PART XIII: TRADE, COMMERCE AND INTERCOURSE WITHIN THE TERRITORY OF INDIA
Article 301: Freedom of trade, commerce and intercourse.
- Plain English: This is the core principle. It declares that “trade, commerce, and intercourse” (the movement of goods, services, and people for business) shall be absolutely free throughout the entire territory of India.
- Crucial Detail: This is a direct order to both Parliament and the State Legislatures. It means a truck carrying goods should be able to cross from one state to another (e.g., from Maharashtra into Gujarat) without facing any barriers, as if it were a single country.
- Real-World Example: A farmer in Punjab wants to sell their wheat to a buyer in West Bengal. This article ensures that the farmer has the right to transport and sell that wheat across any state lines (Haryana, UP, Bihar) without any state border blockades or “entry taxes” that are designed to stop the trade. (Note: The following articles create exceptions to this).
Article 302: Power of Parliament to impose restrictions on trade, commerce and intercourse.
- Plain English: This is the first major exception to the freedom in Article 301. Parliament (and only Parliament) has the power to impose “restrictions” on this free trade between states if it is “required in the public interest.”
- Real-World Example: A dangerous new plant disease breaks out in a specific state. To protect the rest of the country’s agriculture, Parliament can pass a law that “restricts” the movement of all agricultural products out of that one infected state. This is a restriction on free trade, but it is legal because it’s in the “public interest” of national food security.
Article 303: Restrictions on the legislative powers of the Union and of the States with regard to trade and commerce.
- Clause (1):
- Plain English: This is a non-discrimination rule. It says that neither Parliament nor a State Legislature can pass a law that gives “preference” to one state over another, or “discriminates” against one state in favor of another, in matters of trade.
- Real-World Example: Parliament cannot pass a law that says, “We will give a 50% subsidy on all steel only from factories in Jharkhand” because this would give “preference” to Jharkhand and “discriminate” against steel factories in Odisha.
- Clause (2):
- Plain English: This is the exception to the non-discrimination rule. Parliament (and only Parliament, not a state) can pass a discriminatory law if it is necessary to deal with a genuine “scarcity of goods” in one part of the country.
- Real-World Example: A severe drought hits four states in South India, leading to an extreme “scarcity” of grain. To manage this crisis, Parliament can pass a law that temporarily “discriminates” by directing all grain from Punjab to be shipped only to those four states, while restricting its supply to other, well-fed states.
Article 304: Restrictions on trade, commerce and intercourse among States.
This article provides the exceptions for State Legislatures. It gives states two limited powers to restrict free trade.
- (a) [The Non-Discriminatory Tax Rule]
- Plain English: A state can impose a tax on goods that are imported from another state.
- The Condition: This tax must not be discriminatory. The tax must be equal to the tax that the state imposes on its own locally-made goods. This prevents a state from using taxes to protect its own industry.
- Real-World Example: The State of Tamil Nadu makes its own “TN-brand” paper and charges a 5% local tax on it. If a truck of paper arrives from Andhra Pradesh, Tamil Nadu can charge a 5% “entry tax” on it. But it cannot charge a 10% tax, as that would “discriminate” against the AP paper in favor of its own. (Note: The Goods and Services Tax (GST) has now replaced most of these taxes with a uniform “IGST” to solve this exact problem).
- (b) [The “Reasonable Restrictions” Rule]
- Plain English: A state legislature can impose “reasonable restrictions” on the freedom of trade if those restrictions are required in the “public interest”.
- Real-World Example: The State of Bihar, in the “public interest” of health and safety, passes a law to ban the sale and transport of all alcohol within its borders. This is a “reasonable restriction” on the “trade” of liquor from other states.
- Proviso to Clause (b):
- Plain English: This is a crucial check. A state legislature cannot even introduce a bill to create such a “reasonable restriction” unless it has received the “previous sanction” (prior approval) of the President.
- Real-World Example: Before the Bihar legislature can even debate its alcohol ban bill, the bill must be sent to the President of India (acting on the Union government’s advice). If the President gives the “sanction,” the bill can be introduced in the Assembly. This allows the central government to review if the “restriction” is truly “reasonable.”
Article 305: Saving of existing laws and laws providing for State monopolies.
- Plain English: This is a “saving” or “grandfather” clause.
- It says that any trade laws that already existed when the Constitution began (Jan 26, 1950) are “saved” and can continue, unless the President orders otherwise.
- More importantly, it clarifies that nothing in Article 301 (free trade) prevents the Union or a State from making a law that creates a “State monopoly” (a business run exclusively by the government or a government-owned corporation).
- Real-World Example: The government creates the “Food Corporation of India” (FCI) and passes a law giving it the monopoly right to procure, transport, and distribute food grains for the Public Distribution System (PDS). A private trader cannot sue the government, claiming this monopoly violates their “freedom of trade” under Article 301. This article protects the government’s right to create such monopolies.
Article 306: [Power of certain States in Part B…]
- Plain English: This was a temporary article that gave some former Princely States (Part B States) the power to continue restricting trade for 10 years.
- Status: This article was REPEALED and REMOVED from the Constitution by the 7th Amendment Act in 1956. It is no longer in effect.
Article 307: Appointment of authority for carrying out the purposes of articles 301 to 304.
- Plain English: This article allows Parliament to pass a law to create a special “authority” (like a commission or a tribunal) to enforce the free trade rules from Articles 301-304. Parliament can give this authority whatever powers it deems necessary.
- Real-World Example: This article provides the constitutional power to create a body like an “Inter-State Trade Commission” to hear complaints from one state against another regarding trade barriers. (Note: While Parliament has this power, it has not yet created a permanent, powerful body for this specific purpose).
