India’s direct selling industry recorded sales of Rs. 22,142 crore in FY24, growing at a 7.15% compound annual rate over the past five years, according to the Indian Direct Selling Association. The sector now engages 8.8 million active sellers, with women comprising 44% of participants.
Within this expanding market, questions about specific companies’ legal standing remain common. QNET, one of the world’s largest direct selling companies, operates in India through its sub-franchisee Vihaan Direct Selling (India) Pvt. Ltd., which holds a valid Corporate Identification Number under the Companies Act, 2013.
QNET is legal in India, operating under Supreme Court protection since 2017 and complying with the Consumer Protection (Direct Selling) Rules, 2021.
The Regulatory Framework That Governs Direct Selling
The Consumer Protection (Direct Selling) Rules, 2021 established India’s first comprehensive framework for the industry. These rules prohibit pyramid schemes while permitting legitimate direct selling, with earnings derived from product sales rather than recruitment. Companies must register as legal entities, appoint grievance officers, and maintain transparent compensation structures.
Before 2021, direct selling operated under older legislation, primarily the Prize Chits and Money Circulation Schemes (Banning) Act of 1978. That law targeted money circulation schemes but created confusion about legitimate multi-level marketing.
The 2016 Direct Selling Guidelines, issued as an advisory to states, began clarifying distinctions. Seventeen states adopted these guidelines before the 2019 Consumer Protection Act formally defined direct selling at the federal level.
Under current rules, direct selling entities cannot charge joining fees, must provide 30-day refund policies, and must base compensation on actual sales volume.
The Food Safety and Standards Authority of India introduced a new category for direct sellers in July 2024, differentiating them from retailers under the Food Safety Compliance System.
Court Rulings and Legal Protections
Multiple court decisions have shaped QNET’s status in India. The Supreme Court issued a stay order in March 2017, suspending pending investigations and FIRs against Vihaan Direct Selling. That order remains in effect, providing ongoing protection from certain legal actions.
The Karnataka High Court delivered a crucial ruling in February 2017, determining that Vihaan’s business model does not violate the Prize Chits and Money Circulation Schemes (Banning) Act. The court distinguished QNET’s product-based compensation from illegal pyramid structures. A 2022 Karnataka High Court decision further clarified that Vihaan cannot be treated as a financial establishment under the Karnataka Protection of Interest of Depositors Act, since it does not solicit deposits.
More recently, a Bangalore Civil Court issued an order in April 2024 requiring the removal of defamatory content about QNET. The court ruled: “The words expressed by the defendants are extreme, and shocking. Which is clear cut case of blackmailing the company, which is working by registering under the provisions of the law of this court.”
In January 2025, another Bangalore court ordered the removal of a December 2024 article by Organiser.org that falsely claimed QNET operations had ceased, with the court noting the article spread “further misinformation.”
Industry Standards and Memberships
QNET maintains memberships in six Direct Selling Association chapters globally: Malaysia, Singapore, Philippines, United Arab Emirates, Turkey, and Indonesia. These memberships require adherence to codes of conduct and ethical business practices established by industry bodies.
Vihaan operates under a franchise agreement with QNET Ltd., handling product distribution through e-commerce channels. The company’s operations are centered on health supplements, personal care products, and luxury items sold exclusively through the QNET eStore.
Distinguishing Legal Operations from Bad Actors
Regulatory confusion often stems from unauthorized individuals misrepresenting QNET’s business model. Common violations include promising guaranteed income, framing the opportunity as an investment, charging joining fees, or conducting recruitment events without proper authorization. QNET has publicly stated it does not engage in share sales, accept deposits, extend sub-franchisee opportunities, make job offers, solicit investments, or charge registration fees.
The company maintains a complaint mechanism at [email protected] for reporting misrepresentations. Trevor Kuna, QNET’s official spokesperson, explained: “We don’t operate traditional stores; we rely on e-commerce, and our independent distributors drive the sales. We do not recruit people, either; we encourage people to promote our products to others, and when others buy, these people earn commission on every product sold.”
What Entrepreneurs Need to Verify
Prospective Independent Distributors should confirm several details before joining. Vihaan’s CIN is U52399KA2011PTC060730, verifiable through the Ministry of Corporate Affairs database. The company maintains GST registration, FSSAI licenses for food products, and other statutory compliance documents.
With India’s direct selling sector projected to reach 18 million sellers and grow at approximately 9-10% annually through 2030, entrepreneurs entering this space should understand both the regulatory environment and specific company compliance records. Court protections and regulatory adherence indicate QNET’s legal operations in India, though individual experiences in direct selling vary based on effort, market conditions, and adherence to company guidelines.
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