Maximum retail price explained

Maximum retail price (MRP) is a manufacturer-calculated price that is the highest price that can be charged for a product sold in India, Indonesia, where it is known as Harga Eceran Tertinggi (HET), and Bangladesh.^[1] The MRP is also imposed by the government in Sri Lanka for goods designated as 'essential commodities'.^[2]

About

The benefits of having a nationwide, legally-enforced MRP include lower prices for consumers and a decrease in the symptoms of inflation.^[3] All retail products in India must be marked with their MRP. Shops cannot charge customers over the MRP. Some shops may charge slightly below MRP to draw more customers to their stores. In some remote areas, tourist spots, and in situations where a product is difficult to obtain, consumers are often charged illegally over the MRP.^[4]

However, the retailers may choose to sell products for less than the MRP. MRP differs from systems using a recommended retail price because in those systems the price calculated by the manufacturer is only a recommendation, not enforceable by law.

In April 2015, it was reported that milk vendors in Mumbai were threatening a boycott after it was discovered they had been charging above MRP and the Maharashtra state government threatened to intervene.^[5]

Criticism

The concept of MRP has been criticized as incompatible with the free market system, because it involves manufacturers deciding what profit retailers will make.^[6] It is easy for sellers to charge more than the MRP by charging for 'services' on top of the item price, such as a 'cooling charge' for cold drinks, or by manufacturers setting the MRP at up to ten times the expected sale price. In Sri Lanka, it has been reported that the MRP for basic items at food stalls is circumvented by the operators charging separately for ingredients in the food, such as the eggs in egg hoppers.^[7] The MRP also hurts consumers in rural areas because if retailers cannot charge a higher price to make up for the higher cost of transportation and distribution to those areas, they may simply not stock many items.^[6]

Unit sale price

From 2022 onwards the USP (Price per unit, KG or per gram) will be displayed along with MRP for goods in India.^[8]

See also

• Price controls
• Recommended retail price
• Resale price maintenance

References

1. Web site: VAT on commissions for drug sales raised. dead. https://web.archive.org/web/20170828191630/http://print.thefinancialexpress-bd.com/2014/11/27/68117/print. 28 August 2017. The Financial Express (Bangladesh). The NBR policy guidelines say the drug administration will set the maximum retail price of drugs based on the trade price.
2. Web site: Pricing and Management Division . 2023-07-08 . www.caa.gov.lk.
3. Web site: 2022-03-17 . Price controls – advantages and disadvantages . 2023-07-12 . Economics Help . en-GB.
4. Web site: New law in making to punish vendors charging over MRP. 25 December 2015. The Indian Express. 12 October 2016.
5. Web site: Milk vendors charging more than MRP threaten boycott. Times of India. 23 April 2015.
6. Web site: 23 July 2015. Time to abolish the MRP. The Hindu.
7. Web site: 2022-08-27 . Import controls: Regression when we really need reform . 2023-07-08 . Latest in the News Sphere The Morning.
8. Web site: 9 November 2021. Consumers to soon have a reason to smile; govt comes out with 'unit sale price' for packaged items. 2021-11-25. The Times of India. en.