Is India moving to ban all multilevel marketing?

The Hindu newspaper in India has today reported on some proposed new guidelines from the Indian Government for State legislation regarding the “Prize Chits & Money Circulation Schemes” (PCMCS). The PCMCS law is, to say the least, not clear and this lack of clarity has allowed pyramid and other scams to flourish in India.

Unfortunately, critics of the multilevel marketing business model have convinced some in India that it too should be made illegal. Incredibly, news articles even in reputable media talk about how pyramid schemes are banned around the world, and then go on to talk about companies like Amway as if they are pyramid schemes (and thus illegal everywhere). Amway is not banned anywhere. These draft guidelines would do so, however in India –

 5. No individual or Company or firm or business association, in any form, shall run a scheme that induces enrolment of new members by offering benefits or commission, by whatever name called, to upline members in the pyramid out of the action or performance like sale or purported sale of goods or services by the downline members.

This guideline, if implemented as law, clearly would ban all multilevel marketing in India, with an outright ban on earning commissions based on sales through agents you recruit and train. I’ve received a copy of the proposed guidelines as well as accompanying background notes and will be posting a series of articles over the next few days. In the meantime, if you’re involved with network marketing in India, you need to get in contact with your local political representatives and ensure they are aware of these guidelines and the damage they’ll do to Indian enterprise and India’s reputation.

10 thoughts on “Is India moving to ban all multilevel marketing?”

  1. The draft guidelines should be –

    5. Company or firm or business association, in any form, shall run a direct selling business that induces enrolment of new members by offering benefits or commission, by whatever name called, to upline members in the network not the pyramid the action or performance like sale or purported sale of goods only , no money share to down line shall go to downline members. model Plan may be as of AMWAY (Network plan). It shall not be 2 legged , 4 legged….. or Pyramid.

  2. hi friends,
    In India, in MBA, in marketing subject there is a chapter that explains
    the direct selling system and given Amway example. But In Amway is facing legal problems in India. Why these subjects and the course create confusion and play with peoples life. What message they want to give and who is the responsible for creating confusion.

  3. I want to add a correction. The newspaper did not say “Indian Government”; rather they mentioned “Odisha Government”. Odisha or Orissa is an Indian state ruled by a state political party. They do not have jurisdiction over the whole India, which only Indian Government has. Incidentally I draw your and other readers’ attention to another news published in The Telegraph, a Kolkata based national English daily on 12th December 2012 under the heading ” Centre scan on Bengal Ponzi Schemes” quote ” ‘The government is aware of these chit funds and will act against them; let the rules be framed. After that we will act.’, an official in Delhi said……” The only reason why we have delayed notifying these rules is representations from legitimate direct direct selling companies such as Amway, Oriflame and Tupperware which felt they may also be hit by wording of the rules. We have ironed out these glitches and the new rules should come out anytime now.”.
    Obviously the officer is an Indian Government representative. The interesting fact is that Indian Government now recognizes Amway as “legitimate”; hence there is no question about winding up of Amway in India. Of course.there may be certain change of rules to be followed by the direct selling giant. http://www.telegraphindia.com/archives/archive.html

  4. Does this mean that India will ban all businesses? Every manufacturer has a “downline” of wholesalers and gets a commision on every product they sell. Every wholesaler has a “downline” of retailers and gets a commision on every product they sell. And every retailer has a “downline” of customers and get a commission on what they bought. Bingo! Let’s ban ALL stores – they too sell the products, criminals! And every Indie can go back several thousand years back and manufacture everything at home. Unbelievable example of ignorance…

    1. very true… all traditional business works on same model of amway where manufacturer employ different wholesalers and they have retailers under them..so every business will turn out to be a scam if amway is a scam.

      1. Come back when you feel cheated by your handlers. However, Human brain once stretched can not regain it’s original shape. There are chances that you might have got programmed that you will not be able to think rational anymore.

  5. dear sir,

    I suppose amway is a direct selling company and sales and marketing plan at present in india is not only offering multilevel marketing based earning options…..one can earn also lot without multilevel model also….

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