India should remove provisions of jail term for labelling offences: EAC-PM working paper

India should opt for a system of graded fines and remove provisions for imprisonment for labelling offences in the commercial sector, Economic Advisory Council to the Prime Minister (EAC-PM) has suggested in a working paper.

EAC-PM in the paper titled 'Reforming the Legal Metrology Regime' said in case the country decides to retain the provisions on imprisonment, it should only be for extreme cases and repeat offences, in a way that consumer rights are adequately protected.

"Our analysis of other countries suggests that India should opt for a system of graded fines (for up to fourth offence, as suggested by some state governments) and remove provisions for imprisonment," the EAC-PM said.

The paper noted that the complexity of packaging regulations provides opportunities for legal metrology inspectors to issue notices on frivolous grounds of minor/technical non-compliance.

"These inadvertent lapses, often with little impact on the legibility of important information, are tried stringently, thereby imposing undue hardship on the entrepreneur," it pointed out.

The Legal Metrology Act, 2009, which establishes and enforces the standard of weights, measures and labels used in the commercial sector, has long been subjected to criticism for harsh punitive measures and complexity of its labeling regulations. It remains a stumbling block in improving India's ease of doing business.

The 2009 Act has provision for imprisonment as a punishment for offences under it.

In addition to the simplification of 2011 Packaging Rules, the paper suggested that the government may consider process changes like instituting a mechanism of issuing improvement notices to fix technical errors before proceeding with enforcement action against erring entrepreneurs, allowing for non-essential information to be displayed using QR codes.

"Cost-effective corrective measures such as use of stickers over existing labels for imported goods may also be considered to introduce some much-needed flexibility in a complex and rigid system," the paper said.

According to the working paper, the frequent changes in packaging regulations requirements makes compliance difficult and expensive because it distorts the timelines required for printing of labels.

"Frequent changes also increase the risk of violations for entrepreneurs because there will always be packaging material in the supply chain that does not comply with the new rules and have to be scrapped or recalled," it said.

The paper also suggested that the government may consider putting in place a system to assimilate all the statutory/regulatory mandates from respective ministries and departments around labeling-related changes and notify them twice a year on pre-announced fixed dates.

While this is akin to the Consolidated FDI Policy Circular where the government consolidates policy changes on foreign investment at one place or Master Circulars issued by the Reserve Bank of India and Sebi on important topic, the paper said, 'A similar consolidated policy for labeling changes will be transparent, predictable and will greatly improve the ease of doing business in India.'

According to the paper, given the threat of imprisonment, the criminalisation of second and subsequent offences under the 2009 Act has distorted the balance between empowering the legal metrology inspector and securing the dignity of legitimate entrepreneurs.

"The current system of using imprisonment as a tool to control entrepreneurs has given local officials multiple opportunities to indulge in rent-seeking by filing a first offence on trivial grounds and then threatening criminal prosecution for subsequent offences," the paper said.

Several major economies around the world (including the UK, the USA, Australia and Canada) have underscored the need to shift from an adversarial and prescriptive legal metrology framework to a more principle-based framework that is simpler and focused on ensuring compliance.