Part XIII - Trade & Commerce • Article

Article 303 Simplified: Restrictions on the legislative powers of the Union and of the States with regard to trade and commerce

Article 303 prohibits both Parliament and State Legislatures from passing laws that discriminate against one state or show favoritism (preference) to another in trade and commerce. However, there is one exception: Parliament can favor a state if it is experiencing a severe shortage of essential goods.

Official Text

(1) Notwithstanding anything in article 302, neither Parliament nor the Legislature of a State shall have power to make any law giving, or authorising the giving of, any preference to one State over another, or making, or authorising 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 authorising the giving of, any preference or making, or authorising 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.

Simple Meaning

Explain Like Ten

The government cannot make rules that favor one state's shops or goods over another state. They must treat all states' businesses fairly, unless one state is facing a severe shortage of food or water and needs emergency help.

Student Mode

Article 303 enforces non-discrimination in trade legislation. Clause (1) bans both Parliament and State Assemblies from passing laws that give preference to one State or discriminate between States. Clause (2) provides an exception: Parliament (not States) can make preferential laws to resolve a crisis arising from the 'scarcity of goods in any part of the territory of India.'

Example

Parliament cannot pass a tax law that makes imports from Tamil Nadu more expensive than imports from Gujarat to favor Gujarat. However, if Bihar is facing a severe famine, Parliament can pass a special law prioritizing food grain shipments to Bihar over other states.

Key Takeaway

The Union and States cannot show favoritism or discriminate between states in trade laws, except when Parliament acts to resolve a severe shortage of goods.

FAQs

Can a State Government pass a law to favor its own local traders over traders from other states?

No. Article 303(1) prevents both Parliament and State Legislatures from making laws that discriminate between states.

In what scenario can Parliament show preference to a specific state in trade?

Only when dealing with a situation of severe scarcity of goods in that region, as permitted by Article 303(2).

Quiz

Under Article 303, legislatures are generally prohibited from:

Answer: Discriminating or showing preference between States in trade

Who can waive the non-discrimination rule in trade to resolve a severe scarcity of goods?

Answer: Parliament by law