Introduction:

Single brand retailers may be exempted from marking their products with Maximum Retail Price (hereinafter referred to as “MRP”), as the Government is contemplating to change labelling norms for single-brand retailers. This is in furtherance to discussions of the European Business Group (hereinafter referred to as “EBG”) with the Government to change labelling norms for single-brand retailers. EBG, a federation in India which aims to create an environment for European Business to flourish, is currently in talks with the Government to amend the current labelling norms in India with respect to writing of MRP, date of manufacture and other details on packaged commodities for sale in the Indian market.[1]

Law on MRP in India:

All packaged goods in India have to mandatorily bear MRP. MRP is the maximum price at which a commodity in packaged form may be sold to the consumer inclusive of all taxes. MRP was introduced in 1990 vide amendment to the Standards of Weights and Measures Act (Packaged Commodities’ Rules), 1997. Prior to this amendment, manufacturers had the option to print either the MRP (inclusive of all prices) or the retail price (local taxes extra). However, manufacturers often charged more that the locally applicable taxes by opting for the later method. Therefore, the amendment was introduced to prevent consumers from profiteering by manufacturers and to introduce compulsory printing of MRP on all packaged commodities.

Currently, provisions of MRP and manner of declaration of MRP are governed by The Legal Metrology (Packaged Commodities) Rules, 2011 (hereinafter referred to as the “Rules”).[2] According to the Rules, all packaged commodities shall be affixed with a label that is legible and prominent, and such label shall contain declarations including the MRP.[3] The Rules make no labelling exceptions for single brand retailers or any kind of manufactures, and state that all packaged commodities have to bear MRP. Therefore, doing away with the provision for MRP will require legislative changes and amendments in the law.

Impact of stating MRP:

The law of MRP in India is unique as India is one of the few countries where there is mandatory provision of displaying MRP on products. In most countries, displaying the MRP tag is not mandatory and the price is generally labelled on the shelf where a bunch of products are displayed. The provision of MRP was introduced in India to protect the interest and right of consumers. Affixing labels on packages with details including MRP allows consumers to make an informed decision and obtain full information about the quality and price of products they purchase.

However, according to European retailers, the practice of affixing labels on packaged commodities increases cost of production for single brand retailer. According to them, as there are no middlemen involved between manufacturers and consumers in case of single brand retailers, therefore, MRP is not needed to protect consumer rights.[4] Also, if no MRP is to be printed on affixed labels, the cost of production will decrease which will ultimately lead to reduction in price of commodities for consumers.

The Government, now, has to decide and strike a balance between protecting the rights of consumers and ensuring more investments and ease of doing business for European retailers. Also, it is hoped that new rules are framed in a manner which will allow standard pricing of goods sold over the counter in local stores, and there is no scope for arbitrary pricing.