What is Internal Trade?

By Arryan Mohanty 

Published on: January 16, 2024 at 19:32 IST

We may use various goods daily, from notebooks, pens, soap, clothes, produce, food, radio, television, fans, and furniture. Where can we purchase all of these items? The reply will be “from the neighbourhood market.” 

We occasionally visit a market some distance from our home for special events like festivals or weddings. The question that needs to be answered is how these things get to the market. Several businesses and individuals carry out the process of moving a product from its place of manufacture to the market and then making it available to the final consumers. 

They serve as a conduit or a link between manufacturers and consumers. This Article will teach us about the businesses and individuals that serve as the intermediaries between producers and consumers in a given nation and the several purchasing options available to customers.

Buying and selling products and services to make a profit is a trade. Trading has been a part of human history in some form or another since the beginning of civilization. Modern times have seen a rise in the importance of trade as new products are created daily and made accessible for consumption on a global scale. No person or nation can assert that it produces all the commodities and services it needs. As a result, everyone is creating what they are best suited to create and trading the surplus with others.

Trade is an age-old practice that has significantly contributed to the development and advancement of human civilization. Trade has helped to shape cultures and even bind them together. The interchange of products and services, whether domestically or internationally, demonstrates our ability to collaborate, adapt, and improvise.

Trade has always been important since no nation or state has ever been able to produce all the goods it needs. As a result, we need laws and regulations to oversee and control business. The Indian Constitution’s Part XIII guarantees freedom of trade, commerce, and intercourse under Articles 301 to 307.¹ The general principles of trade and commerce are outlined in Article 301, whereas the restrictions that apply to trade are outlined in Articles 302² through 305.³ The adoption of these clauses was based on the Australian Constitution. 

What is Internal trade?

The purchasing and selling of goods and services within a country’s territorial boundaries are called internal trade. Whether the goods are bought from a local neighbourhood shop, a central market, a department store, a mall, or even from a door-to-door salesperson, or an exhibition, all of these are examples of internal trade because the goods are obtained from a seller who is physically present within a country, be it a neighbourhood shop, a central market, a department store, a mall, or even a door-to-door salesperson. 

No customs fee or import duty is imposed on this commerce since the goods are a component of home manufacture and are intended for domestic use.

In general, it becomes highly challenging for manufacturers to directly contact all of the consumers or users of products that must be provided to numerous buyers spread out over a large geographic area. 

For instance, the assistance of wholesalers and merchants becomes crucial if vegetable oil, bath soap, or salt produced at a facility in any country or region is to reach millions of consumers nationwide. 

Wholesale trade describes the buying and selling commodities and services in large quantities for further resale or intermediate usage. On the other hand, retail trade is when things are bought and sold in smaller amounts, usually to the end consumer.

Retailers deal in retail trade, whereas wholesale dealers participate in wholesale trade. Wholesalers and retailers play crucial roles as marketing intermediaries in the trade of goods and services between producers and users or final customers. Internal commerce tries to quickly and affordably distribute goods equitably across a country.

Activities that are not trade

Article 301 of the Indian Constitution guarantee freedom of trade, commerce, and intercourse. However, some acts may fall under its ambit while not being protected by the freedom. Illegal activities, such as gambling and the lottery, are examples.

In the case of State of Bombay v. R.M.D. Chamarbaugwala,⁴ The Supreme Court affirmed the prohibition of these criminal practises. In this case, it was determined that no criminal activity or unpleasant activity would receive any protection under Article 301. 

Examples of such acts include taking pornographic photos for cash, trafficking in women and children, employing terrorists or goons, etc. These activities are extra-commercium (not subject to private ownership or acquisition), even though the forms, techniques, and trade procedures may be utilised, and are, therefore, not covered by Article 301.

Inter-relation between Article 301 and Article 19(1)(g)

The opportunity to participate in any movement, exchange, or business that advances the interests of the entire population is granted by Article 19(1)(g) of the Indian Constitution,⁵ and the free flow of exchange with other nations is permitted by Article 301. Anyone may exercise their inevitably protected rights under Article 301. 

Under Article 19(1)(g), the basic right may only be asserted by citizens. Article 301, which grants citizens and non-citizens the ability to appeal to the court on the off chance that their privileges have been abused, addresses this obstacle posed by Article 19.⁶ 

Although Article 301 and its companion articles 302 to 307 set restrictions on the country’s ability to expand its trade freely, Article 19(1)(g) imposes conditions on the right to practise a calling or profession. 

However, the limitations outlined in Articles 302 to 307 should have indirect effects rather than limiting the opportunity guaranteed by Article 19(1)(g). Article 301 is seen as a clarification of Article 19(1)(g) because it only deals with the development of labour and products, and it has a more limited reach than Article 19(1)(g).

Furthermore, it is occasionally claimed that Article 301 applies to all exchanges, whereas Article 19(1)(g) protects individuals. But this is untrue. Article 301 is derived from Section 92 of the Australian Constitution. Hence, everyone has access to this privilege.

Accordingly, it is possible to assume that, from some angles, the two of them are connected. During a crisis, they should also be apparent as linked concepts. Privileges under Article 19(1)(g) are suspended during times of crisis. The judiciary, therefore, expects to use the powers granted by Article 301 to investigate whether any infringement has occurred.

Features of internal trade

The following are the essential features of internal trade:

• Products are bought and sold within the limits of the same country.
• Payment is made in that nation’s currency for all goods and services. For instance, if trading occurs in India, the payment will be made in Indian rupees.
• It involves interactions among middlemen, customers, and producers.
• It comprises a network of intermediaries and organisations exchanging commodities and services.
• Compared to foreign trade, the danger of transportation is significantly lower due to internal trade.
• The rules that are in effect in that nation only need to be respected because of domestic trade.
• Economical provision of goods and services is the goal of internal trade.
• The products need to be made in the country.
• Products must be obtained from a person or a company with roots in that nation.
• Products can be delivered via local transportation options.
• Although there are no customs or import duties, customers must still pay taxes to the government.

Types of internal trade

Normally, we purchase items for daily usage from neighbourhood shops. These business owners buy products in large quantities and then sell them to us when we ask for them. But do we know where these store owners purchase their goods? They often purchase large quantities of items directly from producers or from any other stores that offer bulk purchases. As a result, we observe that some shopkeepers purchase items in bulk and resell them to others in bulk, while others purchase goods in bulk and sell them in smaller quantities depending on customers’ needs. Consequently, based on the number of goods traded, retail and wholesale trade are the two basic categories into which internal trade can be classified. 

• Wholesale trade

Purchasing and selling products and services in bulk for resale or other intermediary uses is referred to as “wholesale trading.” The term “wholesaling” refers to the business operations of those people or organisations that sell to retailers, other merchants, and industrial, institutional, and commercial uses but do not make many sales to final consumers. 

Retailers and manufacturers depend on wholesalers as a vital link. They allow manufacturers to undertake various tasks related to the distribution of goods and services, including reaching many purchasers dispersed across a large geographic area (via retailers). 

By buying and selling the products in their names, they typically acquire ownership of the goods and assume the business risks. They buy in bulk and sell in tiny numbers to merchants or industrial users. 

They carry out a variety of tasks, including grading products, packing them into smaller lots, storing them, transporting them, promoting the products, gathering market data, gathering retailers’ scattered and tiny orders, and distributing supplies to them. Additionally, they offer credit facilities to the shops and free them from the burden of storing large inventories of goods. The majority of the tasks carried out by wholesalers are ineliminable. If there are no wholesalers, the makers or the retailers must carry out these duties.

The characteristics of wholesale trading are as follows:

• The wholesaler typically deals in one or a few different product variations. He is a specialist trader in a certain field, such as machinery, textiles, or drugs.
• Wholesalers purchase products in bulk from producers and manufacturers before selling them to retailers and occasionally to customers.
• Investment of a sizable quantity of capital is necessary for wholesale trade. This is because purchases are made in large quantities, manufacturers are granted advances, and the items are typically offered on credit. Additionally, a lot of storage space is needed.
• For the convenience of the merchants, most people who sell comparable goods wholesale have their business locations close together. For instance, the wholesale markets for grains and papers. These are wholesale marketplaces that specialise in a single commodity.
• Wholesale merchants engage in a variety of operations in addition to selling, including packing, grading, advertising, market research, etc.

• Retail trade

A retailer is a business enterprise specialising in directly selling products and services to final consumers. Typically, the retailer purchases items in bulk from the wholesalers and distributes them in smaller amounts to the final customers. The retail stage is the point in the distribution process where products are handed off from the manufacturer or distributor to the end user. Thus, retailing is the area of business that focuses on selling goods and services to final consumers for their domestic and non-commercial use.

The commodities may be sold in various ways, such as in person, over the phone, or through vending machines. Additionally, the products may be sold in various locations, including a store, the customer’s home, or any other location. For instance, we frequently see people selling joke books, magic potions, or ballpoint pens on the street or buses. 

We also frequently see people selling cosmetics or detergent powder door to door or selling vegetables from small farmers on the side of the road. But these will be regarded as retail sales instances as long as the products are sold to final consumers.

Therefore, if sales are made directly to customers, it will be regarded as retailing regardless of “how” the products are offered or “where” the sale is made. A retailer handles a variety of tasks related to the delivery of products and services. 

He or she buys a range of goods from wholesalers and other vendors, arranges for proper storage of the goods, sells them in small quantities, assumes business risks, grades the goods, gathers market data, extends credit to the customers, and advertises the products’ sales through displays, participation in different programmes, etc.

Retail trade characteristics include:

• Dealing with various goods is usual in retail trading.
• A retailer makes bulk purchases from producers or wholesalers to sell in smaller quantities to consumers.
• The primary market area or an area close by is often where retail trading occurs.
• Retail trade typically entails buying on credit from wholesalers and selling to customers for cash.
• A retailer’s relationship with the manufacturer is indirect (via wholesalers), while its relationship with customers is direct.

Role of the Government and Ministry of Commerce in Internal Trade

The government stated its intentions to quadruple exports (to $900 billion) by 2020 and boost India’s share of global trade from 2.1 percent to 3.5 percent in April 2015 when it unveiled a new Foreign Trade Policy. The Make in India and Digital India programs of the government are intended to be integrated under the policy. 

In a speech in Washington in June 2016, Prime Minister Narendra Modi clarified his thinking and laid out a concise plan: “We will continue to strengthen the Make in India initiative.” It is not intended solely for domestic production or import substitution. It is as much about making world-class products and services for the whole globe. That is why, for us, improvements toward free trade are important. Developed countries must open their markets to goods and services from countries like India. I see this as a win-win proposition for the U.S. and India. India is the future human resource powerhouse of the world with a world rd-work young population. A partnership between American capital and innovation and Indian human resources and entrepreneurship can be very powerful. I am convinced I can strengthen our economies through such a partnership.” 

This solid commitment must be finished, particularly considering that commodities have dropped for seventeen months since December 2014. Yet, to do so effectively, the public authority should continually assess how these objectives (like the coordinated effort between American capital and advancement and Indian assets and business ventures) are showing themselves in changing worldwide patterns. 

The Smart City Undertaking, Make in India, Expertise India Program, and Computerized India are four of India’s key projects, whose execution would require unfamiliar direct speculation and a careful redoing of the nation’s assembling industry. 

The current government is a major area of strength for looking far. India got threefold the amount of greenfield FDI, which added up to an expected $63 billion, in 2015 when contrasted with China and the US. India did become the main country on the planet for greenfield FDI, surpassing the US ($59.6 billion) and China ($56.6 billion). 

The Make in India movement may face global headwinds due to the global economic downturn, protectionism, and mechanical events such as computerization and 3D printing. Making in India may influence the Indian market, explicitly the protection area. 

There is bountiful proof that exchange has further developed expectations for everyday comforts worldwide, expanded genuine pay, and contributed to worldwide success. In any case, globalization makes for two champs and washouts. Exchange encourages riches yet disparity; if the assembling area is exposed to sponsored or unloaded products and swapping scale control, it could endure devastating fallouts. 

While the exchanging framework offers insurance against unjustifiable exchange, there is no hope. At the same time, ruthless evaluating is regulated when entire frameworks don’t work based on market costs and when it is difficult to recognize state appropriations and company unloading. Indian specialists are compelled to settle on hard decisions because of changes in worldwide exchange strategy. The country’s issues can deteriorate if individuals go into ostrich mode and shut down.

It would be good to explain how India gravely erred by entering into economic agreements against its better judgement and interests. It is proverbial that assuming an FTA brings about exchange development however, in light of a legitimate concern for one accomplice, it is a gravely arranged understanding.

Rather than leaving deregulation, a line of inadequately arranged accords ought to prompt the termination of exchange moderators. Ill-conceived economic accords with India have prompted upset obligation structures, high import charges on unrefined components and intermediates, and decreased charges on finished merchandise, all dissuading the production and product of items with esteem added. 

Regardless of its strong, calculated clearness, the Modi government is obliged by an internal-looking administration. The arrangement’s objectives and its execution strategies should be inside steady and one. It is difficult to wish to develop the extent of worldwide business and produce many works by overlooking exchange strategy or being contingent upon an exchange methodology that confines India.

Since around 2007, talks for an FTA with the European Union have been delayed. With 13% of all wares and administrations exchanged between the two nations, the European Union is India’s most prominent trading partner. If a country’s unfamiliar and exchange strategies complement each other, that is an ideal indication of that country’s outside collaborations.

India has wrestled with an exchange methodology that is more mindful and internal looking and an international strategy that looks for key substance with its exchanging accomplices, oftentimes for a good objective. Likewise, reasonable clarity is required for the qualification between activities that would fall under the classification of exchange strategy and activities that could be comprehensively delegated to exchange advancement.

India’s product sends have a thin record for 78% of all commodities, and assembling trades quickly lose competitiveness due to an unfortunate coordinated operations foundation and feeble exchange help. India’s trial with unique monetary zones (SEZs) didn’t take off. The foundation of free ports or different plans should be considered on the merits. One may be pardoned for inquiring why free ports would succeed if SEZs fizzled or why the Chinese can sort themselves out more effectively than different nations.

In the meantime, a critical central concern is India’s Supreme Court notice to the middle and a few states on returning unused SEZ land that had a place with farmers. The legislatures should consider whether to improve or re-examine the strategy. Under the rubric of exchange strategy come issues like the genuine, powerful conversion standard and the worldwide exchange design. 

India has not made up for declining commodities sales to the European Association and the US with increments elsewhere. The exchange strategy organisation makes them make sense of what to do. India could take advantage of the TPP and TTIP’s delays in finishing building its home and apply to become a major trading nation. If it doesn’t, the head of the state’s well-thought-out plan to increment yearly exchange turnover with the US to $500 billion and raise India’s portion of worldwide exchange to 3.5 percent will ring hollow. 

India ought to revive the multilateral exchange discussions at the WTO. Doing so requires farsightedness on India’s part and compromises in a portion of the positions it has taken on farming, Mode 4 of GATS, ITA-2, and government acquisition. Its offers can be restrictive, putting the onus of taking them forward on India’s major trading partners and the concessions they will allow India. Toward the day’s end, India’s inclinations are better served by the WTO and MFN exchange than by the horde of RTAs and FTAs.

India doesn’t seem to have any choice other than to independently change under world principles on specialized boundaries to exchange, clean/phytosanitary norms, and natural and administrative guidelines and to participate in emergency mode redesigning of the actual framework that is urgent to exchange. 

Except if the modern area moves forward and fulfills world guidelines, there will be cut-off points to what the public authority can do concerning working on the nation’s foundation. The Exchange Help Understanding of the WTO — which India is presently a signatory and the bureau has now supported — would give the directing system inside which the necessary moves can be initiated. 

India necessities to work on a guide on a conflict balance that can bring its labor and products into congruity with the best expectations on specialized hindrances to exchange; sterile/phytosanitary rules; marking, bundling, customs, leeway, and cargo methodology; and the best or next-best ecological and work guidelines. India should exploit the TPP and TTIP delays to assemble its homegrown house and register as a significant exchanging country.

Regulatory authorities for internal trade in India

In India, the Ministry of Commerce and Industry is responsible for the central government department, the Department for Promotion of Industry and Internal Trade (DPIIT). It is responsible for developing and implementing promotional and developmental policies that will help the industrial sector thrive while considering socioeconomic goals and national priorities. DPIIT is in charge of the overall industrial strategy. 

In contrast, particular administrative ministries are responsible for the production, distribution, development, and planning elements of the specific sectors assigned to them. Additionally, it is accountable for enabling and boosting FDI (foreign direct investment) flows into the nation.

The Department for Promotion of Industry and Internal Trade is called DPIIT. DPIIT is governed by the central government because it is a division of the Indian Ministry of Commerce and Industry. The department is responsible for developing and carrying out initiatives for development and promotion to support the expansion of the industrial sector. Their policies or viewpoints are consistent with socioeconomic objectives.

Specific ministries are set up to oversee and manage the planning, production, distribution, and development of particular industries. However, DPIIT is generally in charge of managing industrial policy. 

The Department was first founded in 1995, and in 2000, it underwent a reorganization following the merging with the Department of Industrial Development. To encourage FDI and advance industrial cooperation in India, DPIIT collaborates with other critical industrial groups like ASSOCHAM, Confederation of Indian Industry, Federation of Indian Chambers of Commerce and Industry, etc.

Functions of DPIIT

The function of Department for Promotion of Industry and Internal Trade include:

• Industrial Policies

• The division is liable for planning and executing modern arrangements figured out by the public authority of India.
• They devise methodologies per the public improvement goals and execute them to advance the advancement of ventures.
• Disregarding a specific industry’s modern development and execution is doled out to the division — offering counsel on all specialized modern matters.

• Intellectual Property Rights

“Designing policies related to Intellectual Property Rights. Below are some fields related to the policies formulated under Intellectual Property Rights-

• Patterns and Trademarks
• Industrial Designs
• Geographical Indication of Goods
• Promotion of top-notch quality productivity and technical cooperation
• Supervising the regulations formulated under the Administration of Industries Act in 1951

Encouraging industrial development of backward industrial areas and the northeastern region of India. It also includes international cooperation for industrial partnerships.”

• Foreign Direct Investment (FDI)

• Drawing up arrangements for Unfamiliar Direct Venture (FDI) and guaranteeing its advancement and legitimate execution.
• Supporting coordinated efforts or consolidations at the mint cost level and imagining strategy boundaries for unfamiliar tech.
• With the adjustment of its name, DPIIT likewise saw a change or expansion of obligations. In 2018, DPIIT took all web-based business matters under its division.
• All matters connected with the inside exchange government assistance of brokers, new businesses, and their representatives are presently included as one of the obligations of DPIIT in 2019.

Role of Commerce and Industry Association in the Regulation of internal trade

Business and industrial associations are created to further safeguard their shared objectives. There are several similar organizations in the nation, including the Confederation of Indian Industry (CII), the Federation of Indian Chambers of Commerce and Industry, and the Associated Chambers of Commerce and Industry (ASSOCHAM) (FICCI). 

These organizations serve as the nation’s trade, business, and industry watchdogs. These organizations have been helping strengthen domestic commerce, a significant component of global economic activity.

These collaborations include capacity-building programmes, training courses, and so on. These initiatives enable small and medium-sized firms to improve their competitiveness and contribute to their total growth.

These industrial groups also collaborate with the government to ensure market access in overseas markets. They attempted to tackle trade-related obstacles in international commerce so that it might be conducted efficiently and smoothly.

The Ministry and trade groups collaborate to give information to companies, including market research and industry trade. This, in turn, enables organisations to make better decisions regarding their operations and investments.

The Chambers of Commerce and Industry work with the government at various levels to refocus or implement policies that lessen obstacles, promote interstate trade, boost transparency, and do away with many layers of inspection. The chambers also target raising sound foundations and improving and blending the assessment structures. The mediations are principally in the accompanying regions:

• Interstate development of products: The Offices of Business and Industry help in numerous exercises concerning the interstate development of merchandise, which incorporates enlistment of vehicles, surface vehicle arrangements, and development of expressways and streets. For instance, the development of a brilliant quadrilateral hall declared by the State leader of India in one of the Yearly Comprehensive gatherings of the League of Indian Offices of Business and Industry (FICCI) will work with inside exchange.
• Octroi and other neighbourhood demand: Octroi and nearby charges are significant sources of income for the local government. These are gathered on the products and from individuals entering the state or as far as possible. The Offices of Business attempt to guarantee that their burden isn’t at the expense of smooth transportation and neighbourhood exchange.
• Harmonisation of deals charge construction and Worth Added Assessment: The Offices of Business and Industry are responsible for associating with the public authority to orchestrate the deals charge structure in various states. The deals charge is a significant piece of the state income. A sane construction of the deal’s charge and its uniform rates across states is significant for advancing an equilibrium in exchange. According to the new strategy of the public authority, the Worth Added Expense is being collected instead of the business duty to eliminate the flowing impact of the deals charge.
• Promoting agro items and related issues: The relationship between agriculturists and different organizations assumes a significant part in the advertising of agro items. Smoothing out of neighbourhood sponsorships and promoting approaches of associations selling agro items are part of the region where the Offices of Trade and Industry can truly intercede and connect with concerned organizations like cultivating cooperatives.
• Loads and Measures and Counteractions of duplication brands: Regulations connecting with loads and measures and the security of brands are important to safeguard the interests of the customers and dealers. These should be authorized stringently. The Offices of Trade and Industry communicate with the public authority to figure out such regulations and move against those who disregard rules and guidelines.
• Extract obligation: Focal extract is the main wellspring of the public authority income collected across states by the focal government. The extract strategy assumes a significant part in the valuing system. The exchange affiliations must cooperate with the public authority to guarantee the smoothing out of extract obligations.
• Advancing sound framework: A sound foundation like street, port, power, rail lines, and so forth assumes a synergistic part in advancing exchange. The Offices of Trade and Industry have conversations with government organizations for interest in these tasks.
• Work regulation: A straightforward and adaptable work regulation is useful in running enterprises, expanding creation, and producing business. The Offices of Trade and Industry and the public authority continually interface with issues like work regulations, conservation, and so forth with the public authority.

State’s power to regulate trade and commerce

Article 303⁷ limits the authority of the Parliament as stated in Article 302. According to Article 303(1),⁸ the Parliament is not authorized to pass legislation that would maintain the superior position of one State over another State due to admission in trade or commerce into any of the lists in the seventh schedule. Although there is a shortage of commodities in some areas of the country, Clause (2) stipulates that the Parliament may act if it is declared by law that it is necessary to create such laws or regulations. The authority to determine whether or not there is a shortage of products in certain areas of the territory is placed in the hands of the parliament.

“Article 304(a)⁹ further says that the State should impose taxes on any goods transported/imported from other States if similar goods are taxed in the State too. It is done so that there is no discrimination between goods produced within the State and goods imported from other states.” “In the case of State of Madhya Pradesh v. Bhailal Bhai,¹⁰ the State of Madhya Pradesh imposed taxes on imported tobacco which was not even subject to tax in the very own State, i.e., State of Madhya Pradesh. The Court disapproved of the tax statement, stating that it was discriminatory.

Judicial pronouncements on internal trade

The Assam Taxation (on Goods Carried by Road or Inland Waterways) Act, 1950 was up for review in Atiabari Tea Co. Ltd. v. State of Assam,¹¹ and the court had to decide whether or not it was a constitutionally sound piece of legislation. In this case, the appellants produced tea in West Bengal and Assam, and their product was sold in Calcutta marketplaces, from which it was shipped inside and outside India’s borders. After receiving the governor’s approval, the Assam Legislature approved an Act. 

The primary goal and function of the legislature were to impose taxes on products transported across Assam’s inland waterways or by road. The appellant contested the constitutionality of the aforementioned Act before the court.  The five-judge bench, in this case, invalidated the legislation because it violated Part XIII of the Indian Constitution and the Constitution’s origins. The court established the working test for evaluating whether a tax or levy directly and immediately restricts the free flow of trade as follows: “The taxes and levies can and do amount to the limitation on freedom of trade.” 

The Rajasthan Motor Vehicles Taxation Act, 1951 was challenged in Automobile Transport (Rajasthan) Ltd. v State of Rajasthan Ors.¹² on grounds related to those in the Atiabari Tea Co. case. In this instance, the government of Rajasthan imposed a tax on motor vehicles used within the State in any public place or retained for use within the State (a tax of Rs. 60 on motor vehicles and of Rs. 2000 on trucks transporting goods every year). The legality of the aforementioned act was contested. 

The seven-judge bench affirmed the tax’s legality. It ruled that the freedom guaranteed by Article 301 must be consistent with Indian law and not interfere excessively with the authority and autonomy granted to the state. In the current instance, the Supreme Court determined that the tax was not in breach of Article 301 since it was compensatory and did not hinder or obstruct the freedom of trade, commerce, or intercourse, thereby assisting it. As long as they are appropriate and do not restrict anyone’s freedom of trade or commerce, collecting tolls or taxes for the construction, maintenance, or repair of roads, etc., does not put anyone’s freedom in jeopardy. 

Any law that affects tariffs, licencing, price control, or other matters shall, if passed, be subject to the President’s approval and must never violate Part XIII of the Indian Constitution. “A practical criteria for determining whether a tax is compensating or not is to ask if the trade is using particular facilities for the better conduct of its business and paying not much more than what is required for supplying the facilities.” As a result, the freedom guaranteed by Article 301 does not imply complete freedom since taxation is not a restriction as defined by the applicable articles in Part XIII.

The Madhya Pradesh High Court’s ruling was contested in Bhagatram Rajiv Kumar v. Commissioner of Sales Tax, Madhya Pradesh¹³ before the Supreme Court. The legitimacy of the entry tax under section 3(1)(a) of the Madhya Pradesh Sthaniya Kshetra Me Mal Ke Pravesh Par Kar Niyam, 1976, was at issue in the case before the court. The issue was whether section 3(1) applied to entry taxes on items like sugar exempt from sales taxes (a). The court dismissed the appeal because it believed that the sugar tax would be due and would not exceed the income subject to the tax.

In the case of the State of Bihar v. Bihar Chamber of Commerce,¹⁴ entry taxes were levied on commodities being consumed, sold, or used locally, with a maximum rate of 5% allowed by the government. Based on Entry 52 of List II of the seventh schedule, the state had the authority to pass laws. The Supreme Court was asked whether the tax violated Article 301 because it was levied on products entering the local region, making it unclear whether it qualified as a compensation tax. 

According to the court, the same is compensatory. In this instance, the government did not provide specific evidence to demonstrate that the charge was a regulatory and compensating measure. The court determined that the situation was “of no concern” because the Court can note that the State provides various facilities to the trade, including upkeep of roads, waterways, marketplaces, etc.

Innovations in internal trade

In the age of the internet and digital technology, when everything is getting digitised, internal trade is reconstructing itself in a never-before-seen digital form. The global digital revolution has influenced how we conduct domestic trade. The trades are growing increasingly appealing to both consumers and enterprises.

Internal commerce has been moving towards digitalization for some years. Businesses and sellers are increasingly using digital techniques to handle formerly manual activities. Data handling, inventory management, order processing, payments, and customer relationship management are all digital. Many software applications, such as Tally Reporters and inventory management systems, are utilised for the aforementioned tasks. This has streamlined their processes, allowing commerce to develop in other dimensions.

The marketplace has witnessed the implementation of IoT sensors to advance business operations. These sensors ensure the continuous monitoring of commodities and guarantee that no items are depleted from stock. Moreover, these sensors can oversee supply chain insights and ensure inventory safety. 

The advent of IoT technologies has effectively eliminated overstocking and understocking, with a renewed focus on customer satisfaction and their specific requirements. Numerous retailers employ modern technologies such as data extraction, mining, and analytics to analyze user needs based on their acquired information. 

This thorough analysis has proven instrumental in aiding decision-making, particularly identifying the most popular products. Additionally, retailers can anticipate market prices and the best-selling items for the upcoming season, thereby gaining a competitive advantage and enabling them to formulate well-prepared and strategic trading approaches.

E-commerce platforms have grown in popularity since they were first launched nationwide. Many e-commerce sites, including Amazon, Flipkart, and Meesho, have boosted trade since they are simple and dependable. Consumers are more likely to engage with e-commerce platforms for buying since they can buy anything without traveling anywhere.

These platforms have offered consumers an advantage and provided numerous businesses and startups with a dependable means of reaching out to a worldwide audience and selling their products. Many small businesses are turning to online platforms like Amazon, Flipkart, and others to grow their operations and reach a wider audience.

Combining online shopping with secure payment gateways such as Razorpay and simple worldwide access to items has dramatically enhanced the chances for all sorts of businesses to thrive.

Payment methods are no longer confined to cash since new payment gateways such as UPI, credit/debit cards, and even contactless payment methods such as mobile wallets allow you to pay even when you don’t have cash. Consumers are relying less on cash as payments have become more convenient. Digital payments have improved the efficiency and traceability of internal trade operations.

Challenges in Internal Trade

Internal commerce, as we have seen, is an important component of our country’s economic progress. However, traders confront many challenges while conducting internal commerce. These barriers might be geographical, industrial, or regulatory. By examining them, we can identify some typical issues that traders confront.

Monopolies and oligopolies do not promote market competition. They are major players that control firms in specialised areas or industries. Oligopolistic marketplaces include industries such as cement, steel, and aluminium. They control the market because of their size and influence, and they prevent smaller firms from joining. Because there is less competition, businesses may set their item prices.

Despite one’s best efforts, the market needs to be more fair. Some major market companies have access to market knowledge ahead of the competition. This offers them an advantage over competitors in the market. This discrepancy in information can also contribute to others making poor judgements and limiting effective commerce.

There also needs to be more transparency in the market. When you go to the store, you will notice that some items have a whole list of ingredients, but others only display a handful. Furthermore, several chemicals are disguised beneath the label of preservatives. Furthermore, firms’ marketing tactics make it difficult for buyers and sellers to discern fair prices and evaluate product quality.

The market is subject to various restrictions to prevent monopolies and level the playing field for everyone. However, internal trade regulations may be complicated, with many rules and compliances to follow, making them challenging for a businessman to grasp. This inhibits small enterprises from engaging in formal trading. Various state rules can cause confusion and administrative costs for enterprises involved in interstate commerce. The government attempted to address the issue by replacing several state and national levies with a single tax, GST. However, the situation still needs to be solved. 

India is a quasi-federal country. States have sovereignty and may rule themselves, imposing whatever taxes they like. However, because each state has its regulations, it can be difficult for traders to conduct interstate commerce. Interstate obstacles include import limitations like tariffs and administrative barriers, limited infrastructure in some states, and bureaucratic delays.

Obtaining licences and permissions for a specific trade can significantly challenge the business process. Due to red tape and administrative delays, dealers frequently need help to secure licenses and permits on time. This inhibits the transaction procedure. 

The Indian economy was known as the Licence Raj or Permit Raj from the 1950s to the early 1990s due to intense government control and the difficulties of getting licences and permits. However, the government is currently working to reduce delays and make the system more efficient for everyone.

Efficient transportation is an essential part of internal trade. If the items are not delivered on time, the customer and the vendor suffer damages. Poor infrastructure, interstate trade obstacles, heavy traffic, and high transportation costs can all impede the flow of products.

Another significant logistical concern is supply chain interruption. The supply chain can be impacted by various reasons, including lower output due to a shortage of resources, natural catastrophes, recurrent labour strikes, and so on. These factors impact the supply of items on the market, resulting in higher price volatility and instability.

Some firms understock or overstock their products due to bad management or unscrupulous actions. This causes financial losses, price swings, increased carrying costs, problems reacting to variations in demand, and inefficiencies in internal commerce.

The storage of commodities is an integral part of the supply chain. If storage facilities are not well-equipped and up to standard, items may decay, damage, or deteriorate, reducing market availability.

Conclusion

Trade alludes to trading labour and products to acquire benefits. Humanity has participated in exchanging, in some form or another, since the beginning of civilisation. The significance of exchange in current times has expanded as new items are being fostered consistently and are being made accessible for utilization all through the world. 

No individual or nation can profess to be independent in creating every one of the labor and products expected by it. Hence, everyone participates in delivering what is ideal to create and trading the overabundance of produce with others. Based on the geological area of purchasers and vendors, an exchange can be extensively arranged into two classifications:

• inner exchange
• outer exchange. 

The exchange inside a nation is called an “inner exchange.” The exchange between at least two nations, then again, is called an outer exchange. The current part talks exhaustively about the importance and nature of inner exchange. It makes sense of its various sorts and the role of offices of business in advancing inward exchange.

When the Constitution grants commerce freedom, this freedom cannot be unrestricted. As a result, Articles 302 to 305 create limitations and guarantee that commerce is done lawfully throughout all states and the nation. Together, these Articles guarantee that the freedom of business, trade, and sexual relations is provided with constitutional legitimacy. At least there wouldn’t be any arbitrary impediments to trade and commerce based on geographic differences or other factors.

Have you considered how various manufacturers’ products might reach us without markets? We are all aware of the primary store around the street selling products we need daily. But is that sufficient? We like to look at larger markets or stores with a wide selection when we need to purchase things of a specialized type.

Our observation reveals that several kinds of stores offer various commodities or specialized things, and based on our needs, we make purchases from particular stores or marketplaces. We may have seen people selling their wares on the streets in rural regions; these wares might be anything from vegetables to clothing. The scenario here is quite different from what we see in urban areas.

References

• dpiit.gov.in/ 
• 319_Bus_Studies_Eng_Lesson22.pdf (nios.ac.in)
• kebs110.pdf (ncert.nic.in)

Endnotes

1.  Constitution of India, 1949, Art.301, read with Art.302, Art.303, Art.304, Art.305, Art.306, Art.307

2.  Constitution of India, 1949, Art.302

3.  Constitution of India, 1949, Art.305

4.  1957 AIR  699

5.  Constitution of India, 1949, Art.19(1)(g) 

6.  Constitution of India, 1949, Art.19

7.   Constitution of India, 1949, Art.303

8.   Constitution of India, 1949, Art.303(1) 

9.   Constitution of India, 1949, Art.304(a) 

10.  1964 AIR 1006

11.  AIR 1961 SC 232

12.  1962 AIR 1406

13.  AIRONLINE 1994 SC 131

14.  AIR 1996 SC 2344