Consumer rights
Goods sold must mention cost price too
Pushpa Girimaji

A Member of Parliament has attempted to do, through a private member’s Bill, what the government could not or would not do: make it mandatory for manufacturers to print on all packages not just the maximum retail price (MRP), but also the cost of production.

Called the "Consumer Goods (Mandatory printing of cost of production and maximum retail price) Bill, 2006, the Bill (57 of 2006) introduced in the Lok Sabha by Hansraj Gangaramji Ahir on April 27, says that "no person shall sell or cause to be sold, any consumer goods without the cost of production and MRP of the product printed on such product after the expiry of six months from the date of coming into force of this Act".

There is also a provision in the Bill to receive consumer complaints pertaining to violations and, after due enquiry, cancellation of the licence of the manufacturer for selling without printing the relevant information about the cost of production. The Bill also provides for punishing of violators with simple imprisonment for a term not less than one year and with a fine not less than Rs 1 lakh.

Says the MP, in the "Statement of Objects and Reasons" accompanying the Bill: "It is generally seen that the prices of consumer goods sold in the markets are determined arbitrarily by the manufacturers. In this process, the manufacturers gain huge profits as the actual manufacturing cost is very low. The consumers’ interests are compromised and they are compelled to buy goods at much higher prices in comparison to actual manufacturing cost of goods. Thus, consumers are subjected to economic exploitation.

"For example, potato chips, drinking water, soft drinks, automobiles, medicines, etc are being sold at a price much higher than their cost price. The manufacturers arbitrarily fix the prices and the consumers are compelled to purchase goods at higher costs. If it is made mandatory for the manufacturers to print the actual cost of production of goods along with their MRP, it will help to curb the greed of the manufacturers. Such a measure will also help the consumers in making a decision regarding buying the product.

"It is the duty of the government to bring a legislation for protecting the interests of consumers. In the wake of economic liberalisation, it has become essential that the consumers are given the right to know the actual manufacturing cost of the goods they are going to purchase. It is also in the public interest to make commodities and goods available at fair prices to consumers. The interests of consumers can be protected against the vice of profiteering by making the goods and commodities available to them at a reasonable price."

Unfortunately for consumers, this is not a Bill introduced by the government, but by an MP as a private member’s Bill. And such Bills generally never get passed by Parliament to become a law. Usually, the government requests the member to withdraw the Bill and if he refuses to do so, the government gets enough number of MPs and ensures the defeat of such legislation.

However, there is one positive factor here. Usually, when an MP introduces a Bill as a private member’s Bill, he or she draws the attention of the government to the need for such a law and the government may well bring the necessary amendment on the lines of the Bill introduced by the private member. So one hopes that this particular Bill too will serve that purpose and force the government to act.

For a number of years, consumers and consumer groups have been demanding that the manufacturers print on all packages, not just the MRP, but also the ex-factory price. The logic being that the ex-factory price will introduce transparency in the pricing of goods, while at the same time preventing printing of inflated MRPs by manufacturers. Further, consumers have a right to information and this is an essential information that they would like to have.

Manufacturers, of course, are vehemently opposed to this. In fact the Union Ministry of Consumer Affairs constituted several committees to discuss the issue and in all these committees, barring the representatives of manufacturers, all others felt that printing the ex-factory price was the best solution to the problem of inflated MRPs being marked on certain goods by manufacturers.

Now, marking the MRP, inclusive of all taxes, is mandatory under the Weights and Measures (Packaged Commodities) Rules. And if the manufacturers have to print the ex-factory price, too, these rules have to be amended. However, on account of the strong resistance form the manufacturers’ lobby, the government has not done it.