From the very beginning of its deliberations the Constituent Assembly was keen to ensure the freedom of inter-State trade and commerce through out the Union. In fact, one of the primary purposes of federal Union itself is the establishment of freedom of commerce.

According to some writers, it is the Commerce clause of the American Constitution which made the United States one united nation. For, under the Commerce clause, the national government of the United States assumed enormous powers of regulating a wide variety of activities of the citizens and of the constituent States.

But the process has involved an unending legal conflict which is still raging between the Union and the State even after two centuries of the working of the Constitution. In Australia too, the situation is not happy owing to the omnibus character of the right to inter-State trade and commerce that is embodied in the Constitution.

The framers of the Indian Constitution had the benefit of these experiences at the time of drafting the provisions dealing with inter-State trade and commerce as embodied in the Constitution.

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This is why Articles 301 to 307 form a well-though-out scheme and, in the opinion of one of the members of the Drafting Committee, “are about as nearly perfect as human ingenuity could possibly make them.”

The objective behind the principle of freedom of inter-State commerce is that within the country trade and commerce should develop to the largest possible extent and it should not be hindered by artificial barriers and restrictions imposed by the various States of the federation.

Accordingly, the Constitution has taken into account the largest interests of India as a whole as well as the interests of particular States and the wide geography of this country in which the interests of one region differ from those of another.

Speaking on the general nature of the provisions, Ambedkar said: “I should also like to say that according to the provisions contained in this part, it is not the intention to make trade and commerce absolutely free, that is to say, deprive both Parliament and States of any power to depart from the fundamental provision that trade and commerce shall be free.

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The freedom of trade and commerce is subject to certain limitations which may be imposed by Parliament or by the Legislatures of the various States, subject to the fact that the limitations contained in the power of Parliament is confined to cases arising from scarcity of goods in one part of the territory of India, and in the case of the States it must be justified on the ground of public interest.”

Article 301 is general in scope and enacts that “subject to the other provisions of this Part, trade, commerce and intercourse throughout the territory of India shall be free”. After having stated the general nature of the freedom of trade and commerce, the Constitution details the limitations to this freedom. There are five such limitations:

(1) Parliament may impose restrictions in any part of the territory of India in the public interest (Art. 302). The purpose of this provision is to allow the Government of India to restrict the movement of goods so as to safeguard a well-balanced economy and the proper organisation and ordering of supplies of goods and services.

Famine may be raging in one part of the country while there is plenty in another part, as has been the experience of the country in regard to food during the last several decades.

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If Parliament has no effective powers to check such abnormal situations, freedom of trade and commerce, instead of a blessing, will become a menace to the freedom of life itself.

(2) Although Parliament is empowered to restrict the free movement or articles of trade and commerce, normally the laws passed by Parliament in this context ought to be non-discriminatory in character. In other words, it should not prefer one State to another. But when any part of the country is suffering from scarcity of goods, Parliament may, meet such a situation; pass even a discriminatory law (Art. 303).

(3) A State Legislature may impose on goods imported from other States any tax if similar goods produced in that State also are taxed in a like manner. A State Legislature is also authorised to impose reasonable restrictions on the freedom of trade and commerce with or within that State as may be required in the public interest (Art. 304).

Here is a certain amount of discretion given to the States to regulate Inter-State trade and commerce under exceptional conditions. But this is subject to Central control. According to this, any Bill who seeks to introduce such restrictions can be introduced in the State Legislative only with the previous sanction of the President.

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The purpose of the provision is obvious. If on account of parochial patriotism or provincialism and in disregard of the larger interests of India as a whole, a new Bill or an amending Bill to modify an existing law is introduced in a State Legislature, it will be open to the President to withhold sanction.

The President will have the opportunity to see that the legislation is in the public interest and the restriction imposed is reasonable.

(4) Under Article 305, tax laws existing at the time of the inauguration of the Constitution were safeguarded even if they violated the freedom of inter-State trade and commerce and the power of Parliament to regulate it.

At the same time, the President was empowered to make any changes to those laws as he thought fit. This Article in its present form was added by the Fourth Amendment of the Constitution, 1955, and it saves also all laws providing for State monopolies which were passed before the coming into effect of the Fourth Amendment.

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The fact that every restriction should be reasonable in relation to its objective leaves the Supreme Court with adequate power to examine and adjudicate upon the reasonableness of such restrictions and declare those that are unreasonable in its view invalid.

(5) Finally, under Article 307, Parliament is empowered to appoint such authority as it considers appropriate for carrying out the purposes of Articles 301 to 304 and to confer on that authority such powers and duties as it thinks necessary.

Speaking on this provision, Ambedkar said, “(It) is merely an article which would enable Parliament to establish an authority such as the Inter-State Commission as it exists in the U.S.A.

Without specifically mentioning any such authority it is thought desirable to leave the matter in a fluid state so as to leave Parliament freedom to establish any kind of authority that it may think fit.” Australia too has such an Inter-State Commission which renders valuable service in the field of inter-State trade and commerce.