The government is set to unveil a new formula for calculating Maximum Retail Price (MRP) to ensure transparency and fairness in the price structure. The action will put an end to the misleading discounts and ease the burden on consumers. The new formula will emphasise working costs and a reasonable margin of profit, not price control. Soon, the government and stakeholders will sit down to discuss and finalise the draft. This shift is anticipated to liberate consumers from inflated prices and foster a more honest pricing system.
What is MRP?
A Maximum Retail Price (MRP) is the maximum price as defined by government officials at which Indian consumers can be asked to pay. Consumers cannot be asked to pay more than the MRP indicated on the packaging of a product, the Consumer Goods Act of 2006 states.
MRP charges all the charges applicable, and sellers are not permitted to charge higher than indicated for their products. Retailers and manufacturers are only authorised to offer a reduction in the MRP price for certain goods and to offer below the MRP price.
Government to come up with new MRP formula for transparency
It is not the intention of this exercise to regulate prices but to make sure that the MRP is calculated on a reasonable cost-based margin. The government is planning to create a new way to decide the Maximum Retail Price (MRP) of products to make pricing more transparent and fair for consumers. This aims to stop misleading discounts and artificially high prices.
The government desires the MRP to be determined by assigning it to the cost of manufacturing and business costs, so that false tricks under the guise of discounts can be avoided.
Government’s initiative related to Maximum Retail Price (MRP)
The main intention is to make MRP dependent upon a reasonable cost-based margin, not price regulation.
A formula will be designed to make MRP affordable for consumers and profitable for industry manufacturers.
The government plans to connect MRP with manufacturing costs and company expenses.
This step is aimed at stopping deceptive discount practices.
Highlights of New MRP formula updation:
- New MRP Formula: Work is in progress to prepare a new formula to calculate the Maximum Retail Price (MRP) to introduce transparency and fairness in the pricing mechanism.
- Stakeholder Discussions: The government will shortly engage in discussions with stakeholders to finalise the draft of the new formula.
- Relief for Consumers: This is to give immense relief to consumers by putting an end to the practice of deceptive discounts and inflated price tags.
- Transparent Pricing: The new formula will try to make the pricing system transparent, with an eye for functional costs and minimal profit margins.
- No Price Control: The new formula is not to control prices, but to make prices transparent and fair.
- Legal Metrology Act: The current Legal Metrology Act, 2009, deals with weights and labels but does not give any guidelines for MRP, and hence, this new scheme becomes a must.
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