MLM companies are multinational companies which are involved in the production, sale, distribution, marketing and promotion of a range of products and services in the form of online, digital and telecommunication channels.
They are also involved in financing the activities of these companies and are not regulated in any country.
MLM businesses have grown rapidly over the past decade, reaching a total of more than 50 companies in 2017.
In 2018, the number of MLM-related companies in India grew to over 1,200, up from only 13 in 2016, according to data from industry tracker IRIB.
The Indian government has cracked down on MLM business activities and introduced regulations for the distribution of the products, services and technology, but the number and quality of such companies is a key issue.
What are the rules in India?
There are several laws and regulations that define the activities, ownership, governance and liability of MLMs.
The Companies Act defines a company as any entity that owns or controls a property, or other property or assets, whether real or immovable, and includes a promoter and a manager.
Companies are not allowed to directly engage in business activities.
The company must also be owned by the promoter, who must hold the relevant licenses, and the promoter must be qualified, or have been trained, to conduct business activities for a company.
Companies cannot set up branch offices in other states.
A company must be authorised by the Ministry of Corporate Affairs (MoCA), which sets up rules for companies to set up branches in its jurisdiction.
The MoCA has also set up rules to address MLM risks, including the risk of misappropriation of funds.
In 2016, there were around 3,400 MLM firms in India with revenue of around Rs 8,600 crore.
MLMs have been involved in various industries for over a century and have attracted investors, but they are increasingly being linked to consumer and service sectors.
How are MLM brands recognised in India and how can they be regulated?
Companies that are part of the category of “Malls” or “Cities” are classified as MLM entities.
The companies must have their name and logo printed on the products they sell, in the products and on the marketing materials, and they are required to adhere to certain standards, such as the terms of service and minimum operating hours.
Companies can set up franchisees and affiliates, who may sell products at lower prices, and these affiliates can also sell products.
The franchisees can charge higher prices, or sell products with limited inventory, or offer a limited number of items to franchisees.
The affiliates can charge different prices for different categories of products.
Some MLM ventures have been launched in cities, but most of them are concentrated in the rural areas.
What should I know about online marketing?
There is no official data on the amount of online marketing activity in India.
However, a recent survey conducted by the Association of Online Marketing Companies (AOMC) found that in 2017, nearly 6,000 MLM operations were operating in India (up from 4,000 in 2016).
The survey was based on responses from 2,000 online marketers in 20 cities, as well as online retailers in 50 other cities.
The survey also showed that online marketing is growing at a rapid pace in India – up by 40 per cent between 2017 and 2018.
The AOMC report also revealed that, in 2019, more than half of online marketers surveyed were active in online marketing.
How do I find out about MLM?
If you are in India or have ever been in India you can check out the list of the top 10 online marketing companies here.
MLT’s website, MLT India, lists the top 20 MLM enterprises in India that offer products and are authorised by government regulators, the AOME, the Ministry for Industrial Policy and Promotion (MIP) and the Ministry Consumer Affairs (MCA).
MLT offers a list of more information and resources to help you learn about MLMs in India as well.
How can I find a local MLM company in India without leaving India?
Find local MLMs online using the search engine and browse for businesses.
You may also want to read this MLM vs. non-MLM comparison article.
You can also get involved with other online communities, such at the MLM Forum or the MLP Forum.
There are also forums on topics like online marketing and education, where you can learn more about the companies that are involved.