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Legal Metrology May 27, 2024

Dual Pricing Ban in India- Reasons, Suggestions and Exemption

Dual Pricing Ban in India

In India, the Ministry of Consumer Affairs, Food, and Public Distribution introduced the dual pricing ban to ensure that each customer receives fair treatment and the right to transparency prevails. Dual pricing leads to customer exploitation, so the move and efforts to ban it was smart and credible.

What is Dual Pricing?

Dual pricing refers to the practice of selling exactly similar pre-packaged commodities at varying MRPs by either the manufacturer, importer, or packer. This is done for various advantages, such as profit generation from foreigners and customers who are ignorant of the prevalent market prices.

The government of India has undertaken steps to curb the practice of dual pricing by means of amendments to the Legal Metrology (Packaged Commodities) Rules) which has been in force since 1-01-2018. This legislative alteration was made with the intent of consumer protection in mind.

This legislation safeguards consumers from being exploited by sellers’ avarice, wherein the same product is sold at various prices in retail ecosystems such as airports, malls, and cinemas.

Several instances have occurred where certain companies have charged higher prices for packaged commodities in locations such as malls, airports, hotels, and tourist spots.

Further, varying prices are charged for the same product on account of aspects such as location. A water bottle is sold at Rs. 20 at the local shops or the railway station but it costs nearly Rs. 200 at a five-star hotel. It is for the purpose of preventing such malpractices that lead to unfair pricing and price hikes that the government has imposed a dual pricing ban.

Dual Pricing Ban in India

The motive behind the dual pricing ban was that each customer had the right to be treated with fairness and the right to transparency. Dual pricing leads to ethical worries because it exploits variations in purchasing power, leading to profiteering where vulnerable customers are exploited.

The Legal Metrology Act (2009) does not support dual pricing of commodities; it concerns itself strictly with the standards of weights and measures as elucidated in the preamble and object of the Act. The government has banned the Maximum Retail Price, i.e. MRP, for the same product in airports and malls. The Ministry of Consumer Affairs and Food and Public Distribution amended the Legal Metrology (Packaged Commodities) Rules, 2011.

The dual pricing ban in India was introduced with this concern in mind by the Ministry of Consumer Affairs, Food and Public Distribution, which approved amendments to the Legal Metrology (Packaged Commodities) Rules in 2017. These rules stipulate that each packaged product ought to be sold with a uniform MRP, irrespective of the location of the sale.

The implementation of the said dual pricing ban is under the supervision of the Legal Metrology Department, which undertakes inspections to verify whether or not there is adherence to this regulation, particularly in luxury hotels and airports. Despite constant efforts, challenges continue to exist.

This dual pricing ban was enforced with the intent of levelling the playing field for the consumers, guaranteeing that each consumer pays the same price irrespective of the location of its purchase. This initiative encourages trust and fairness within the markets and for businesses across India. It necessitates changes to the pricing strategies as well as compliance with amended labelling prerequisites, but it facilitates better transparency and equality in the prevalent market ecosystem within India.

Rule 18 (2A into the LMA Rules, 2011)

The Legal Metrology (Packaged Commodities) Amendment Rules (2017) led to the introduction of Rule 18 (2A into the LMA Rules, 2011), which stipulates that manufacturer, packer and importer are disallowed from engaging in the malpractice of dual pricing.

Rule 6 of the Legal Metrology Rules, 2011

Packaged goods such as food, beverages, and bottled water are within the purview of Section 2 (I) of the Legal Metrology Act, 2009, and they ought to adhere to Rule 6 of the Legal Metrology Rules in 2011. As per Rule 6, the following declarations ought to be alluded on each package of the said product:

  • Name and Address of Manufacturer
  • Common or Generic Names of the Commodity contained in the Package. With concern to multiple products, one ought to allude to the name and quantity of each product
  • Net Quantity of the Commodity with regard to Weight or Measure or the Number of the Commodities within the package if they are packaged and sold by number.
  • Month and Year of Manufacture or Pre-Packaging or Import
  • Retail Sale Price of the Package
  • Dimensions of the Commodity within the package, particularly if they differ in size in addition to the dimensions of each piece

There are various instances of this malpractice, such as the entry ticket for Indians to the Taj Mahal is Rs. 50, and the same is true for foreigners, which is Rs. 550. A similar instance is noticeable in railways, where the ticket provided depends on the chosen routes and adapts to the demand. While the seats get filled and the travel date approaches closer, travellers can observe an increase in the process of the same tickets.

Likewise, when one visits the theatre for a movie premiere, one is asked to pay more money for the first-day show, which exploits the excitement of the viewer. We can see this happen even in mobile data plans wherein the telecom operators provide varying data plans for prepaid and postpaid customers, with the prepaid plans being cheaper per GB and the postpaid plans having various additional benefits such as free calls and streaming services.

Suggestions in Context to Dual Pricing Ban in India

If one wishes to enhance the efficiency of the dual pricing ban within India, then the following are the recommendations to consider:

a) Regular Audits and Inspections: The regulatory bodies must implement frequent and surprise checks to ensure compliance.

b) Penalties for Violations: The penalties ought to be increased as a deterrent for businesses that have been discovered violating the dual pricing ban.

c) Public Campaigns: Public campaigns ought to be launched to spread awareness among consumers regarding their rights and provide detailed information on the dual pricing ban.

d)  Compliant Channels: Provision of accessible channels for consumers to report violations.

e) Mobile Apps: Formulation and promotion of mobile applications through which consumers can verify the product prices and report any discrepancies.

f)    Digital Price Monitoring: Implementing a digital price monitoring system that tracks prices from various regions and retailers is quintessential.

g) Industry Partnerships: To boost voluntary compliance and self-regulation, one must work in tandem with trade associations and businesses.

h) Training Programs: Encouragement and provision of training programs for retailers and suppliers regarding the legal facts and advantages of following the dual pricing ban.

i) Clear Definitions: It is important that the law is unambiguous and crystal clear about what it defines and what comprises dual pricing, as well as about the situations in which it is pertinent.

j) Quick Legal Proceedings: Speedy procedures and special fast-track courts ought to be established to effectively tackle cases concerning violations of dual pricing.

k) Price Tags and Billing: Uniformizing price tags and billing from within and around retail outlets is essential.

l) Public Reporting: Businesses must be compelled to publicly report the infrastructure of their pricing and update consumers regarding any price alterations underway.

Exemptions for Dual Pricing

The Legal Metrology Act has banned dual pricing under the following regulations:

a)    Services – You will not notice any dual pricing for services, which essentially indicates that companies and businesses can set prices for services in a wide range of currencies such as Dollar, Euro, Yen…etc. They can proceed with this step even sans a demonstration of the price equivalent to the rupees.

b) Pre-Packaged Commodities- The LMPC Act bans dual pricing for all pre-packaged commodities. The list comprises commodities such as food products, beverages, cosmetics, and toiletries, each of which has fixed quantities and prices printed on the product’s packaging.

c) Imports and Exports- Import and export transactions do not comprise dual pricing because they involve currencies from around the world.

d) Business to Business (B2B) Transactions: Dual pricing is not compulsory for these transactions between businesses. It is not possible to show prices in both currencies on account of limitations of the physical space; hence, dual pricing is not needed. However, this exception is hardly invoked because it is one such exception that can be proved with ease. 

To Sum Up

The Union Ministry of Consumer Affairs has imposed a ban on the practice of dual pricing and stated that it will opt for a balanced approach to pricing issues. The government has ordered manufacturers, importers, and packers to choose a larger font size for the declaration on the packages to ease the readability of the same so that the consumer can scrutinize the fine print.

The dual pricing ban within India demonstrates the growing importance of consumer rights and the promotion of fair-trade practices worldwide. Implementation challenges exist, but the commitment to one price for packaged products across various retail environments displays an administrative determination to preserve consumers’ rights. This regulatory move will be advantageous to consumers and prompt businesses to choose better ethical pricing strategies, eventually leading to a healthier economic landscape built on consumer trust within the nation.

Frequently Asked Question

  1. What is an example of dual pricing in India?

    Dual pricing is a technique for charging different prices for the same product or service available in other markets. For example, a company might charge a different price for online purchases than in-store prices or present different rates for domestic Vs international customers.

  2. What is the problem of dual pricing?

    A significant section of customers may be either unwilling or unable to pay with cash and may stick to a business that does not offer distinct prices for cash and credit. Most importantly, dual pricing can create a negative public perception, as some consumers may view it as unjust or discriminatory.

  3. What are the types of dual pricing?

    The two prominent types of dual pricing systems are discriminatory pricing and differentiated pricing.

  4. What is dual pricing in Indian economy?

    Dual pricing is an approach to selling pre-packaged commodities (almost identical matches) at different MRPs by importer/manufacturer/packer. It is accomplished because of numerous benefits, such as generating profit from foreigners and customers who are clueless about market prices.

  5. What is the purpose of dual pricing ban?

    The purpose of dual pricing ban is to ensure fair practices in the trade and keeping things bright and transparent for the customers.

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