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Inter-State Trade and Commerce

Inter-State Trade And Commerce

Article 301 to 307Part XIII of the Indian Constitution provides for freedom of trade, commerce, and intercourse. The general principles of commerce and trade are laid down in Article 301, while the restrictions under which trade operates are outlined in Articles 302 to 305. These provisions were adopted from the Australian Constitution.

Freedom of trade, commerce, and intercourse

  • Article 301 talks about the freedom of trade, commerce, and intercourse throughout the country.
  • It states that subject to other provisions under Part XIII, the freedom to carry on these activities shall be free.
  • Freedom here means the right to freedom of movement of persons, property, things that may be tangible or intangible, unobstructed by barriers within the state (intra-scale) or across the states (inter-scale).


  • Trade means buying and selling of goods for profit-making purposes.
  • Under Article 301, the word trade means an actual, organized & structured activity with a definite motive or purpose.
  • For the motive of Article 301, the word trade is interchangeably used with business.


Commerce means transmission or movement by air, water, telephone, telegraph or any other medium; what is essential for commerce under Article 301 is transportation or transmission and not gain or profit


  • Interstate Movement: Referring to the transportation of goods from one location to another, this encompasses both commercial and non-commercial transactions.
  • Comprehensive Scope: Involves various activities, including trade, travel, and interactions with others.
  • Limited Reach of Freedom: Article 301’s freedom isn’t interpreted in its widest sense for various reasons.
  • Specific Context: The term “intercourse” relates to “trade and commerce,” implying commercial-intercourse” rather than random motion.
  • Legislative Scope: Article 301 limits legislative power, but the Seventh Schedule doesn’t explicitly include “intercourse” as a legislative subject.
  • Word ‘Free’: Article 301’s “free” doesn’t imply exemption from national laws; it distinguishes between obstructive laws and regulations for smooth trade conduct.


  • The drafters of the relevant Articles of Part XIII were fully aware that economic unity was absolutely necessary for the stability and progress of the federal polity established by the Constitution for the governance of the country.
  • A country should function as a single economic unit with no internal trade barriers or obstacles.
  • In a federation, it is critical to reduce as many barriers (tariffs, non-tariffs, quotas, etc.) between states as possible so that people feel as if they are members of the same country despite living in different geographical areas of the country.
  • Economic unity and national integration are the primary sustaining force for the federal polity’s stability and cultural unity.
  • Fears or apprehensions raised by local or regional problems may persuade the State legislature to enact remedial measures aimed solely at protecting regional interests, with no regard for their impact on the nation’s economy as a whole. Part XIII’s goal was to prevent this from happening.
  • The free movement and exchange of goods across India’s territory is critical for the nation’s economy and for maintaining and improving the country’s living standards.


  • The mere fact that Article 303(2) gives Parliament the exclusive power to make a discriminatory law in response to a scarcity of goods, or that the Proviso to Article 304(b) gives the President supervisory power over a state legislation seeking to impose restrictions on inter-State or intra-State trade, is not a good enough argument to hold that these are anti-federal features imposing unjustifiable encroachment on the Union.
  • Several state governments support the establishment of the authority contemplated in Article 307. The Government of India does not believe that such an authority is require.
  • Trade, commerce, and intercourse all refer to a wide range of activities. The actions of the Union and state governments have far-reaching consequences for them.
  • Legislative and executive actions in the fields of licencing, tariffs, taxation, marketing regulations, price controls, procurement of essential goods, trade channelization, and supply and distribution controls all have a direct and immediate impact on trade and commerce.
  • Today, the field is occupied by a plethora of laws and executive orders. This has resulted in an enormously complex structure.


  • When the Constitution guarantees trade freedom, that freedom cannot be absolute. Built-in limitations for the common good curb such freedom, preventing it from deteriorating into a counterproductive license.
  • As a result, legitimate regulatory measures are not consider to be limitations on this freedom.
  • When taken as a whole, the scheme of the Articles in Part XIII is well-balance.
  • It reconciles the imperative of national economic unity with the interests of state autonomy.

Inter-State Trade And Commerce, Inter-State Trade And Commerce, Inter-State Trade And Commerce

Read Also: Recommendations On Centre-State Relations

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