Yes, there have been instances in India where protective regulations have limited trade between different states within the country. One prominent example is the system of interstate check posts that functioned as regulatory barriers between states, causing delays and increasing costs for traders. These check posts had been set up to enforce state-specific taxes, permits, and other regulations on goods and vehicles moving across state borders.
However, in recent years, the Indian government has been working towards the removal of such barriers and streamlining interstate trade through initiatives like the Goods and Services Tax (GST) and the implementation of a unified market system. The GST has replaced multiple state and central taxes with a single tax structure and has significantly reduced the bureaucratic hurdles faced by businesses involved in interstate trade.
The aim of these reforms is to create a more open and seamless trade environment, facilitating the movement of goods and services across state borders and promoting economic integration within India. While challenges remain in fully eliminating all trade barriers and harmonizing regulations across states, the government's focus on enhancing ease of doing business is gradually leading to increased trade between different states within India.