Sunday, December 4, 2022

Is Direct Selling Legal in India?

Direct selling is an industry that offers an opportunity for immense entrepreneurial growth and learning. It is an industry that has been on the rise in the country in the past two decades, creating self-employment opportunities. Undoubtedly, this industry is a big boost to the gig economy! 

However, there is a lack of in-depth awareness about direct selling in India. The direct selling business opportunity is misinterpreted and misconstrued to be an unorthodox scheme or an unrelatable door-to-door selling method. In addition, the lack of a regulatory framework with clear laws for direct selling entities has many a times kept the industry under the scanner. 

Even though, the Ministry of Consumer Affairs, Goods and Public Distribution in India has issued The Direct Selling Guidelines 2016 for protecting consumers’ legitimate rights, few of the consumer complaints are equated as criminal disputes. So, this leads to scepticism, and one might wonder if direct selling is legal.

Therefore, in this article, we will provide clear and accurate information about the direct selling industry and answer one of the most asked questions – Is direct selling legal in India? We will further understand the legality of the QNET business in India. 

But first, let’s understand what is direct selling?

What is direct selling? 

Direct selling is a method of network marketing that enables an individual to sell goods and services directly to a customer without involving a retailer or a third party. The most common way of generating sales in this method is through word-of-mouth referrals. It is also important to note that direct selling does not involve shops, malls and it isn’t driven by the location and traditional methods of selling goods. 

Furthermore, direct sellers can build a sales team and grow their businesses by earning compensations and rewards for the overall sales of products and services. This is usually contingent on the compensation plan of the direct selling company.

So, now that we understand the basics of direct selling, let’s understand the scope of direct selling and the opportunity it provides to individuals for entrepreneurial growth.

Direct sellers discussing about the direct selling industry in India

Direct selling in India 

The direct selling industry has grown by leaps and bounds over the years. However, the industry remains rather lesser-known to people, and conventional jobs overshadow direct selling opportunities. So, let’s understand a few important details about the industry in the country. 

Introduction of Direct Selling in India: Direct selling was first introduced in the 1980s in India. It was a new concept, and people were still adapting to the new philosophy. It was the start of a revolution that continued gaining popularity and became a mainstay in the 1990s. Since then, direct selling has come a long way, paving the way for many top companies like QNET and providing opportunities for millions of individuals in the country.

Facts and Figures of Direct selling in India: Direct selling industry has been positively impacting social and economic fronts in the country. Indian direct selling is one of the top 20 direct selling markets globally. 

Infographics depicting the facts and figures of direct selling in India

In 2020, direct selling in India recorded annual sales worth INR 23,800 Crore (USD 3.19 Billion) with the highest Year-over-year (Y-o-Y) growth of 28.3 per cent and the highest CAGR of 17.6 per cent over the last three years. (Source: WFDSA Report 2020)

Another interesting fact is that the number of active direct sellers were 74.3 Lakhs (7.4 Million as of May 2020. It is further predicted that the direct selling industry will create close to 18 million self-employed direct sellers by 2025. This suggests a steady progress in the growth of the industry, with more people welcoming changes and adapting to the gig economy.

What do direct sellers sell, and which state contributes the most? Direct sellers in India, directly sell a vast range of products and services. In 2020, health and wellness was the highest selling product category with 57% sales, followed by Cosmetics & Personal Care at 22%. 

In terms of geography, Maharashtra was the highest contributor with 12% of total sales, with West Bengal and Uttar Pradesh contributing 11% and 9%, respectively. (Source: Times of India)

Is Direct Selling legal in India?

A young man wondering - Is direct selling legal in India

A straightforward answer to that question – Yes, direct selling is legal in India. We’ve already learnt about important facts and figures and how the direct selling industry is growing every year. However, there is yet another important fact that adds more credibility to the industry. In 2016, the Ministry of Consumer Affairs, Goods and Public Distribution in India issued The Direct Selling Guidelines 2016 and, most recently, the Direct Selling Rules 2021, which integrates well with the Consumer Protection Act.

The Guidelines are significant in protecting consumers’ legitimate rights and preventing fraudulent business practices. Moreover, it was an attempt to strengthen the regulatory mechanism of the industry. While these guidelines are monumental for the direct selling industry, there is still a need for the country to establish a regulatory body with concrete rules and regulations.

Now, it is up to the individuals to do their due diligence and find out more about the industry and its opportunities for sustainable growth. Speaking of opportunities, one might still wonder how to join a direct selling company in India. 

So, how does an individual sign up with a direct selling company in India?

How to join a direct selling company in India?  

After completing a brief research, an individual may come across many direct selling companies in India. QNET is one of those top direct selling companies that empower direct sellers through its entrepreneurial opportunity.

The registration process is simple as individuals can sign up for the opportunity online from the comfort of their homes. However, it is advisable for all individuals to properly understand the opportunity and go through the terms and conditions. 

Just like any other well-established, legitimate direct selling company, individuals must go through QNET’s Policies and Procedures and understand how it follows a strong Code of Ethics. Professional ethics is of utmost value to QNET, and all distributors must adhere to all the rules and regulations of the company.

Moreover, there are a few important prerequisites before becoming a QNET direct seller. The individual must be 21 years of age or older to become a direct seller in India. The next important requirement is for the individual to have a referrer.

The individual must further ensure that he/she completes the online Distributor Application Form by providing accurate and true information. Then, the individual must print the Distributor Application Form and agree to its contents by signing the hard copy. Finally, the application needs to be sent to the company along with supporting documents for the purpose of KYC.

These are the steps that an individual needs to follow to be on track to become a direct seller with QNET. Once an individual registers with QNET, there might still be doubts about the legality of QNET business in India.

Legality of QNET business in India 

When we talk about direct selling companies in India, there is often a misunderstanding that this business is a Chit Fund business. Unfortunately, the application of the Prize Chits and Money Circulation (Banning) Act, 1978, to the Direct Selling industry is itself misleading and irrational. In fact, direct selling doesn’t come under its purview. It is guided by the provisions of the Consumer Protection Act, 1986.

A Chit Fund company generally organises a chit fund or chit scheme. The company gathers members interested in investing in the chit group called subscribers. A chit scheme is a savings-cum-borrowing scheme where subscribers invest a fixed amount every month for a certain period of time. The latter is totally different from direct selling companies who need to have a well-established product line to market, complying with the expected standards of quality and pricing.

Is QNET a Ponzi scheme? 

QNET is not a Ponzi firm. It is a 23-year-old leading Asian direct selling company that markets health, wellness and lifestyle products through its e-commerce portal. 

QNET’s business model is transparent. The information about the company, product prices, compensation plan, earnings and income disclaimer, and the product money-back guarantee (Refund policy) is clearly stated on the QNET India website

Additionally, QNET has also set up a dedicated grievance redressal cell to address consumer complaints. QNET encourages anyone who comes across a policy violation or misrepresentation of business or product to email all the details to [email protected]  

Notably, the Honourable High Court of Karnataka, while quashing a complaint, made valuable observations with respect to the business of the company, which is highlighted hereunder for your reference (February 2017): 

“Material of unimpeachable character pertaining to the activities of QNET have been produced before the Court. A perusal of the material and the charge sheet averments prima facie indicate that the activities of QNET and Vihaan, i.e., the multilevel marketing companies, do not constitute offences under the Prize Chits and Money Circulation Scheme (Banning) Act, 1978. The activities of the company do not fall within the definition of ‘Money Circulation Scheme’ under Section 2(c) of the Act, nor does it fall within the definition of ‘Prize Chit’ under Section 2(e) of the Act. When the activities of these companies do not constitute either Money Circulation Scheme or Prize Chits, the offences under section 4 and 5 of the Act do not even remotely apply to such activities and consequently charging the accused for such offences is unsustainable.” 

Start Direct Selling with QNET 

A QNET training program being conducted while discussing the legality of QNET business

Direct selling presents a great opportunity for individuals, especially those seeking a change or starting a company of their own. QNET is one of India’s best direct selling companies that provides a life-changing opportunity for individuals to be their own boss and take control of their lives.

The QNET direct selling opportunity introduces the individual to the best-in-class products, and a chance to start with lower overhead costs and flexible working hours. But most importantly, QNET provides access to a community of like-minded individuals to motivate and support the individual through their journey.

Now, if there is still doubt if direct selling is legal or if you would like to learn more about the direct selling opportunity, the industry or QNET products, then visit QNET India’s website.

If you’d like to take charge and start your direct selling journey, visit the QNET India registration page to get started – Register now!

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