Article 302

Article 302 of the Constitution of India confers upon Parliament the authority to impose restrictions on trade, commerce, and intercourse between States or within any part of the territory of India. The purpose of such restrictions must always be directed towards the public interest. This provision forms a crucial part of Part XIII of the Constitution, which deals with the framework of trade and commerce within the country, balancing the ideals of economic freedom and regulatory control.

Background and Constitutional Objective

The framers of the Constitution, while guaranteeing freedom of trade under Article 301, recognised that absolute freedom could potentially conflict with public welfare, economic planning, or national security. Hence, Article 302 was incorporated to empower Parliament to introduce reasonable restrictions on this freedom whenever necessary for the common good.
The objective was to ensure that India’s internal trade and commerce could be regulated uniformly at the national level, thereby avoiding economic disintegration or regional disparities. This central authority enables Parliament to intervene in cases where unrestricted trade might harm public interest or disrupt the economic balance among States.

Scope and Authority under Article 302

The provision reads:“Parliament may by law impose such restrictions on the freedom of trade, commerce or intercourse between one State and another or within any part of the territory of India as may be required in the public interest.”
From this, two essential features emerge:

1. Parliamentary Competence: Only Parliament, not State Legislatures, can enact laws imposing restrictions under this Article.
2. Public Interest Clause: Any restriction must be justified as necessary for promoting or safeguarding the public interest.

The restrictions may apply:

• Between States, where inter-State trade or commerce is concerned.
• Within a State, if intra-State trade impacts national economic stability or uniformity.

Thus, Article 302 provides Parliament with a nationwide jurisdiction over commercial matters that may affect India’s economic unity or public welfare.

Understanding the Concept of Public Interest

The Constitution does not specifically define “public interest”, leaving it open to interpretation by the legislature and judiciary. It is generally understood to include measures intended to:

• Promote equitable economic development.
• Prevent monopolistic practices and unfair trade.
• Ensure adequate supply and fair distribution of essential goods.
• Maintain national security or public order.
• Safeguard the health, welfare, or financial stability of the population.

However, such restrictions must not be arbitrary and must be grounded in rational legislative purpose, as laws inconsistent with this standard can be struck down by the judiciary.

Relationship with Other Provisions of Part XIII

Article 302 functions in coordination with the broader constitutional framework of trade and commerce:

• Article 301 ensures freedom of trade, commerce, and intercourse throughout India.
• Article 303 prohibits discrimination between States in matters of trade and commerce.
• Article 304 permits State Legislatures to impose reasonable restrictions, provided such laws do not discriminate against goods from other States and receive Presidential assent.

Together, these provisions maintain a balance between economic liberty and legislative regulation, ensuring that while trade remains free, it is not detrimental to national interests.

Judicial Interpretation

The Supreme Court of India has clarified the contours of Article 302 through a series of landmark judgments that have shaped its application.

• State of Bihar v. Bihar Chamber of Commerce (1956): The Court held that restrictions under Article 302 must be reasonable, non-arbitrary, and demonstrably in the public interest.
• K. K. Verma v. Union of India (1954): The judgment emphasised the need to balance the constitutional freedom of trade under Article 301 with the necessity of restrictions imposed for economic or social welfare.
• Atiabari Tea Co. Ltd. v. State of Assam (1961): Though primarily concerning Article 301, this case also underscored that any restriction must derive from legislative authority under Articles 302–304.

Through these interpretations, the judiciary has reinforced the principle that the power to restrict trade is not absolute and must be exercised within constitutional limits.

Conditions and Limitations for Imposing Restrictions

Restrictions under Article 302 must satisfy several constitutional conditions:

• They must be reasonable, justified by circumstances, and proportionate to the objective sought.
• The restrictions must serve public interest, not political or sectional interests.
• They must not infringe upon fundamental rights, particularly Article 19(1)(g), which guarantees the right to practise any profession or carry on any trade or business.
• They should not lead to discrimination between States, which is expressly prohibited under Article 303.

These safeguards ensure that the power granted to Parliament remains subject to judicial review and constitutional accountability.

Legislative Examples and Applications

Several central laws enacted under or consistent with the principles of Article 302 illustrate how Parliament has exercised this power to regulate trade and commerce:

• The Goods and Services Tax (GST) Act, 2017: Harmonises indirect taxes across the nation, thereby regulating inter-State trade in a uniform manner.
• The Essential Commodities Act, 1955: Controls the production, supply, and distribution of goods deemed essential to ensure availability and fair pricing.
• The Competition Act, 2002: Prevents anti-competitive practices and monopolies that could hinder free and fair trade.

These laws exemplify how Parliament utilises Article 302 to advance economic stability, prevent exploitation, and promote equitable growth.

Impact on the Federal Structure

Article 302 plays a key role in maintaining the balance between State autonomy and national economic integration. While trade and commerce largely fall under the concurrent domain, Parliament’s overriding power under this Article ensures uniformity in legislation affecting inter-State trade.
This centralised authority prevents individual States from enacting conflicting trade laws that could fragment the national economy. At the same time, it preserves the principle of cooperative federalism by ensuring that restrictions serve collective national interests rather than unilateral central control.

Criticism and Challenges

Despite its constitutional purpose, Article 302 has been subject to certain criticisms:

• The broad scope of “public interest” grants Parliament wide discretion, which may lead to potential misuse or overregulation.
• It can sometimes curtail State powers, reducing flexibility in addressing local economic issues.
• Determining what constitutes a “reasonable restriction” remains subjective, often requiring judicial scrutiny.

Nonetheless, the checks provided by Articles 303 and 304, along with judicial oversight, act as effective safeguards against arbitrary legislative action.