As India embarks on a new era of economic development, its strategy is anchored on attracting businesses and building a “trust-based governance” model that fosters a conducive environment for businesses to thrive. Through various targeted government initiatives, such as the National Single Window System (NSWS), which has streamlined regulatory approvals, modernised laws, and facilitated investment, the government has demonstrated a strong commitment to aligning domestic industry laws and regulations with global benchmarks on quality, compliance, and Ease of Doing Business.

The rechristening of the Department for Promotion of Industry and Internal Trade (DPIIT) in 2019 has played a key role in bringing forth these reforms. By bringing industrial policy, FDI, and investment promotion under one roof, the creation of the department has provided businesses, SMEs, and industry stakeholders with much-needed clarity, simplified procedures, and a platform to scale innovation. For instance, the start-up ecosystem, once fragmented across overlapping state and central regimes, has since emerged as a pillar of India’s growth story, with the number of unicorns exponentially increasing from 3 in 2015 to 24 by 2021. Similarly, the logistics sector benefited from DPIIT’s coordination on logistics policy, enabling stakeholders to come together on a common platform and negotiate. However, despite these strides, considerable work remains across key reform-intensive sectors.

One such sector is retail, currently valued at ₹84.5 trillion today and projected to grow at a compound annual growth rate (CAGR) of 11.4%, reaching ₹248.5 trillion by 2034. This expansion is primarily driven by rising demand from Tier 2 and Tier 3 cities. Within this vast sector, the Direct Selling industry has emerged as a critical segment. It recorded sales of ₹22,142 crore in FY 2023-24, representing a 4.4% year-over-year growth. Beyond its economic contribution, the industry generates self-employment for nearly 8.8 million people and plays a significant role in empowering women, whose participation has increased from 37% to 44% over the past year.

Despite its promise, the industry continues to grapple with legal and regulatory ambiguities. Direct selling in India dates back to the early 1990s, with companies such as Amway entering the market. Recognising its potential, the central government established an Inter-Ministerial Group (IMG) in 2009-10 to deliberate on draft model rules for multi-level marketing (MLM) companies. Subsequently, another Inter-Ministerial Committee (IMC) was constituted under the aegis of the Department of Consumer Affairs (DoCA), followed by the formation of a High-Level IMG to strengthen regulatory coordination for direct selling entities.

In 2016, the DoCA issued Model Direct Selling Guidelines for adoption by state governments. However, as these guidelines lacked statutory backing, implementation was inconsistent, with only 17 states formulating corresponding rules. A more concrete framework was established in 2021, when the Government of India notified the Consumer Protection (Direct Selling) Rules, 2021, under the Consumer Protection Act, 2019. These rules introduced mandatory registration of direct selling entities, prohibited pyramid schemes, and prescribed standards for consumer protection and seller transparency.

However, while the rules have helped support these platforms and direct sellers, as an essential and growing facet within India, the sector demands more concerted attention. While the IMC and IMGs involved a multi-stakeholder approach, the sector’s regulation presently faces a linear policy direction. The current framework remains primarily consumer-protection-centric, without adequately recognising the sector’s broader role as an engine of economic growth, employment generation, and investment. Such a narrow lens risks underutilising the industry’s full potential within India’s development agenda. Direct selling must increasingly be viewed not just as a consumer rights issue, but as a strategic industrial sector with measurable contributions to gross domestic product (GDP), women’s entrepreneurship, and livelihood creation.

At present, regulatory classifications create unintended barriers. The industry has been caught in overlapping frameworks, including the Prize Chits and Money Circulation Schemes Act (PCMCS) of 1978, the Banning of Unregulated Deposit Schemes Act (BUDS) of 2019, and various state-level laws. This legal ambiguity, highlighted in a white paper by NLU Delhi, has not only hampered the sector’s growth but also discouraged entrepreneurship and undermined its potential to advance inclusive development.

The multi-faceted nature of the sector – especially since it sits at the intersection of consumer protection, entrepreneurship, and industrial growth – requires the purview of DPIIT and a re-examination of the perspective. While India has taken necessary steps to regulate the sector, a more integrated approach that balances consumer rights with industrial development is key. By situating direct selling within the broader ambit of industrial policy and under the purview of DPIIT, and re-examining the laws that govern the sector, India can unlock the sector’s latent potential, attract greater investment, and ensure that this industry not only protects consumers but also drives inclusive economic growth.

This article is authored by Rajat Banerji, chairman, FICCI Direct Selling Task Force.