It is good that you are searching before joining the company. Employee should always conduct a survey before joining a company.

The query posted by you has been discussed in many threads that you may find relevant e.g;

https://www.lawyersclubindia.com/forum/Is-multi-level-marketing-illegal-in-India-45084.asp

https://archive.indianexpress.com/news/govt-asks-states-to-ban-multilevel-marketing-schemes/1039514/

https://efmp.wordpress.com/what-is-mlm/multi-level-marketing-is-legal-in-india%E2%80%A6-what-you-should-know/

https://mlmage.com/HowtoOpenMLMCompanyinIndia.asp

Who can start a multi-level marketing mlm company?

What is the law for setting up Multi Level Marketing Company India?

There is no separate law for setting up a Multi Level Network Marketing MLM Company in India till now it was proposed in Indian Parliament 2005 but yet not became a law however there are certain acts of India constitutions which we need to consider before setting up Multi Level Marketing Company:

1. It should not be a only head count commission modal which falls in Pyramid Scheme which is banned in India, covers MRTP Act alias Money Rotation Trade Practice Banning ACT 1969.
2. It should not be only money involved investment return format which falls in PCMC Act alias Prize Chit and Money Circulation banning Act 1978. It should be feasible Product selling Business Modal.

   What is the best practice to setup a Multi Level Marketing Company?

   Firstly i recommend you to setup a Private Limited or Limited Company to setup a Multi Level Marketing Company in India which involved limited risk for directors who are setting up a Multi Level Marketing Company Business.
   
   Apply for IDSA (Indian Direct Selling Association) Member Ship. It’s not a government body but it’s a private body setup by Amway India who is trying to govern the whole Direct Selling Companies in India with their problem and to stop unethical and illegal MLM companies and Multi Level Network marketing Business practice to operate and destroy the MLM Business route.
   
   Apply for Vat/Service Tax/ Tan No and all necessary license and registration required for manufacture and selling your product.
   
   Appoint a Legal Advisor and a Chartered Account to create rules and regulation forms, printing materials, other company related legal documents and stationary materials. Please does not cut copy paste other company’s print materials as it may not be applied on your product or MLM Business modal? It is also advisable to develop exclusive website content and information related to company written by legal advisor of the company to counter legal laws of the Land.