FIPB in its meeting on 24th August will deliberate on the perils of allowing FDI from companies in multi-level marketing, under which a person is required to enrol members to sell products and services
New Delhi: An inter-ministerial group will discuss issues related to foreign investment by companies in multi-level marketing, a methodology which was allegedly used by firms like Speak Asia to cheat investors of crores of rupees, reports PTI.
The Foreign Investment Promotion Board (FIPB), according to sources, will deliberate on the perils of allowing foreign direct investment (FDI) from companies in multi-level marketing, under which a person is required to enrol members to sell products and services.
The issue is listed in the agenda of the 24th August meeting of FIPB, which is headed by Economic Affairs Secretary Arvind Mayaram and comprises representatives of concerned ministries. FIPB is responsible for approving proposals of foreign investment in sensitive sectors.
Recently a study by the Ministry of Corporate Affairs (MCA) has cautioned people against joining multi-level product marketing schemes saying such programmes are primarily meant to con individuals to the benefit of a few sitting at the top of pyramid.
According to the study, the pyramid or multi-level marketing schemes are "over-priced" to pay huge commissions to people sitting at the top of pyramid and earn exorbitant profits for the company.
Most recently, multi-level marketing company Speak Asia Online and chit fund company Gold Quest International have come under the radar of investigation agencies.
The Singapore-based Speak Asia was accused of duping investors to the tune of Rs1,300 crore.
Besides multi-level marketing issue, the FIPB is also likely to decided on as many as 48 applications of FDI.
About 10 FDI applications of pharmaceutical and healthcare companies too will come up for scrutiny.
Applications of Unitech Wireless (Tamil Nadu), Sterlite Networks Ltd, (Dadar and Nagar Haveli), DB Corp, Wall Street Journal India Publishing, Tara Aerospace Systems and City Union Bank, are other items on the agenda.
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