Nepal Government Prioritizes Mandatory MRP Implementation in 100-Day Action Plan

Kathmandu. The government has prioritized effective market regulation and the mandatory implementation of Maximum Retail Price (MRP) as part of its 100-day action plan for governance reform.

In the list released for governance reform, the government stated it would facilitate the customs system and separate commerce and consumer protection tasks to implement MRP through intensive monitoring.

The debate over MRP in Nepal is not limited to price; it is a matter linked to consumer rights, legal provisions, and significant state revenue. However, stakeholders suggest that due to past experiences, resistance from large business houses, and political pressure, implementing this agenda will be challenging for the government.

Political Pressure on Past Efforts
Efforts to implement MRP have been made in the past. Before 2075 BS, there was no separate MRP system for pricing goods in Nepal. At that time, the old practice of allowing a 20 percent profit margin under the Black Marketing Act was in effect. However, to make the market modern and transparent, that provision was removed and the 'Consumer Protection Act 2075' was introduced.

According to Sub-section 3 of Section 6 of this Act, manufacturers are required to clearly mention the MRP on the labels of products they produce. There is a legal obligation for manufacturers for goods produced within Nepal and importers for imported goods to write the maximum retail price in Nepali or English. Goods without such details cannot be sold or distributed.

For hardware, electrical appliances, or machinery, guarantee or warranty periods, information on flammability or fragility, and warning messages or pictures if harmful to health are mandatory. The Act has a strict provision to fine businesses up to 300,000 rupees for not following this rule.

According to the Act, the label must clearly state the quantity, production date, batch number, expiry date, and potential 'side effects' of using the product. Additionally, the MRP must be set only after including all types of taxes applicable to the product.

For hardware, electrical appliances, or machinery, guarantee or warranty periods, information on flammability or fragility, and warning messages or pictures if harmful to health are mandatory. The Act has a strict provision to fine businesses up to 300,000 rupees for not following this rule.

However, implementation could not take place as the private sector exerted significant pressure to prevent it. Issuing a notice on 2081 Chaitra 13, then Director General Kumar Prasad Dahal had directed the mandatory implementation of MRP on all goods starting from 2082 Baishakh 1.

Following this, as the department intensified monitoring, the Nepal Chamber of Commerce, Birgunj Chamber of Commerce and Industry, and Morang Merchants Association publicly opposed it. They met with the then Minister of Industry, Commerce and Supplies, Damodar Bhandari, and lobbied hard to stop the MRP immediately.

It is said that the game to transfer Dahal from the department began because he enforced MRP, but MRP was not the only main reason for his transfer.

When the Council of Ministers decided to transfer 72 joint secretaries on Shrawan 26, Dahal was also removed from the department. After Dahal's transfer, then Industry Minister Bhandari appointed Roshan Gyawali to the department. He had also promised to continue the MRP initiated by Dahal. But Dahal says it was just a formality, 'The current monitoring is only for fulfilling procedures and operates on 'settings'; it has not improved the market.'

Former Joint Secretary of the Government of Nepal and former Director General of the Department of Commerce, Kumar Prasad Dahal, claims that if Nepal's market system can be made transparent and mandatory billing and MRP are implemented, the state could collect an additional 2 trillion rupees in annual revenue.

Now, the government has included MRP implementation in its 100-day action plan. However, Krishna Prasad Bhandari, President of the Consumer Awareness Forum, says that the campaign started by Dahal in the past was sabotaged under pressure from power centers.

If the government wants to raise additional revenue and protect consumers from being cheated, mandatory MRP is essential. For this, the regulatory body must be free from political interference, says Bhandari.

Consumer rights activist Marseli says, 'Good governance is only possible through the rule of law. The government needs to take bold steps rather than keeping its action plan limited to paper. But businesses have already started lobbying the current government to prevent the implementation of MRP.'

Claim of Potential 2 Trillion Revenue Collection

Former Joint Secretary of the Government of Nepal and former Director General of the Department of Commerce, Kumar Prasad Dahal, claims that if Nepal's market system can be made transparent and mandatory billing and MRP are implemented, the state could collect an additional 2 trillion rupees in annual revenue.

Noting that more than 70 percent of the country's market still relies on informal transactions without bills, he said this is causing huge losses to the state treasury.

According to him, if MRP is applied to all branded and packaged goods, and price lists and mandatory billing are used for goods sold by weight, 'bargaining' and tax evasion in the market will be completely stopped.

'Only 10 to 20 percent of the current market is organized,' said Dahal, 'When you go to marts like Bhatbhateni, you get a bill, and the tax goes directly to the government's account. However, 70 percent of shops in main business centers like New Road do not even issue bills. The 'under-invoicing' trend, where goods worth 5,000 are sold but a bill is made for only 1,000 and the rest of the tax is evaded, is causing a loss of 2 trillion to the state.'

He commented that while he implemented MRP on cement, steel rods, and vehicle spare parts while in the department, the current monitoring operates on 'settings'.

Mandatory Billing Along with MRP

Krishna Prasad Bhandari 'Marseli', President of the Consumer Awareness Campaign, says that a mandatory billing system should be implemented along with MRP implementation. He stated that there is an interrelationship between MRP and billing. Bhandari said, 'Until PAN or VAT bills are made mandatory, consumers will not be saved from being cheated. Just setting an MRP is not enough; for its actual implementation, consumers must receive a mandatory bill.'

Marseli said that advertisements currently seen in the market like '50 percent discount' or 'buy one get one free' are misleading and meant to deceive consumers. He said, 'MRP should be set with a fixed profit margin. Currently, the MRP itself is artificially inflated, and then a drama of giving a discount is performed. Real stakeholders and consumer rights activists should be included in the price determination committee formed by the government.'

He has also demanded that businesses that do not issue bills should be punished with 6 months of imprisonment according to the Consumer Protection Act.

Private Sector Demand for Procedural Facilitation

Kamalesh Kumar Agrawal, President of the Nepal Chamber of Commerce, has said that the government needs to do homework on some technical and practical aspects for MRP implementation. He mentioned that the gap between the customs 'reference price' and the actual transaction price has caused problems for businesses.

'Since our infrastructure is weak, transportation costs are high, which can cause price variations depending on the location,' said Agrawal, 'Since printing MRP on imported goods is expensive, it would be easier if the government facilitated alternatives like putting it on a website or keeping a rate list in the shop.'

Agrawal's demand is that the government should trust the private sector, recognize the transaction price, and make the online valuation system effective.