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Articles 301 to 307 in Part XIII of the Indian Constitution govern inter-state trade, commerce, and intercourse within the territory of India. Article 301 aims to foster a unified economic environment by declaring that trade, commerce, and intercourse throughout India shall be free, thereby removing barriers between states and encouraging the free flow of goods and services. This freedom extends to both inter-state and intra-state trade. However, this freedom is not absolute and is subject to certain restrictions outlined in Articles 302 to 305. Parliament can impose restrictions in the public interest, but it cannot discriminate between states unless there is a scarcity of goods. State legislatures can also impose reasonable restrictions in the public interest, provided the bill receives the President's sanction, and they too cannot discriminate between states. States can levy taxes on imported goods that are similar to those manufactured domestically, preventing discriminatory taxation. Additionally, the freedom is subject to nationalisation laws, allowing the Parliament or state legislatures to create government monopolies in trade or services. Parliament is empowered to appoint an authority to implement these provisions, though no such authority has been appointed so far.
The Constitution makes four provisions for inter-state comity: 1. Adjudication of inter-state water disputes (Article 262) 2. Coordination through inter-state councils (Article 263) 3. Mutual recognition of public acts, records and judicial proceedings (Article 261) 4. Freedom of inter-state trade, commerce and intercourse (Articles 301–307, Part XIII) In addition, Parliament has established **Zonal Councils** (statutory bodies) to promote inter-state cooperation.
The Constitution contains a "Full Faith and Credit" clause to enable mutual recognition of public acts, records, and judicial proceedings across state boundaries. Since the jurisdiction of each state is confined to its own territory, the Constitution ensures that acts and records of one state are recognized throughout India, removing difficulties that would otherwise arise from territorial limitations. The clause operates on three principles: (i) Full faith and credit is given throughout India to public acts, records, and judicial proceedings of the Centre and every state; (ii) Parliament has power to determine the manner and conditions under which such acts, records, and proceedings are proved and their effects determined; and (iii) Final judgements and orders of civil courts in any part of India may be executed anywhere within India without requiring a fresh suit. The term "public acts" encompasses both legislative and executive acts of government. "Public record" includes any official book, register, or record made by a public servant in discharge of official duties. Importantly, the rule applies only to civil judgements and not to criminal judgements—states are not required to enforce the penal laws of another state.
Inter-state water disputes arise from disagreements between two or more states regarding the use, distribution, and control of waters of inter-state rivers and river valleys. The Constitution provides a special framework for their adjudication outside the ordinary court system. Article 262 empowers Parliament to establish mechanisms for settling these disputes and to exclude the Supreme Court and other courts from exercising jurisdiction over referred cases. Parliament has enacted two principal laws under this provision: the River Boards Act (1956) and the Inter-State Water Disputes Act (1956). River boards advise state governments on the regulation and development of inter-state rivers, while ad hoc tribunals are established to adjudicate specific disputes. The tribunal's decision is final and binding on all parties. As of 2019, nine inter-state water dispute tribunals have been constituted to address disputes involving major river systems including the Krishna, Godavari, Narmada, Ravi, Beas, Cauvery, Vansadhara, Mahadayi, and Mahanadi.