The Indian Constitution ensures freedom of trade, commerce, and intercourse across the country while allowing the government to regulate it for public interest.
👉 Part XIII (Articles 301 to 307) of the Indian Constitution deals with Trade, Commerce, and Intercourse within India.
👉 Ensures free movement of goods, people, and capital across states.
I. Meaning of Trade, Commerce, and Intercourse
✔ Trade – Buying and selling of goods and services.
✔ Commerce – Transporting, exchanging, and distributing goods.
✔ Intercourse – Movement of people and communication across states.
Example: A company in Maharashtra can sell goods in Karnataka without extra restrictions.
II. Freedom of Trade, Commerce, and Intercourse (Article 301)
✅ Article 301 – Trade, commerce, and intercourse shall be free throughout India.
✅ This means no state or local government can create barriers for trade between states.
Example: A factory in Tamil Nadu can transport goods to Delhi without any restrictions.
III. Power of Parliament to Regulate Trade (Article 302)
✅ Article 302 – Parliament can impose restrictions on trade for public interest.
✅ The Centre can control trade to protect the environment, public health, and national security.
Example: The Centre can ban plastic products across states for environmental reasons.
IV. Restrictions by State Governments (Article 304)
✅ Article 304(a) – States can impose taxes on goods coming from other states, but they must be reasonable.
✅ Article 304(b) – States can impose restrictions on trade for public interest, but they need the President’s approval.
Example: A state can tax alcohol from another state but cannot ban it completely.
V. Protection Against Discriminatory Taxes (Article 303)
✅ Article 303(1) – The Centre cannot favor one state over another in trade.
✅ Article 303(2) – If there is a national emergency, Parliament can make special trade rules for some states.
Example: The Centre cannot charge lower taxes for Maharashtra and higher taxes for Gujarat.
VI. State Power to Tax Trade (Article 305)
✅ States cannot make laws that stop businesses from operating, except in the public interest.
VII. Inter-State Trade Disputes & Coordination (Article 307)
✅ Parliament can set up an authority to oversee inter-state trade disputes.
Example: If Kerala and Tamil Nadu have a trade dispute, the Centre can intervene.
VIII. Examples of Trade & Commerce Regulation
| Area | Regulation Example |
|---|---|
| Essential Goods | Government can fix prices for food and medicines. |
| Public Safety | Ban on firecrackers in Delhi to control pollution. |
| Health Regulations | Ban on gutka and tobacco products in some states. |
| Inter-State Transport | GST system ensures smooth inter-state trade. |
IX. Importance of Trade, Commerce & Intercourse
✅ Promotes Economic Growth – Helps businesses expand nationwide.
✅ Encourages Competition – Lowers prices and increases quality.
✅ Reduces Regional Imbalance – Ensures equal distribution of resources.
✅ Strengthens National Unity – Allows free movement of people and goods.
X. Challenges in Inter-State Trade
❌ State-level taxes – Despite GST, some states impose additional taxes.
❌ Bureaucratic delays – Long paperwork and permissions slow down trade.
❌ Political interference – Some states block goods from others due to political issues.
XI. MCQs on Trade, Commerce & Intercourse
1. Which Article guarantees free trade and commerce across India?
A) Article 300
B) Article 301
C) Article 303
D) Article 305
Answer: B) Article 301
2. Under which Article can Parliament impose restrictions on trade?
A) Article 301
B) Article 302
C) Article 303
D) Article 304
Answer: B) Article 302
3. Which Article prevents the Centre from favoring one state over another in trade?
A) Article 301
B) Article 302
C) Article 303
D) Article 304
Answer: C) Article 303
4. Which Article allows States to tax goods from other states?
A) Article 301
B) Article 302
C) Article 304(a)
D) Article 305
Answer: C) Article 304(a)
5. Under which Article can a State impose restrictions on trade with Presidential approval?
A) Article 301
B) Article 302
C) Article 304(b)
D) Article 306
Answer: C) Article 304(b)
6. Who has the power to resolve Inter-State Trade Disputes?
A) Supreme Court
B) High Court
C) Parliament
D) President
Answer: C) Parliament
7. Which Article allows Parliament to set up an authority for trade regulation?
A) Article 301
B) Article 303
C) Article 305
D) Article 307
Answer: D) Article 307
8. When can the Centre make trade laws that favor some states?
A) During normal conditions
B) During elections
C) During a national emergency
D) During a financial crisis
Answer: C) During a national emergency
9. Which Article states that trade should not be restricted within states?
A) Article 301
B) Article 303
C) Article 305
D) Article 307
Answer: A) Article 301
10. Which tax reform helped in smooth inter-state trade?
A) Income Tax
B) GST
C) Excise Duty
D) Custom Duty
Answer: B) GST
XII. Conclusion
✅ Article 301 ensures free trade across India.
✅ Parliament and State Governments can impose restrictions under specific conditions.
✅ GST has improved inter-state trade, but challenges remain.
✅ India’s trade policies must balance economic growth with public interest.
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