditions under the Drugs & Cosmetics Rules for importing products that fall under this category.

Despite several attempts, the Amway India Managing Director, Mr William S. Pinckney, could not be reached for comment.

He had earlier told Business Line that the company posted a Rs 630-crore turnover last fiscal and had no plans to bring in further foreign investment into India or set up its own manufacturing plant.

Meanwhile, the FIPB has also permitted the company to import and test market a whole range of `technologically advanced' products in India.

These include fragrances and deodorants, shampoos and other hair care items, skin refinishing and replenishing lotions, body firming gels, the `Satinique' range of special use hair care products, the `Glister' range of oral care products such as mouthwash, cookware systems and electromagnetic wave shields for mobile phones.

In its application, Amway said that it wanted to import and test market these products to assess their commercial viability in the Indian market.