What is the full form of MRP?

MRP: Maximum Retail Price

MRP stands for Maximum Retail Price. It is the highest price that can be charged for a product in the country. It is calculated by the manufacturer of a product. Along with the cost price it includes transportation cost and all the government taxes that are levied on that product. However, it can be sold below the MRP by the retailers. In India, all the products are labelled with the MRP to allow the customer to know the highest price at which a product can be sold or bought.

It prevents sellers from selling products at a price higher than the MRP. However, still, there are many instances when a product is sold higher than MRP, for example, in tourist places especially in the hill stations where products are not easily available, the retailers charge more than the MRP. The MRP was introduced in India in 1990 after the amendment of Standards of Weights and Measures Act, 1997.

Why MRP was criticised?

• The concept of MRP was criticised when it was compared with the free market system as in MRP, the manufacturer decides what profit retailers will make.
• It is easy to manipulate MRP such as the cooling charge for cold drinks.
• The manufacture may set the MRP up to ten times the expected sales price.
• The retailers cannot charge more than MRP in rural areas to make up for the higher transportation cost, so they don't stock most of the items and thus people living in rural areas do not get much variety of products to buy.

MRP is governed by the Legal Metrology Rules, PCR, 2011. As per this rule:

• All packed commodities should be labelled and the label must contain declaration and the MRP
• After the amendments in the Pre Packed Commodities rules 2011, the goods displayed by the seller on online e-commerce platforms must contain the information about the name and address of the manufacturer, packer and importer, net content, mrp, customer care number, etc.
• The medical devices like valves, syringes, thermometers, etc., must state the MRP and declaration as per the PCR.
• There should not be two MRP on a single product.
• The font size of the MRP and other information like 'best before date' should be big so that consumers can easily read this.

Besides this, the Consumer Good Act, 2006 also states that a consumer cannot be charged more than the MRP.

However, after the concept of GST was introduced the retailer started selling products above the MRP by saying that the price printed on the product is exclusive of the taxes. So, to prevent this practice new rules have been introduced after the implantation GST, these rules state that:

• A minimum of two advertisements should be given in the newspapers if the price of a product increases after the implementation of GST.
• The products whose price is decreased after GST don't need to give an advertisement in the newspapers.

If a seller charges more than the MRP in the name of GST, the consumer can lodge a complaint against the seller in the anti-profiteering commissions.