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Is Network Marketing Legal in India?

Is Network Marketing Legal in India?

Today we will know Is Network Marketing Legal in India? Network marketing is based on the direct selling formula.

The fundamental principle of network marketing, pyramid business, and multilevel selling is the same. Network marketing uses a network of people to sell a product or service.

Also Read: Top 10 Network Marketing Companies in the World

Here, the marketer not only earns money by directly selling to the customer but also earns a commission on the sales made by other people recruited by him or her.

This article is going to illuminate every fact associated with the widespread query, “Is network marketing legal in India?”

Network marketing is a system where every salesperson recruits salespersons below him or her, and that results in a hierarchy.

The pyramid type of business, which is basically a money game is illegal.

It has nothing to do with real commerce. Moreover, it cannot be called a legitimate network marketing.

Also Read: Can Multi-Level Marketing Expand into Services?

In a legitimate network marketing, the company provides people with real and honest product at a fair price.

The product should comply with the need and want of customers. In network marketing, very few people earn a lot of money.

But, it should not be misunderstood. These few people become successful in their dedicated effort and hard labor.

Also Read: MLM Business Plan

As far as India is concerned, the law does not precisely or elaborately put opinion regarding the concept of network marketing or to say, multilevel marketing.

One cannot thus, confidently say that network marketing is legal or illegal.

The risk related to network marketing can be elaborated as follows.

  1. There is no specific refund and after-sales service policy communicated.
  2. In some cases, the company has no local offices except the head office.
  3. The selling agent is not under legal obligation.

Also Read: How to Start Network Marketing in India

Rules and guidelines for network marketing

However, in India, there are government rules and guidelines for network marketing to protect the interest of consumers.

  1. It is meant to regulate the sale of goods and services made through multilevel or network marketing.
  2. The company should have updated sales tax, income tax, TDS clearance, and other required licenses.
  3. The company should have its official website containing information and the names of authorized direct sellers.
  4. The company should have a consumer grievance cell and should register consumer complaints.
  5. The company is prohibited from selling products of inferior quality.
  6. The network marketing company is barred from doing a money circulation scheme as per act 1978.
  7. The Maximum Retail Price (MRP) on the package of the product should be visible.
  8. Goods sold should carry a guarantee or warranty.
  9. In case, the consumer finds a product defective, he/she can exchange or return the same within a specific period.

The Government of Kerala, Rajasthan, and some other states in India have made guidelines.

Also Read: Top 10 Network Marketing Companies in India

Network marketing is another form of doing business. Both the company, as well as consumers, should be aware of policies before venturing into action.

After all, the concept of network marketing is not free from issues in the Indian business environment.

At any rate, multilevel or network marketing is an alternate system of selling products and services to consumers. It does not follow the company – distributor – wholesaler – retailer – consumer route.

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