Trade and Commerce within the territory of India.

Part XIII of the Constitution contains provisions relating to the freedom of trade, commerce and intercourse within the territory of India. Article 301 in general terms declares that trade, commerce and intercourse throughout the territory of India shall be free. The term ‘trade’ means buying and selling of goods. The word ‘commerce’ is wider than trade. Technically it also means buying and selling of goods. The expression ‘intercourse’ if read in the context in which it occurs in Article 301 means commercial intercourse. In wider sense it includes not merely trade and commerce but also activities such as movement of persons for the purpose of friendly association with one another.

In State of Bombay v. R.M.D Chamarbaugwala, AIR 1957 SC 699, it has been held that the protection of Article 301 was available in respect to such activities as would be regarded as lawful trading activities and that it did not extend to activities which is their very nature and in essence were res extra commercium. Freedom of trade, commerce and intercourse means the free movement and exchange of goods. It means that there shall be no prior restraint upon trade and commerce. In a federation, it is necessary to minimize the inter-State barriers as much as possible so as to inculcate in the minds of the people the feeling that they are members of one nation, though residing in different geographical divisions of the country. The progress of the Nation further requires that there should be free flow of trade, commerce and intercourse as between different parts without any barriers so that the economic resource of the country, of its various parts, may be utilized to the common advantage of the entire nation. Article 301 is an adaptation from Section 92 of the Australian Constitution which declares that trade, commerce and intercourse among the States, whether by means of internal carriage or ocean navigation, shall be absolutely free.

The freedom assured by Article 301 is not confined to freedom from such laws as the Legislature may pass in the exercise of its legislative power under those Entries in the Legislative Lists in the Seventh Schedule which relate to trade and commerce.
The expression ‘throughout the territory of India’ in Article 301 means throughout the various regions comprising the territory of India. Article 301 will therefore be violated whether restrictions are imposed at the frontiers of a State or at any stage prior or subsequent thereto.
In Automobile Transport Ltd. v. State of Rajasthan AIR 1958 Raj. 114, it has been held that it may be taken as a settled law that the restriction or impediments which directly and immediately impede or hamper the free flow of trade, commerce and intercourse fall within the prohibition imposed by Article 301.

Non-Discriminatory Restriction Imposed in Public Interest (Article 302 and 303):
1.) Article 302 provides that the Parliament may impose such restriction on the freedom of trade, commerce and intercourse between one State and another or within any part of the territory of India as may be required in the public interest.
2.)Restriction under Article 302 may be imposed by the Parliament by law in the exercise of its legislative power. No restriction can be imposed upon the freedom by a mere executive action. Restriction may be imposed by an executive action if taken in the exercise of power delegated by the Parliament.

3.) In Prag Ice & Oil Mill v. Union of India, AIR 1978 SC 1296, it has been held that although Article 302 did not speak of reasonable restriction yet, it was evident that restrictions contemplated by it must bear a reasonable nexus with the need to serve public interest.

Restriction on Freedom of Trade and Commerce under State Law(Article 304):
It has been realized that some local control is necessary in order to safeguard the particular interest of each State, without unduly burdening the freedom so declared. With this objective, Article 304 empowers the State Legislature to regulate trade and commerce by way following ways:
A. Limitation on State’s Power under Article 303(1):
1) Article 300(1) prohibits the State Legislature from making any law, by virtue of any entry relating to trade or commerce in any of the Lists in the Seventh Schedule which may give or authorize the giving of any preference to one State over another or discriminate between one State and another.
B. State’s Power to Impose Tax on Imported Goods [Article 304(2)]:
Clause (a) of Article 304 provides that the Legislature of a State may by law impose on goods imported from other States or the Union Territories any tax to which similar goods manufactured or produced in that State are subject so however as not to discriminate between goods so imported and goods so manufactured or produced.
The object behind Article 304(a) is to prevent discrimination against imported goods by imposing tax on such goods at a rate higher than that borne by local goodssince the difference between the two rates would constitute a tariff wall or fiscal barrier and thus impede the free flow of inter-State trade and commerce.

When the Constitution provides the freedom of trade, such freedom cannot be absolute. Thus Article 302 to 305 impose restrictions and ensures that trade is conducted in a lawful manner throughout the states and the country. All these provisions together ensure the provision of Constitutional status to the freedom of trade, commerce, and intercourse. Now at least there would be no unreasonable interference with trade and commerce based upon geographical variations or any other such barriers.

Aishwarya Says:

I have always been against Glorifying Over Work and therefore, in the year 2021, I have decided to launch this campaign “Balancing Life”and talk about this wrong practice, that we have been following since last few years. I will be talking to and interviewing around 1 lakh people in the coming 2021 and publish their interview regarding their opinion on glamourising Over Work.

If you are interested in participating in the same, do let me know.

Do follow me on FacebookTwitter  Youtube and Instagram.

The copyright of this Article belongs exclusively to Ms. Aishwarya Sandeep. Reproduction of the same, without permission will amount to Copyright Infringement. Appropriate Legal Action under the Indian Laws will be taken.

If you would also like to contribute to my website, then do share your articles or poems at

We also have a Facebook Group Restarter Moms for Mothers or Women who would like to rejoin their careers post a career break or women who are enterpreneurs.

We are also running a series Inspirational Women from January 2021 to March 31,2021, featuring around 1000 stories about Indian Women, who changed the world. #choosetochallenge

Leave a Reply

Fill in your details below or click an icon to log in: Logo

You are commenting using your account. Log Out /  Change )

Google photo

You are commenting using your Google account. Log Out /  Change )

Twitter picture

You are commenting using your Twitter account. Log Out /  Change )

Facebook photo

You are commenting using your Facebook account. Log Out /  Change )

Connecting to %s

This site uses Akismet to reduce spam. Learn how your comment data is processed.