Latest news with #LegalMetrologyAct
Mint
16-07-2025
- Business
- Mint
Consumer dissonance: Focus policy on market rivalry instead of pricing strategy
Mint Editorial Board A review of India's MRP system of 'maximum retail prices' mustn't end up cramping the pricing freedom of companies by invoking an outdated cost-plus formula. Let's rely on competition, not intervention, to regulate prices. Before India's GST regime was put in place, sales tax was typically imposed on MRPs, which held mark-ups in check. Gift this article In a country of highly price-conscious consumers, even a liberalized economy must endure an itch for price control that seems to surface in policy circles every few years. The latest instance is an idea reported to have popped up as part of a proposal to revise India's MRP system. Under it, as of now, consumer-facing companies must display a 'maximum retail price' on a product's pack above which it cannot legally be retailed. In a country of highly price-conscious consumers, even a liberalized economy must endure an itch for price control that seems to surface in policy circles every few years. The latest instance is an idea reported to have popped up as part of a proposal to revise India's MRP system. Under it, as of now, consumer-facing companies must display a 'maximum retail price' on a product's pack above which it cannot legally be retailed. While free markets of the West have no such price caps, clearly marked MRPs are useful for their information value. Marketers need to convey the top prices they want charged, while buyers need a way to check if they are being asked to overpay. Also Read: Let retail fuel prices drop to support India's growth To be sure, this does not always address consumer dissonance. A recent purchase that's spotted selling online (or elsewhere) at half the price, say, could make one wonder what its 'real price' is (or should be). Seen this way, the credibility of MRPs might be at stake. Before India's GST regime was put in place, sales tax was typically imposed on MRPs, which held mark-ups in check. Now that actual sales bills are taxed, MRPs can costlessly be hiked by companies to make discounts look alluring. Does all this call for extra 'transparency' in the form of new MRP guidelines asking for cost-linked prices? Since the idea has been floated, we must grapple with it. No matter how well intended, and even if it's aimed only at items of everyday utility, it is an idea whose time has clearly passed. It is for good reason that India's Legal Metrology Act, under which MRPs operate, doesn't empower the Centre to prescribe any pricing formula. Cost-derived MRPs would assume that cost-plus pricing is the only valid game in town. Such an assumption would be a relic of our closed economy, an era of monopolies, weak growth and centrally set prices, with very little space left for price signals from markets to shape the allocation of resources. Prices were subject to diktats in the name of consumer protection back then, but satisfaction levels began to rise only after market forces were given a more effective role to play in driving prosperity. Our policy pivot in favour of the free market includes the freedom of an enterprise to craft its very own pricing strategy in a well-contested field of business. Indeed, it is entirely fair for a product's price to reflect its value as perceived by its target audience of buyers, who may be pleased to pay a fortune for the fuzzy benefits of a fancied brand, for instance. This may hold even in modestly priced product categories. The state should not intervene if both sides are satisfied and it generates value. While the Centre's cost-link idea is still in an exploratory stage, it could be costly for the economy if businesses find they cannot price their wares as they deem fit. Also Read: Quick-commerce players should come clean on their pricing game As a matter of principle, a free market relies on competition to regulate prices. Sure, this device could fail if the rivalry in a field is so weak that the usual risk of losing sales to rivals does not deter a firm from using extortive pricing to gouge customers. Predatory pricing to drive competitors out of business is another unfair practice that reveals a sector's failure to regulate itself. But these failures are for antitrust authorities to address. To secure the interests of consumers, we must focus on the adequacy or lack of competitive dynamics. Several sectors with high entry barriers, for example, host duopolies today. We need a policy thrust that favours the economy—and this means robust competition, not state intervention. Topics You May Be Interested In
Mint
15-07-2025
- Business
- Mint
Bar code: Will MRP rules curb inflated label prices?
The Centre is looking to make pricing of retail goods more transparent and consumer-friendly through a potential overhaul of the maximum retail price (MRP) system, five people aware of the matter said. The Union consumer affairs department has sounded out industry associations, consumer bodies and tax officials about the plan on 16 May, the people cited above said on the condition of anonymity. While the intention is to prevent manufacturers marking up retail prices steeply, some believe the proposal may erode pricing freedom. Retail outlets are currently free to charge any amount up to the maximum printed on the label, and manufacturers do not need to justify how the MRP is arrived at. According to one of the five people mentioned above, the consumer affairs department is looking into whether there should be guidelines on linking MRP to the cost of making and marketing items including essential commodities, packaged goods, and daily use consumer products. To be sure, the proposal is still in its early stage, and the date for the follow-up meeting is yet to be decided. Price-setting Under the Legal Metrology Act, 2009, the department of consumer affairs has the mandate to regulate weights, measures, and labels on packaged goods to ensure accuracy, transparency, and consumer protection. However, the Act does not empower the department to prescribe a pricing formula. Responding to a question about setting MRP under the new regime, a second person said, 'The standard cost will be decided in consultation with all stakeholders. Industry and consumer groups have been asked to give their suggestions to fix the MRP in a way that is not deceptive. The proposal is meant for most of the consumer goods." A ministry communication titled 'Hybrid meeting to discuss the declaration of exaggerated MRP on packaged commodities" said consumer affairs secretary Nidhi Khare would chair the meeting on 16 May. The meeting discussed irrational pricing, and industry executives and consumer groups were urged to come up with suggestions to make the pricing mechanism more consumer-friendly and "aligned with the current taxation system," said the third person. 'Such anomalies, including that of differential pricing, are expected to be addressed through amendments or stricter enforcement under the Legal Metrology Act, 2009, which empowers the ministry of consumer affairs to act against unfair pricing and deceptive practices," the third person added. MRP meeting Representatives of industry organizations such as FICCI, Assocham, Confederation of Indian Industry, PHD Chamber of Commerce and Industry, and the Retailers Association of India, as well as officials from the Goods and Services Tax Council and legal metrology controllers from all states and union territories attended the meeting, said the third person, who attended the meeting. Queries emailed to all of the above remained unanswered. The meeting also discussed so-called differential pricing, when the same product carries different MRPs depending on the location or sales channel. Most developed countries don't have a concept of MRP, and let market forces set prices. While some nations, like India, mandate MRP declaration, the actual price is determined by the manufacturer, with exceptions for essential goods where governments might regulate pricing. 'Not price control' 'The idea behind the proposal is to check unfair trade practices," the second person said. "For instance, if a product has an MRP of ₹5,000 but is sold at ₹2,500 after a 50% discount, the question arises—why was such a high price printed on the tag in the first place? If the retailer is earning a profit by selling it at ₹2,500, the original MRP appears inflated. Does that mean the 50% discount was merely a tactic to attract consumers? We are exploring all such cases in consultation with the industry, especially since the retailer is legally allowed to sell the product at its declared MRP." According to a fourth person, the objective is not to control prices as such, but to ensure that pricing is based on reasonable cost-plus margins. Cost-plus pricing is when the sale price is determined by adding a fixed percentage (markup) to its total cost of production and distribution. "A formula is likely to be worked out to keep MRPs within a fair range that ensures both consumer affordability and manufacturer profitability," the person added. Market efficiency Industry representatives did not see any need for changing the current system. 'It is widely acknowledged that market-driven pricing serves consumers better and supports economic and market efficiency. We have long embraced a free-market approach and the government has judiciously limited price regulation to certain essential commodities like pharmaceuticals. Experience shows that a controlled economy does not serve the interests of the consumer," said Piruz Khambatta, chairman of Rasna Group, who earlier headed a CII committee on food processing. Another industry executive said on the condition of anonymity that the term MRP indicates the maximum price at which a product can be sold and it enables dealers in certain markets to give customers a discount. The person said that linking retail price to costs will prompt some businesses to discontinue certain products, which will affect their availability to the consumer, defeating the very purpose of price regulation. This trend was seen in the pharmaceutical industry wherein a cost-plus pricing mechanism existed in the past. Guardrails in place Some believe there are already mechanisms available to check any malpractice. 'There's a need to be very clear about what the government is trying to address here, and what the actual market failure is. If input costs are low but consumer prices remain high, it suggests that certain intermediaries may be making super-normal profits. There are already mechanisms in place to deal with this such as the Competition Commission of India, or GST enforcement, to check collusion or lack of competition," said Amol Kulkarni, director of research at CUTS International, a non-governmental organisation. 'Instead of regulating MRP or delving into manufacturing-level pricing, which may have unintended consequences; we should strengthen these existing tools. Such interventions could create implementation challenges and confusion among consumers, especially in a price-sensitive country like India. It might also reduce pricing flexibility for companies, affect market access, and limit product choices," Kulkarni added. Tax links Also, any significant change to the MRP mechanism will require coordination with the ministry of finance, particularly to realign the Goods and Services Tax (GST) structure. At present, GST is levied on the transaction value, which may not always be the MRP. 'Since the introduction of GST in 2017, we can't say that MRPs are necessarily high or arbitrary or vary for different places—because there's no legal binding on manufacturers to explain or justify pricing, unless the Central Consumer Protection Authority (CCPA) intervenes," said Ashim Sanyal, CEO of Consumer Voice, a consumer rights organization. 'In the pre-GST era, taxes were levied on the MRP itself—both central and local. This made companies cautious about increasing MRPs, as higher prices directly meant higher tax outgo. It acted as a natural deterrent to inflating prices. With the current system, where GST is applied at the transaction level, manufacturers have greater pricing freedom. In effect, consumers today are at the mercy of companies putting any amount as MRP—which remains legal under existing norms," Sanyal said. 'Linking GST to MRP, rather than transactional value, may appear consumer-friendly on the surface, but it's fraught with complications. It risks distorting pricing freedom and adding unnecessary compliance burdens," said Utkarsh Sinha, managing director of Bexley Advisors, a boutique investment banking firm. Gireesh Chandra Prasad contributed to the story.
The Hindu
20-06-2025
- The Hindu
KSRTC uncovers diesel theft attempt during tanker inspection at Pandavapura depot in Karnataka's Mandya dist.
A case of attempted diesel misappropriation was uncovered by officials of the Karnataka State Road Transport Corporation (KSRTC) during a routine fuel tanker inspection at the Pandavapura depot in Karnataka's Mandya district. According to KSRTC officials, the detection was made on May 13, when a tanker arrived at the depot to deliver 20,000 litres of diesel from a terminal in Hassan. According to KSRTC officials, the fuel decanting team at the Pandavapura depot, led by the depot manager, noticed an anomaly during the preliminary inspection of the tanker. 'We observed a shortage of about 130 litres in the fourth compartment of the vehicle. A detailed inspection revealed a 15 mm external tube illegally inserted into the delivery pipe,' said a senior KSRTC official. 'This tube was set up in a way that allowed fuel to be diverted directly into the diesel tank of the tanker itself. It was a clear and calculated attempt to siphon diesel before delivery,' the official added. Following this discovery, the depot manager immediately lodged a complaint with the Assistant Commissioner of the Legal Metrology Department (Weights and Measures) in Mandya. A joint team from the department visited the depot on May 14 and confirmed the illegal arrangement. 'A case was registered under Section 15 of the Legal Metrology Act, 2009. The tanker, along with related documents, was seized,' the official said.
United News of India
22-05-2025
- Business
- United News of India
J&K Legal Metrology Department launches crackdown on dry fruit sellers
Jammu, May 21 (UNI) In response to increasing consumer complaints and to ensure adherence to fair trade practices, the Legal Metrology Department, Jammu and Kashmir, launched a comprehensive enforcement drive targeting traders and distributors of dry fruits across all districts of the Union Territory. Anuradha Gupta, Controller, Legal Metrology Department, J&K, here on Thursday, said that the crackdown focused on addressing issues of short weighment and the absence of mandatory declarations on product packaging. She said that special enforcement teams were constituted to conduct surprise inspections across all districts of Jammu and Kashmir. During the UT wide drive, a total of 244 traders were inspected, out of which 63 traders were booked for violations, said the Controller adding that these included supplying underweight packaged dry fruits and failing to display mandatory labeling information, including net weight, MRP, date of packaging, and manufacturer details, as required under Rule 6 of the Legal Metrology (Packaged Commodities) Rules, 2011. "This drive underscores our commitment to ensuring that only those packages that are exact in terms of net quantity, and which strictly adhere to Legal Metrology guidelines, are made available to consumers. Such drives will continue in the future as well," said Anuradha Gupta. The Department has issued a strict advisory to all dry fruit sellers, warning them against selling non-compliant packaged commodities, she said, adding, "Violators will face stringent legal action under the provisions of the Legal Metrology Act." In addition, consumers have been particularly advised to carefully check the net weight and labeling on packaged goods before purchasing. Public awareness and vigilance play a crucial role, said the Controller. She said, "being informed about one's rights and responsibilities as a consumer is essential for avoiding exploitation and ensuring fair trade. Consumers are urged to report any discrepancies in packaged goods." "Complaints can be lodged through the LMD toll-free helpline: 1800-180-7114 or via official social media handles. The Department remains active on social media platforms to promptly address public grievances and raise consumer awareness," said the Controller. UNI VBH BD
Mint
22-05-2025
- Business
- Mint
Standard cooking oil packs mooted to cut shifty traders to size
New Delhi: The government is planning to reinstate standard pack sizes for edible oil, two people said, after a spell of flexible norms saw traders short-changing customers. Traders exploited the relaxed norms introduced in 2022 through amendments to the Legal Metrology (Packaged Commodities) Rules, which allowed flexible packaging. As a result, random sizes such as 800 gm, 810 gm, and 850 gm are being sold in the market as 1 kg packs, allowing sellers to charge full 1 kg prices for lower quantities. These practice has been flagged as unfair and deceptive, undermining consumer trust. In response, the government now plans to bring back uniform pack sizes such as 5 kg, 2 kg, 1 kg, 500 grams, and 200 grams for cooking oil to prevent pricing manipulation. This comes in the backdrop of India's cooking oil consumption increasing from 24.6 million tonnes (mt) in 2020–21 to 25.8 mt in 2021–22, and 28.9 mt in 2022–23. Also read | Adani Wilmar to raise cooking oil prices by 20% following import duty hike 'We are reviewing the complaints regarding unfair trade practices related to disparities between the price and the actual weight of edible oil packs. It's a bit tricky for consumers to calculate the price of a pack weighing 800 grams, but it's much easier for the same consumer to understand the cost of a standard 2 kg or 500 gm pack," the first person said. As per the consumer affairs ministry data, the all-India daily weighted average retail price of groundnut oil stood at ₹188.82 per kg on 20 May, nearly unchanged from ₹188.76 per kg recorded a year ago. Mustard oil, however, saw a sharp rise, reaching ₹170.66 per kg compared with ₹135.50 per kg a year earlier. Soya oil was priced at ₹147.04 per kg, up from ₹123.61 per kg last year, while sunflower oil rose to ₹160.77 per kg from ₹123.17 per kg. Palm oil, one of the most widely used cooking oils, climbed to ₹135.04 per kg from ₹101 per kg. Vanaspati also saw a price increase, reaching ₹154.71 per kg compared to ₹126.40 per kg a year ago. Read this | BPCL in talks with Sulzer to make aviation fuel from used cooking oil 'The government is reviewing the packaging norms, and after stakeholder consultations, the old standards are likely to be reinstated to ensure better transparency and promote fair trade practices," the second person said. This change follows mounting confusion among consumers, the person said, adding that all stakeholders have been asked to submit their recommendations on this. The Indian edible oil market, valued at $4.39 billion in 2024, is projected to reach $6.49 billion by 2030, growing at a compound annual rate of 6.79%, according to TechSci Research. Industry welcomed the move, calling it essential for ensuring consistency in retail pricing and compliance with the Legal Metrology Act. 'Standardized packaging ensures that price comparisons are simple, transparent, and fair. It creates a level playing field for both consumers and producers, encouraging trust and long-term brand value," said Sudhakar Desai, president, Indian Vegetable Oil Producers' Association (IVPA). And read | Decoding the dilemma behind escalating cooking oil imports When the packaging rules were amended in 2021, the Legal Metrology (Packaged Commodities) Amendment Rules mandated the display of the Unit Sale Price (USP) on all packaged goods to help consumers compare prices more easily. Building on that, the 2022 amendment went a step further by removing Schedule II, which had previously required certain essential commodities—like edible oils—to be sold only in standard quantities. This shift gave manufacturers the freedom to choose pack sizes as per their convenience, leading to a proliferation of non-standard packs in the market.
