There should be a centralised regulatory mechanism and a mandatory registration process for all direct selling entities operating in the country, a study by Indian Institute of Corporate Affairs (IICA) says. The whitepaper on regulation of direct selling in India, called for setting up of a centralised regulatory mechanism to redress the regulatory uncertainty existing in the country.
It also recommended a mandatory registration process for all such entities in the country, on the lines of the mandatory SEBI registration for all schemes soliciting investments.
“Registration for players in the direct selling industry should be done through the proposed central regulatory body for the industry,” it said.
The study also called for drafting clear definition of direct selling “so that law enforcement agencies could easily differentiate between legitimate direct selling activities and the illegitimate ponzi/pyramid schemes.”
“legislative reform in the direct selling arena is necessary in order to identify advanced ponzi/pyramid schemes, clear up regulatory uncertainty and also to ensure protection of both direct sellers and consumers,” the whitepaper said.