Woah! Govt May Soon Abolish MRP System For Consumer Goods!
You would be surprised to know that India is the only country in the world which follows the Maximum Retail Price (MRP) system for selling consumer goods. As per Legal Metrology Act, every packaged product in India is labelled with Maximum Retail Price (MRP), beyond which the product cannot be sold.
As per reports coming in, Govt. may soon end the very concept of MRP for consumer products, thereby aligning with a global standard wherein the price of the product is determined by the retailer and not the manufacturer.
However, when it comes to regulating the very Legal Metrology Act which determines MRP of any product, Consumer Affairs Minister Ram Vilas Paswan has categorically denied any amendments in the current law to regulate MRP.
Hence, there arise two distinct possibilities now, based on these conflicting reports: Either MRP would be completely abolished or it would be empowered with additional measurement tools and concepts which will make the process of establishing of MRP even more flexible.
India Is Done With The Concept of MRP?
As per a report by Money Control, global retailers are finding it cumbersome and time-taking to label an MRP on each and every product, and they want the Govt. to remove MRP rule for ease of trade.
A Senior Govt. official said, “Certain single brand retailers that want to invest in the Indian market say that getting an MRP stamp [that displays price of a particular product] on every item in the store is a cumbersome process,”
If this is done, then India will follow the global practice of determining the price of the product based on free market principles, and at the discretion of the retailer. With MRP system, which is only followed in India, the discretion of setting up the price lies with the manufacturer, and they need to follow various state-specific taxes to determine its state-specific rates.
However, with the GST, a common tax rate would be applicable, which will make the very concept of MRP redundant.
Anyways, by adding additional ‘services’ charges, for example, service of cooling a soft drink, retailers have been selling products beyond MRP in India.
As per the report, some legislative changes would be required to made in the Legal Metrology Act for removing the need for MRP in products.
No Separate Laws For Regulating MRP: Minister Paswan
Meanwhile, speaking at an event, Consumer Affairs Minister Ram Vilas Paswan has categorically denied any need to change existing laws for regulating MRP for any products.
The issue was regarding multiplexes and shopping malls charging water bottles beyond MRP, and when asked by reporters whether any change in the law would be made to empower the MRP rule more strictly, he said, “There is no need to have a new law to regulate MRP. The existing Act is sufficient and we have enough powers to take action against violators..”
Minister Paswan also suggested that Govt. will come up with better technological assistance for weeding out the corrupt and introduce better weighing mechanism at Panchayat level, to determine the exact weight and price of consumer products.
He further said, “Wrong and imprecise measurement builds mistrust and is often a source of safety hazard… There are doubts expressed sometimes regarding the accuracy of petrol pumps, and weighing machines used in agricultural mandis..”
Hence, going by the statements issued by the Minister, it seems that the MRP system is here to stay for few more years. Although it is good for consumers, but as analysed by experts, the system is bad for the retailers.
Should MRP System be abolished in India? Is it hindering with free market principles? Do let us know by commenting right here!