Aug 17, 2012

Future of RMP and MLM Industry in India latest news

August 17th 2012 RMP and MLM Industry Latest news is that Government is doing lot of work in framing a proper rule and regulation with which MLM industry can operate smoothly in India. I am going to show you step by step how things are taking shape in Rajya Shaba and how the Ministry of Corporate affair is setting the guidelines. We all are curious to what will happen to MLM/direct Selling Industry in India and what will happen to RMP. Below is the list of events that are taking place in RAJYA SHABHA with respect to MLM/Direct Selling Industry.
The whole process started with the lot of MLM scams faced by South Indian states like Kerala, Andra Pradesh and Tamil Nadu

Hence a question was raised to the Ministry of Corporate affairs Shri R.P.N. Singh

"whether the Government is aware that the Multi Level Marketing (MLM) companies are prevalent in India; Whether the government knows the total number of MLM companies in the country; whether the Government has proposed any guidelines for these MLM companies, details of any action against any MLM company and any kind of tax collected from such companies in last three years. "

And answer to this question was on given on 10 May 2012 as follows -

There is no separate activity code to identify Multi Level Marketing (MLM) companies. Therefore, these companies cannot be separately identified from the list of companies registered under the Companies Act, 1956. Also, there are no separate guidelines for MLM companies. Hence information on action and tax collection is not available. 

This information was given by the Minister of State in the Ministry of Corporate Affairs Shri R.P.N. Singh in the Lok Sabha today in reply to a written question 

Result was that Government of India has constituted Inter-Ministerial Committee to consider the issues relating to the companies engaged in Direct Selling/Network/Multilevel Marketing. The Committee will be headed by Shri Rajiv Agarwal, Secretary, Department of Consumer Affair. Representatives of Department of Finance Services, Department of Revenue, Ministry of Corporate Affairs and Reserve Bank of India will be its members. 
This means the Finance, Revenue, corporate affairs, and consumer affairs ministers and also RBI will all together decide what is going to be the fate of MLM or Direct selling Industry in India. 

In a Press Release dated 24th July 2012 Government mentioned that the above inter-Ministerial Committee will work on following to bring change in Direct selling and MLM industry

  1. Bringing on and understand the necessity of a legislation to regulate the Director/Multi-Level Marketing companies; 
  2. Issue of guidelines for these companies on the lines of Kerala guidelines; 
  3. Including the definitions of the Director/Multilevel Marketing and Pyramid Scheme in the Prize, Chits and Money Circulation (Banning) Act, 1978 through an amendment, 
  4. Organizing an awareness campaign under ‘Jago Grahak Jago’ to protect the interest of the consumers in respect of such multi-level marketing schemes; 
  5. International best practices to protect consumers
  6. Suggesting legal action against the companies dealing with such multi-level marketing schemes, 
  7. Which should be the Department to deal with the matters relating to these marketing schemes; 

The committee shall submit its report by August 2012. 

On 13th August 2012 the Committee came back with lot of information on number of Direct Selling companies and all the fraudulent cases came up to notice. 
So the government  has constituted an Inter- Ministerial Group consisting of representatives from Department of Financial Services, Ministry of Corporate Affairs, Reserve Bank of India, Securities Exchange Board of India, Department of Consumers Affairs, CIEB (Department of Revenue) and SFIO to – 

(i) Draft Model Rules on the Multi Level Marketing Companies and on the prohibited scheme under the prize Chits and Money Circulation Schemes (Banning) Act, 1978. 

(ii) Frame clarificatory guidelines on how to distinguish between genuine direct sales from disguised money circulation scheme. 

This information was given by Minister of State for Corporate Affairs Shri R.P.N. Singh in reply to a written question in the Rajya Sabha.

Keep Reading to know all the current happenings and all the legal formalities taking place in the Industry and know the Future of RMP and Other MLM companies in INDIA.