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Panel split over pricing info on packaged goods

A government-appointed committee is wrangling over best methods on price disclosures on packaged goods. A report by Gaurav Choudhury.

business Updated: Aug 19, 2008 21:15 IST
Gaurav Choudhury

A government-appointed committee is wrangling over best methods on price disclosures on packaged goods. It wants to ensure that consumers have a fair idea about the cost of production and prevent profiteering by manufacturers.

“Given that there is a scope for exploiting the consumers even when the maximum retail price (MRP) is declared,” the committee said in its report submitted last month.

“The question is whether the manufacturers should be required to declare any additional information that would educate consumers and empower them in regard to fairness of the price.”

The committee — headed by M Govind Rao, director of the National Institute of Public Finance and Policy — was set up last year to review and suggest best methods of declaration of retail sale price on pre-packed goods. It submitted its report last month.

Consumer organisations have argued quite often that the MRP is used for profiteering instead of protecting consumer interests.

Some members of the committee were in favour of printing first point price or the “factory-gate price” in addition to MRP in pre-packaged goods.

A factory-gate price gives the correct reflection of cost incurred in the production of the commodity. India Inc, however, is against enforcing such a system. “Who decides what is inflated price,” Brittania Industries said in its representation to the committee. Britannia is also against an authority to regulate retail prices.

Marico Industries, which owns the popular Parachute brand of coconut oil, said price determination should be left to market forces. It said that the anti-trust authority should investigate complaints against inflated price declaration.

The practice of displaying production cost is prevalent in many developed countries, including the European Union, where the selling price and the price per unit are indicated on most products.

In India, the Standards of Weights and Measures (Packaged Commodities) Rules, 1977 make it mandatory to declare the name and address of the manufacturer, the commodity’s name, net quantity, time of manufacture and the MRP in every pre-packaged product.

KK Jaswal of consumer rights organisation Common Cause and Sri Ram Khanna of Delhi University, both members of the committee, have strongly recommended printing of the factory gate price to inform consumers about price fairness.

Another member AK Sinha, representing Tariff Commission of the Commerce Ministry, said the package should display the cost of sales including taxes and profit margins of manufactures and resellers in addition to MRP.

The committee’s chairman and a few other members, however, felt that different market structures, local taxes and local factors affecting demand and supply would make administering a factory-gate price system difficult.