Centre may overhaul MRP system: Retail prices likely to be linked to production cost what we know so far

The Centre is considering a significant overhaul of the maximum retail price (MRP) framework in a bid to make retail pricing more transparent and consumer-friendly, Mint has reported. The Union Consumer Affairs Department convened a hybrid meeting with industry associations, consumer bodies, and tax officials to discuss the proposal. 

According to the report, the aim is to curb inflated and deceptive MRPs on packaged goods – a system that currently allows manufacturers to set any ceiling price without linking it to actual costs. “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,” one official involved in the discussions was quoted as saying.

Currently, retailers are allowed to charge any price up to the printed MRP, but the method for calculating the MRP is not regulated. The department is reportedly exploring whether guidelines can be introduced to link MRPs with the cost of making and marketing goods, especially for essential commodities and daily-use items.

The May 16 meeting, chaired by consumer affairs secretary Nidhi Khare, focused on “irrational pricing” and urged stakeholders to align suggestions with the current taxation system. An official reportedly said that 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 Department of Consumer Affairs to act against unfair pricing and deceptive practices.

Differential pricing — where the same product is sold at different MRPs depending on location or sales channel — also came under scrutiny. Some officials raised concerns that inflated MRPs followed by steep discounts could mislead consumers. For instance, an official said, a deodorant has an MRP of Rs 5,000 but is sold at Rs 2,500 after a 50% discount, “the question arises — why was such a high price printed on the tag in the first place?” 

The official added that tf the retailer is earning a profit by selling it at Rs 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 it at its declared MRP.”

According to the report, the government’s objective was not to control prices, but to make sure MRPs were “based on reasonable production costs.” The formula is likely to be worked out to keep MRPs within a fair range that ensures both consumer affordability and manufacturer profitability.