Is Multi Level Marketing (MLM) legal in India?

Posted on February 10, 2019March 8, 2023 by blog_admin

Multi-level marketing is a globally accepted powerful business trend. Business men and people around the globe had welcomed this network marketing profession as a life changing tool. Like any other countries India has also witnessed some reforms in multilevel marketing.

It’s a common doubt among people in India that is MLM legal? Or not?

Let’s have an outline regarding this

India VS Multilevel Marketing

India is country which has a huge human resource and people growth. The eyes of MLM entrepreneurs’ stick on India. Many MLM companies believes that India is a great market for MLM business. As one of the highest most populated country in world India is a big market for product sale.

However MLM business is not new in India it’s been in India for a long time. In the beginning the concept and the word ‘multilevel marketing’ or ‘Network marketing ‘was not so much familiar to people. Today it is quite popular and an emerging trend in Indian business.

Related: What us Multi Level Marketing?

What are the top MLM companies in India?

However Multi-level marketing business is gradually began to grow in India. It’s getting more popularity among people as a business which gives independent freedom and financial growth. There are several MLM companies in India with their MLM supplements. They competes each other to acquire Indian market with their attractive MLM policies and products.

Top MLM companies in India.

1. Mi life style marketing global PVT LTD

It is one of the leading network marketing company in India with variable products .It basically focus in life style products which has a superior quality. also provides a great business opportunity for its members.

2. Amway

As we all know Amway is an international brand which gives high end quality products and business opportunity for its members. Company has a great influence in Indian market.

3. Hindustan Unilever ltd

It is one of the fast growing MLM Company in India with huge range of product and services. It’s a pioneer Indian company which crossed 80 years of experience in Indian market. It has almost 30 distinct category of product and several brands.

4. Forever living product

This company is also an international brand, which people have so much faith and trust on its product and services. It has a wide range of product for its worldwide operations.

5. Vestige

Vestige is yet another powerful MLM company which focuses on health supplement’s, wellness, and cosmetics etc. Its high quality products attracts Indian people and market as well.

However there have many Multi Level Marketing companies which rules Indian market like Tupper ware, Herbal life, Modicare etc..

Difference between a legal and illegal MLM companies.

Sometimes MLM companies are differentiated as Legal MLM companies and illegal MLM companies. As the name suggest legal MLM companies are those companies operates under legal procedure of a particular government’s law and order.

Illegal MLM companies are those companies which doesn’t act’s according to law, and its operation may illegal or unfair.

Legal MLM marketing company offers you a fixed time to achieve financial benefit for your hard work. When it’s comes to illegal MLM firm they offers you quick and easy money.
in legal firm products has high quality people can buy and sell it safely. According to illegal firms there is no significance and quality for products.
In legal MLM organizations members receive commission, bonus etc. strictly based on their sales performance. But in Illegal MLM organizations there is no rules and criteria, they treats more for recruiting new members.
Legal network marketing companies has an accurate MLM plan to sell their product. But in illegal trade there is no correct marketing plan and strategy

One of The main reason for these kind of illegal operation is lack of strict and well defined law in many countries.

What are the conditions for permissible direct selling in India?

However there have some conditions for permissible direct selling in India. Let’s have a look what it is.

The organization should be a direct selling entity in manner. It should have a GST registration, Income tax registration TDS and other license’s as per the regulation of the government
The company should need a bank account in any nationalized Indian bank
In memorandum of association it should be clearly state the nature of the business
There must need a working website and a space to register the consumer complaint
The website must consist names and identification numbers of the organizations authorized sellers
The commission, bonus and all sales incentives should be pay in agreed rate and agreed time
There should need a consumer cell in operation for the queries and complaints of consumers.

Indian Law’s and guidelines for Multilevel Marketing

However in the beginning all the legal procedures and guidelines regarding MLM companies were under ‘prize chits and money circulation schemes’ (banning) act 1978. It was an old act and MLM was also treated under this. There were no strict Laws and rules for MLM at this stage.

In 12 September 2016 Indian government has introduced a model guidelines for multilevel marketing / direct selling. This was a new hope for the entire industry. Let’s check some key terms in it.

All direct selling companies in India should submit an undertaking within 90 days form 12 sep 2016 to department of consumer affairs.
The company cannot force the consumer to purchase more goods and services than they can afford to sell or consume.
The participation must be strictly free. The company cannot demand any type of fee like, entry fee,reg. fee etc..
MLM organization should provide a written contract for every participant in the business ‘regarding the material terms’ of the participation. According to section 10 of Indian contract act of 1872.
The company must provide refund policy, and cancellation of membership whether the members need it.
The company must establish a purchase and buy back policy
They must provide complete information about direct selling operation and policy to direct sellers.
The company must have an office for its operations.
Company must maintain a complete source of their business activity from ‘A to Z’
It should clearly disclose the method of calculation of the remunerations.
Company must maintain a registration procedure with PAN and any identity card to the participant.

Conclusion

As we discussed the term MLM/ network marketing is now getting popularity in India. It is also a part of Indian economy and business. Many MLM companies had gained attention in the market with their unique product and services.

The new guidelines and laws from Indian government made MLM business systematic and significant. Many people came in to the business and some achieved great financial benefit from MLM with their hard work.