The Myth of the Maximum Retail Price: Regulating Inflated MRPs, Artificial Discounts and Consumer Exploitation in India

By Prof. Dr. Deevanshu Shrivastava and Abhinav Gupta

Walk into a pharmacy, a clothing store, a supermarket, or an online marketplace, and one pricing practice appears almost universal, i.e., a product carries a prominently displayed Maximum Retail Price (MRP), followed by an apparently generous discount, such as “MRP ₹1,000/-, now ₹199”; “70% off”; or “up to 80% discount”. The consumer is expected to feel that a good bargain has been secured. However, what if the ₹1,000/- was never a meaningful market price in the first place? This is the uncomfortable question that India’s consumer protection regime must confront. The problem is not discounts themselves. The problem is the possibility of an inflated reference price that makes an ordinary sale appear extraordinary.

The Maximum Retail Price was conceived as a consumer protection mechanism. It sets the maximum price that can be charged for a packaged commodity and, in principle, protects consumers from arbitrary overcharging. Yet MRP has acquired a second, increasingly problematic function: it has become a psychological anchor for discounts. A product marked at ₹2,000 and sold for ₹800 appears dramatically cheaper than the same product simply priced at ₹800. The consumer does not merely see a price; they see an alleged saving of ₹1,200. The commercial incentive to set a high reference price is, therefore, obvious.

This becomes particularly troubling when the gap between MRP and the actual selling price is persistent rather than occasional. If a product is routinely available at 50, 60 or even 80 per cent below its printed MRP, one must ask whether the MRP is a genuine upper retail benchmark or merely a marketing construct. A discount is meaningful only when it is calculated against a credible reference price. Otherwise, the language of “sale”, “special offer” and “80 per cent off” can create an illusion of value without necessarily delivering any exceptional economic benefit to the consumer.

The issue is even more serious in the pharmaceutical sector. Medicines are not discretionary lifestyle products. A patient buying a medicine may lack both the time and the bargaining power to compare prices across manufacturers and pharmacies. The availability of generic medicines has also highlighted substantial differences among printed MRPs, procurement prices, and actual selling prices. When a medicine carries a high MRP and is later offered at a substantial discount, the percentage discount can create a misleading impression of affordability while concealing the underlying price structure. In such a market, transparency is not merely a matter of good commercial practice; it is a public health concern.

India already has a substantial legal framework addressing unfair trade practices, misleading advertisements, and consumer protection. The Consumer Protection Act, 2019 provides important safeguards against deceptive commercial conduct, while the Legal Metrology Act, 2009 regulates declarations for packaged commodities, including MRP. The problem, therefore, is not necessarily the absence of law. It is the lack of a sufficiently sophisticated regulatory approach to the economics and psychology of reference pricing. Regulation traditionally asks whether a seller has charged more than the MRP. It should also ask whether the MRP itself is being used in a way that materially misleads consumers.

This does not mean the Government should fix the price of every commodity. A universal price-control regime would be economically inefficient and could interfere with competition, innovation and legitimate differences in quality, distribution costs and brand positioning. The more sensible approach is to regulate the process by which MRP and discount claims are presented. Manufacturers and sellers, particularly in sensitive sectors, should be required to maintain a defensible basis for the MRP they declare. Where a product is systematically sold at a substantial discount from its printed MRP, regulators should have the power to examine whether the reference price is artificially inflated.

Discount advertising also needs greater transparency. A claim such as “80 per cent off” should not be assessed merely by checking whether the final price is below the printed MRP. Regulators should examine whether the reference price was genuinely offered for a meaningful period, or whether it otherwise represented a bona fide prevailing price. Online marketplaces deserve particular scrutiny because algorithmic pricing, flash sales and constantly changing “original prices” can make it extremely difficult for consumers to determine what a product actually costs in the market.

India should also consider a differentiated approach to MRP regulation. Essential medicines, medical devices and other products involving significant public interest may require substantially stronger price transparency than fashion or lifestyle products. In pharmaceuticals, consumers could benefit from clearer disclosure of the manufacturer’s price, MRP, applicable trade margins and actual retail price. In e-commerce, platforms could be required to disclose meaningful price history where comparative pricing is used. In other sectors, persistent and unusually high discounts could trigger regulatory scrutiny rather than being automatically treated as evidence of consumer benefit.

There is also a behavioural dimension that cannot be ignored. Consumers rarely evaluate prices in isolation. They compare the selling price with the reference price shown to them. A high MRP followed by a dramatic discount, therefore, shapes perception, even when the final price itself is not particularly attractive. Consumer protection must account for this behavioural reality. A technically accurate statement can still be commercially deceptive if its presentation creates a materially false impression of savings.

The objective should not be to eliminate discounts. Competitive pricing benefits consumers, and genuine discounts should remain an important part of the market. The objective should be to ensure that a discount means what consumers reasonably understand it to mean. A ₹1,000 product sold for ₹200 is not necessarily a bargain merely because the label says “80 per cent off”. The real question is whether ₹1,000 was ever a credible price against which the saving can fairly be measured.

India therefore needs to rethink what MRP means in the modern marketplace. The Maximum Retail Price should remain a ceiling against overcharging, but it should not be used to manufacture the appearance of savings. The next generation of consumer protection must move beyond the simple question, “Did the seller charge more than the MRP?” and ask the more important question, “Was the reference price itself fair, transparent and credible?” Until that question becomes part of regulatory policy, the printed MRP may continue to protect consumers from one form of exploitation while unintentionally facilitating another. The consumer deserves not merely a maximum price, but a truthful price.

Prof. Dr. Deevanshu Shrivastava, Professor of Law, National University of Study and Research in Law, Ranchi.

Mr. Abhinav Gupta, Faculty Convenor, Chair on Consumer Research and Policy, National University of Study and Research in Law, Ranchi.