Skip to main content

Legal Capsule by Economic Laws Practice

Legal metrology laws in India – Issues and challenges

Authors: Stella Joseph, Sweta Rajan, Prakhil Mishra, Suhasini Joshi


The Legal Metrology Act, 2009 (LMA) and Legal Metrology (Packaged Commodities) Rules, 2011 (PCR) are the primary instruments available to the Government for protecting consumer interest and ensuring consumer awareness. LMA and PCR prescribe the mandatory declarations required to be made on retail packages, including details such as Maximum Retail Price (MRP), name and address of the manufacturer, packer and importer, contents and size of the commodity, month and year in which the commodity is packed or imported, contact details in case of consumer complaints etc.
Manufacturers, packers and importers are accordingly required to obtain registrations under the LMA. This article analyzes the recent amendments to LMA by the government, impediments faced by the industry, cost of non-compliance (especially in light of the recent increase in traction from Legal Metrology Department or LMD) and effective mitigation strategies.

The PCR have witnessed periodic amendments, with the latest amendment coming into effect from 1 January 2018. Key developments include:
  • Introduction of obligation on e-commerce entities to make mandatory declarations 
  • Declaration requirements being extended to medical devices notified as ‘drugs’
  • Increase in the prescribed font size, with grandfathering provided up to 31 July 2018
  • Prohibition of declaration of different MRPs (dual MRP) on an identical pre-packaged commodity
  • Declarations required on food products being harmonized with labelling requirements under Food Safety (FSS) laws


Ensuring compliance with LMA and PCR becomes crucial inlight of the following factors:
  • The enactment governs aspects which are directly perceived by the end-customer and thus the reputational risks involved are high
  • Applicable fines in case of multiple offences lead to larger pecuniary consequences
  • The time-cost of the top officials (i.e. directors, etc.) for attending proceedings etc. would be high
  • While a remote possibility, one also needs to be mindful of the consequence of prosecution and imprisonment in case of a third or subsequent offence
As regards consequence in case of sale of non-standard packages which do not conform to the mandatory declarations, (i) a fine of up to INR 25,000 is prescribed for the first offence, (ii) a fine up to INR 50,000 for the second offence, and (iii) for subsequent offences, a fine between INR 50,000 to INR 100,000 is payable  and/or punishment with imprisonment (which may extend to one year). Prosecution may also be initiated if no response is received in relation to a particular notice.  Equal penalties are also prescribed for the directors of the companies (however, in cases where a company nominates a director under LMA, these penalties are imposable only on that particular director).


In cases of non-compliance, there are mitigating steps which can be explored.
  • Compounding of offence is allowed for certain offences under the Act, including incorrect declaration on the package. For this purpose, the necessary compounding fees, (which cannot be more than the applicable penalty), can be paid which will ensure that there are no further proceedings initiated in relation to the offence. However, once compounding of an offence is done, there is an embargo on opting for compounding for the same offence if committed within three years. Compounding may help a defaulting company to avoid prosecution, imposition of consequent penalties and imprisonment of designated directors.
  • Clubbing: Though not prescribed under the law, manuals issued by certain States provide for a mechanism of ‘clubbing’ of offences. If several cases are booked within a State in relation to the same commodity of the same entity by different inspectors for violation of the same section/rule under the LMA and Rules, all such cases may be clubbed together and treated as a single offence and compounded. 8 If available, this avenue is advisable to opt for in order to avoid multiple proceedings at different locations in relation to the offences booked for the same commodity.


While the purport of LMA is to benefit consumers, in view of the inherent ambiguities, its enforcement may result in placing trade and commerce at a disadvantage. It would indeed be helpful for businesses if the concerned authorities can define specific aspects that can lead to non-compliance and clarify the ambit of various notices and proceedings, so that a concerted and harmonious stand is adopted before various departmental officers across the country and the avenues of clubbing and compounding of offence are availed in the most prudent and efficient manner.

Popular posts from this blog

VC Interview: Shailendra Singh of Sequoia Capital India

In a recent interview to Venture Intelligence, Shailendra Singh discussed some of the firm’s newer investments in the early stage segment including in the online payments space, the progress at a few existing portfolio companies and the active role the firm is playing in helping its portfolio companies scale and succeed in India and globally. Prior to joining the firm in 2006, Singh was a strategy consultant at Bain & Company in New York and before that, an entrepreneur in the digital media industry.

Venture Intelligence: How does Sequoia go about identifying potential early stage investments in India? Is there anything different you are doing today than, say, a couple of years back?

Shailendra Singh: There is a lot more focus on technology investing and early stage investing. In general, as you might remember a few years ago, we were doing primarily growth investing but in the past 18-odd months, we have had a very strong focus on early stage and that’s continuing. In terms of how…

PE Investments down by 36% in Q1'20

Press Release
Private Equity-Venture Capital (PE-VC) firms invested $5.9 Billion (across 164 deals) during the quarter ended March 2020 - 36% lower than the $9.2 Billion (across 249 transactions) during the same period last year, according to data from Venture Intelligence, a research service focused on private company financials, transactions and their valuations. The Q1'20 investments were also 37% lower compared to the immediate previous quarter (which had witnessed $9.4 Billion being invested across 227 transactions). (Note: These figures include Venture Capital investments, but exclude PE investments in Real Estate).
The latest quarter witnessed 14 PE-VC investments worth $100 million or more, down from the 20 such transactions in the same period last year. The largest PE-VC investment announced during Q1’20 was the $567 million takeover of power generation company RattanIndia Power by Goldman Sachs and Varde Partners. The second largest investment was SoftBank Vision Fund…

Ambit tops League Table for Transaction Advisors to Private Equity deals in 2019

Ambit Corporate Finance topped theVenture Intelligence League Table for Transaction Advisor to Private Equity Transactions for the year 2019. Ambit advised PE deals worth $2.4 Billion (across 4 qualifying transactions) during the period. Citi ($1.1 Billion across 2 deals) and Avendus ($969 million across 12 deals) took the second and third spot. Edelweiss Financial Services ($758 million across 9 deals) and PwC ($708 million across 15 deals) completed the top five in 2019. 

The Venture Intelligence League Tables, the first such initiative exclusively tracking transactions involving India-based companies, are based on value of PE and M&A transactions advised by Financial and Legal Advisory firms.
Ambit Corporate Finance advised the $1.9 Billion buyout of Pipeline Infrastructure from Reliance Industriesby Brookfield Asset Management and the IFC and I Squared Capital-backedCube Highways' acquisition of Delhi-Agra Toll Road from Reliance Infrastructure (Reliance ADAG). Citi advise…

PE investments in 2018 crosses $33-B to set new all-time high

Big Ticket investments in consumer apps Swiggy & Byju’s dominates year-end activity, even as investments in Core Sectors slow down
Private Equity (PE) investments in India rose to their highest ever figure of $33.1 billion in 2018 (across 720 transactions), according to data from Venture Intelligence (, a research service focused on private company financials, transactions and their valuations. While PE investments have already surpassed the previous high - $24.3 Billion across 734 deals in 2017 - in the first nine months of 2018, the mega investments in Consumer Internet & Mobile startups such as Swiggy and Byjus towards the year-end, helped the 2018 total vault by 36% year-on-year. (Note: These figures include Venture Capital investments, but exclude PE investments in Real Estate.) The year witnessed 81 PE investments worth $100 million or more (accounting for 77% of the total investment value during the period), compared to 47 such transac…

"Leveraged stock purchase led Arvind Rao to go astray": Forbes India

Forbes India has an article on the series of events leading to the recent controversial exit of Arvind Rao, Co-founder & CEO of listed Mobile VAS firm OnMobile.

On November 23, 2010, Arvind Rao, the 53-year-old co-founder and CEO of OnMobile, bought approximately 6 lakh shares of his company from the open market, representing a little over 1 percent of the company’s total shares....At Rs 277 a share, he had to pony up nearly Rs 16.5 crore to acquire them....So he went ahead and borrowed money to buy the shares, thinking nothing of the interest it entailed or the fact that he’d need to put up nearly half his existing shareholding as collateral...OnMobile’s shares continued to fall from those levels, while Rao’s interest payments ballooned.

...Motivated by OnMobile’s growth all these years, he had never paid much attention to his salary, most of which went towards the monthly rental on his sea-facing apartment in Mumbai and his BMW 7-Series, both paid directly by the company. He reque…