To prepare for Indian Polity for any competitive exam, aspirants have to know about the basics of Inter-State Relations. It gives an idea of all the topics important for the IAS Exam and the polity syllabus (GS-II). Inter-State Relations and related topics are extremely important for the UPSC Exam. This is an essential portion of the polity. As IAS aspirants, you should be thorough with the Inter-State Relations. This article will provide you with relevant details about the Inter-State Trade and Commerce.

  • spanning from 301 to 307 (Part XIII) of the Constitution deal with the trade, commerce and intercourse within the territory of India.
  • 301 à declares that trade, commerce and intercourse throughout the territory of India shall be free.
  • 301 aimed at breaking down the border barriers between the states and to create one unit with a view to encourage the free flow of trade, commerce and intercourse in the country.
  • The freedom under Art. 301 also extends to intra-state trade, commerce and intercourse.


Imposing restrictions at the frontier of any state or at any prior or subsequent stage will amount to violation of Art. 301


Limitations to the freedom guaranteed under Art. 301
  • Parliament can impose restrictions on the freedom of trade, commerce and intercourse between the states or within a state in public interest.


Parliament cannot give preference to one state over another or discriminate between the states except in the case of scarcity of goods in any part of India.


For example, the Parliament has made the Essential Commodities Act (1955) which enables the Central government to control the production, supply and distribution of certain essential commodities like petroleum, coal, iron and steel and so on.


  • The legislature of a state can impose reasonable restrictions on the freedom of trade, commerce and intercourse with that state or within that state in public interest. Such a bill can be introduced in the legislature only with the previous sanction of the President.


Further, the state legislature can give preference to one state over another or discriminate between the states.


  • The state legislature can impose any tax on goods imported from other states or the UTs to which similar goods manufactured in that state are subject. This provision prohibits the imposition of discriminatory taxes by the state.
  • The freedom (under Art.301) is subject to the nationalisation laws (Laws providing for monopolies in favour of the Centre or the states).

The Parliament or the state legislature can make laws for the carrying on by the respective government any trade, business, industry or service, whether to the exclusion, complete or partial, of citizens or otherwise.

  • The Parliament can appoint an appropriate authority for carrying out the purposes of the above provisions relating to the freedom of trade, commerce and intercourse and restrictions on it.

The Parliament can also confer on that authority the necessary powers and duties. However, no such authority has been appointed so far.

In USA such authority is known as the Inter-State Commerce Commission.

Steps should be taken for the setting up of an Inter-State Trade and Commerce Commission (under Art. 307) (Entry 42 of List-I). This Commission should be vested with both advisory and executive roles with decision making powers. As a Constitutional body, the decisions of the Commission should be final and binding on all states as well as the Union of India. Any party aggrieved with the decision of the Commission may prefer an appeal to the Supreme CourtPunchhi commission on Centre-State relation (2007)