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Transparent guidelines must regulate the MLM business in India

Multi-level Marketing (NETWORK MARKETING) company Amway, which distributes its items through contacts with ordinary people, instead of through stores and superstores, is under the government’s scanner. The issue is whether the American giant, and numerous other companies like it, serve as a Ponzi scheme, each distributor getting rewards including more representatives to the network

Some members have, undoubtedly, functioned this way in the past and Amway has actually adjusted its company model to fall in line. However NETWORK MARKETING business are banned in the state of Andhra Pradesh, from where the preliminary abuses were reported, under a neighborhood law that prohibits chit funds and other Ponzi schemes. Instead of banning companies and investments outright, we require transparent regulations for the market. Distributors must not be awarded just for including more people to the chain; they must acquire when any sort of part of the chain makes a sale and generates earnings. That will amount to genuine economic progress, not a Ponzi scheme.

The government’s Foreign Investment Promotion Board (FIPB) is now trying to figure out whether to eliminate Amway’s permission to operate in India. That is unnecessary, for a number of reasons. Amway is not the only NETWORK MARKETING business in India. There are numerous others, including some domestic players over which FIPB has no jurisdiction.

Ceasing Amway from doing business will certainly not protect against some other member from providing incentives to suppliers to hire other representatives. In any case, it makes no sense to prohibit economic task when it is legitimate. India is now struggling to draw in overseas direct financial investments, to balance its expanding trade deficit. In that climate, prohibiting companies and disrupting financial investment movements is a bad concept.

For NETWORK MARKETING business, the government ought to provide clear standards about exactly what make up genuine business practices, which produce economic advantages and exactly what is simply a method of rolling over stock and earnings by roping in more representatives, in a pyramid scheme. Enforced correctly, such guidelines will help create a flourishing market for Indian and foreign MLM companies.

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Anil Kumar

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