The problem is the manufacturers are independent business people and not owned by the Frank Camaratta or Carl. Rolex owns their manufacturing place. There is no way possible for the Rolex factory to suddenly drop the Rolex wholesale or retail arm and go direct cutting prices for the same product.
Yes, back in the 1990’s Frank found it best to contract with the man and family that are now Chess Empire as his manufacturer. They also made sets for others like Dennis of Legend Chess Products. And they never sold the Camaratta designed sets, wholesale, to Dennis or any other retailer.
But, time progressed and contracts apparently lapsed. So we now see them selling sets like The Mechanics Institute Set that they used to make for Frank and HoS.
If Frank would have owned the manufacturing process instead of contracting with them, we would not be having this discussion now.

Well, you want to compare apples to apples? Lets do it. Franklin Mint Coca Cola chess set is $695 at Frank's site but only $400 at eurekapuzzles. Exactly the same product. And this is just one example. Both are retailers, not manufacturers. I can find dozens other examples.
Markup is fine. They need to make a living and pay the bills. The question is what's a reasonable markup?
FC did a huge service for the chess community back in the 90s by reintroducing the concept of buying a new quality chess set. But I reiterate my point above. The Indian manufacturers would only have gone direct if there was a substantial difference in what they were getting direct v wholesale. We have all seen videos of their facilities in action. I simply don't believe that they apply different manufacturing processes/materials to sets for HOS v other sets.