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Role of Commerce and Industry Associations in Promotion of Internal Trade

Last Updated : 27 Apr, 2023
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Business and industrial associations are formed to promote and protect their common interests and goals. Many such organisations exist in the country, like the Associated Chamber of Commerce and Industry (ASSOCHAM), the Confederation of Indian Industry (CII), and the Federation of Indian Chambers of Commerce and Industry (FICCI). These organisations or chambers function as the national guardians of trade, commerce, and industry.

These organisations or associations have been catalysts in promoting internal trade as an important component of overall economic activity. The Chambers of Commerce and Industry work with the government at various levels to reorient or implement policies that reduce barriers, increase the interstate movement of goods, introduce transparency, and eliminate multiple layers of inspection and bureaucratic hurdles. Furthermore, the chambers intend to build sound infrastructure as well as simplify and harmonise tax structures.

Different areas of intervention by Commerce and Industry Associations

1. Interstate Movement of goods

The Chambers of Commerce and Industry assist in many activities involving interstate movements of goods, such as vehicle registration, surface transportation policies, and highway and road construction. For example, The Prime Minister of India’s announcement of the construction of a golden quadrilateral corridor at one of the Annual General Meetings of the Federation of Indian Chambers of Commerce and Industry (FICCI) will facilitate internal trade.

2. Octroi and other local levies

Octroi and local taxes are important revenue sources for local governments. These are collected on goods as well as from people entering the state or municipal boundaries. The Chambers of Commerce make every effort to ensure that their imposition does not jeopardise smooth transportation and local trade.

3. Harmonisation of the sales tax structure and VAT

The Chambers of Commerce and Industry play an important role with the government to standardise the sales tax structure across states. The sales tax contributes significantly to state revenue. A rational sales tax structure and uniform rates across states are essential for promoting trade balance. The government’s new policy is to levy the Value Added Tax in place of the sales tax in order to eliminate the cascading effect of the sales tax.

4. Agro-product marketing and related issues

Agriculturist associations and other federations play an important role in the marketing of agricultural products. Streamlining local subsidies and marketing policies of organisations selling agricultural products are two areas where Chambers of Commerce and Industry can truly intervene and interact with concerned agencies, such as farming cooperatives. 

5. Weights and Measures, and prevention of brand duplication

Weights and measures and brand protection laws are required to protect the interests of both consumers and traders. These must be strictly enforced. The Chambers of Commerce and Industry work with the government to develop such laws and take action against those who violate rules and regulations.

6. Excise duty

Central excise is the primary source of government revenue levied across states by the central government. The excise policy is important to the pricing mechanism. Trade associations must work with the government to streamline excise duties.

7. Promoting good infrastructure

Good infrastructure, such as roads, ports, electricity, and railways, plays a catalytic role in promoting trade. The Chambers of Commerce and Industry carry on discussions with government agencies about investments in these projects.

8. Labour legislation

Simple and flexible labour legislation is beneficial in running industries, increasing output, and generating employment. The Chambers of Commerce and Industry and the government are constantly interacting with the government on issues, such as labour laws, retrenchment, and so on.

Commerce and industry associations play an important role in the promotion of internal trade by representing the interests of businesses and working to create a favourable environment for commerce.

Here are some of the ways in which Commerce and Industry Associations promote internal trade:

  1. Advocacy: Commerce and industry associations advocate for policies and regulations that promote a favourable environment for businesses to operate in. They work with government officials and policymakers to develop laws and regulations that are beneficial to businesses and encourage growth in the economy.
  2. Networking: Commerce and industry associations provide a platform for businesses to network with each other and share information and ideas. This can lead to new business opportunities and collaborations.
  3. Information dissemination: Commerce and industry associations provide information and resources to businesses, such as market research and industry trends. This can help businesses make informed decisions about their operations and investments.
  4. Training and development: Commerce and industry associations offer training and development programs for businesses and their employees. These programs can improve the skills and knowledge of the workforce and help businesses to stay competitive.
  5. Trade shows and events: Commerce and industry associations organize trade shows and events that bring together businesses and consumers. These events can showcase new products and services and create opportunities for businesses to connect with potential customers.

Overall, commerce and industry associations play a critical role in promoting internal trade by advocating for policies that are beneficial to businesses, providing resources and training to the workforce, and creating opportunities for businesses to network and connect with each other and with consumers.

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