Part XIII: Trade, Commerce, and Intercourse

Article 303: Restrictions on Legislative Powers Regarding Trade

Original Article:

(1) Notwithstanding anything in Article 302, neither Parliament nor the Legislature of a State shall have power to make any law giving, or authorizing the giving of, any preference to one state over another, or making, or authorizing the making of, any discrimination between one state and another, by virtue of any entry relating to trade and commerce in any of the lists in the Seventh Schedule.

(2) Nothing in clause (1) shall prevent Parliament from making any law giving, or authorizing the giving of, any preference or making, or authorizing the making of, any discrimination if it is declared by such law that it is necessary to do so for the purpose of dealing with a situation arising from scarcity of goods in any part of the territory of India.

Explanations:

Article 303 of the Indian Constitution addresses the restrictions on the legislative powers of both the Union and State governments regarding trade and commerce. This provision aims to ensure equitable trade practices across all states, thereby promoting economic unity within the country. However, the article does provide exceptions that allow Parliament to address certain emergencies that could disrupt the balance of trade and commerce, such as scarcity of essential goods.

Clause-by-Clause Explanation:

Clause (1): Restriction on Legislative Power for Preferential Treatment and Discrimination

Clause (1) restricts both Parliament and State Legislatures from enacting laws that create preferences or discrimination among states concerning trade and commerce. This ensures that no state is given an economic advantage over another based on legislative actions.

Clause (2): Exception Allowing Preferential Treatment in Emergency Situations

Clause (2) provides an exception to the restriction laid down in Clause (1). Parliament is permitted to enact laws that allow preferential treatment or discrimination between states if such actions are necessary to deal with specific situations, like a scarcity of goods.

Real-Life Example:

During a severe drought, a state might experience extreme shortages of food supplies. In such cases, Parliament may introduce a temporary law allowing preferential allocation of essential goods to the affected state to address the crisis.

Legislative History:

Article 303 holds historical importance as it reflects the constitutional intent to maintain a balanced federal structure in trade and commerce while ensuring states are treated equally. This article traces its roots to colonial-era practices, where trade barriers between regions often disrupted economic growth.

Amendments and Historical Significance:

There have been no major amendments to Article 303, as its provisions have been consistently regarded as essential to maintaining fair trade practices across India. However, its interpretation has been shaped by several landmark judgments over the years.