Dual Pricing Ban in India - Reasons, Solutions and Exceptions

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Dual Pricing Ban in India - Reasons, Solutions and Exceptions

Dual pricing is a practice of selling identical pre-packaged commodities at the different MRPs by manufacturer/importer/packer. This is done because of many benefits such as generating profit from foreigners and customers who are unaware of the market prices.

Similarly, some companies charge higher prices of packaged commodities in some locations such as malls, airports, hotels, tourist places, etc. Also, different prices are charged for the same product based on factors such as location and other complex factors. 

For instance, bottled water is sold for Rs. 20 at the local shops or railway stations, but the same bottle will cost you Rs. 200 in a five-star hotel. This is a concept of dual pricing. To stop such practices, the government banned dual pricing.

Government-Banned Dual Pricing 

The Legal Metrology Act does not support dual pricing of the commodities. It only deals with standards of weights and measures and goods sold/distributed by weight and measure as evident on a perusal of the preamble and the object of the Act.

The government has prohibited the Maximum Retail Price (MRP) for the same product in multiplexes, airports and malls. The Ministry of Consumer Affairs and Food and Public Distribution amended the Legal Metrology (Packaged Commodities) Rules, 2011.

It is banned because every customer has a right to be treated fairly and transparently. This pricing was raising ethical concerns, as it involves taking advantage of differences in purchasing power or can exploit unaware customers.

The Legal Metrology (Packaged Commodities) Amendment Rules, 2017, introduced Rule 18 (2A) into the LMA Rules, 2011, which provides that no manufacturer/packer/importer will follow the dual pricing rules.

Effect of Ban on MRP Dual Pricing

Packaged products such as food, beverages, bottled water, etc, fall under Section 2(I) of the Legal Metrology Act, 2009 and must comply with Rule 6 of the Legal Metrology Rules, 2011. According to Rule 6, the following declarations must be mentioned on every package:

• The name and address of the manufacturer
• Common or generic names of the commodity contained in the package. In case of multiple products, mention the name and quantity of each product.
• Net quantity of the commodity in terms of weight or measure or the number of commodities in the package if they are packed or sold by number.
• Month and year of manufacture or pre-packing or import.
• Retail sale price of the package. However, for packages containing alcoholic beverages, the State Excise Laws and the rules made there must be applicable as per the state laws. 
• Dimensions of the commodity contained in the package, especially if they vary in size, along with the dimensions of each different piece.

Examples of Dual Pricing

• Taj Mahal Entry Tickets: The price of an entry ticket for Indian citizens is Rs. 50 and for foreigners, it is Rs. 550. The price differs based on the wide visitor base to generate additional value. 
• Railway Flexi-Fares: The ticket price is based on the select routes and adjusts according to the demand. As the seats get filled and the travel date comes close, the travellers see a hike in ticket prices.
• Movie Premiere Pricing: If you want to go for a movie premiere, then for the first-day shows or initial screenings, you have to pay a higher ticket price. This practice is done to take advantage of the initial excitement of the viewer.
• Mobile Data Plans: Telecom operators usually offer different data plans for prepaid and postpaid customers, with prepaid plans being a little cheaper per GB and postpaid plans coming with added benefits like free calling or streaming services.

Exceptions of Dual Pricing

The Legal Metrology Act prohibited dual pricing under these regulations:

1. Services: In India, you will not see dual pricing for services. This means the companies or businesses can freely set prices for services in any currency (Euro, Pound, Dollar, etc). They can do this without displaying the price equal to rupees.
2. Pre-packaged commodities: The LMPC Act completely prohibits dual pricing for all pre-packaged commodities. The list includes commodities such as food products, beverages, cosmetics, and toiletries that have fixed quantities and prices printed on the packaging.
3. Exports and Imports: The import and export transactions do not include dual pricing. As these transactions involve international currencies.
4. Business-to-business (B2B) transactions: Dual pricing is not mandatory for transactions that are done between businesses.
5. Technical limitations: In case, it is impossible to display prices in both currencies due to space constraints, or other limitations. Then, dual pricing is not required. However, this exemption is used rarely used as it can be demonstrated easily.

Conclusion

The Union Ministry of Consumer Affairs banned the practice of dual pricing. And, said that they will adopt a balanced approach in the pricing. However, the government ordered the manufacturers, importers, and packers to use the bigger font size of a declaration on the packages. So, the consumer can easily read the details and other instructions.

If you are a manufacturer, importer or packer, then you require a Legal Metrology Certificate to carry to business operations. Reach out to Registrationwala, to get the license, we assist you in the application process. As obtained, a license is a must to avoid the legal consequences.

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