In the wake of arrest of Amway India CEO William Scott Pinckney and two other officials, the representative body of direct selling companies IDSA on Friday sought clearer regulatory guideline to govern the functioning of the over Rs 6,000 crore sector.

"We need a clear policy framework. There should be clear distinction between the direct selling industry and the fraudulent financial pyramid and ponzi schemes,” Indian Direct Selling Association (IDSA) Chairman Amarnath Sengupta told reporters in New Delhi.

There is no clear and holistic definition of direct selling in India and as a result, the classification of direct selling is also not clear, he said, adding that this lack of clarity in regulations for the sector and events such as unwarranted arrest of Amway officials will dampen the spirit and confidence level of 50 lakh distributors.

IDSA, which has 19 direct selling companies like Amway, Tupperware and Oriflame as its members, has been continuously advocating the issue with the Government of India since last many years, IDSA Secretary General Chavi Hemanth said.

She added, "The focus of regulation should be to identify which practises are fraudulent and it should lay down certain specifications for the protection of consumers, distributors as well as the direct selling entity."

There is need to take into consideration the global best practises while designing a comprehensive legal framework to regulate the direct selling in the country, she said.