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Internal Trade – Class 11 Business Studies Chapter 10 Notes & NCERT PDF

Class 11Business StudiesChapter 10NCERT book: Business Studies - Class 11

Notes and a simple summary of Chapter 10 of the NCERT Class 11 Business Studies book, with the official chapter PDF, flashcards, an MCQ quiz and an AI tutor for your doubts.

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Chapter 10: Internal Trade

Introduction

How do products from different manufacturers reach us? The chapter begins with our neighbourhood provision store, specialised shops, street sellers in rural areas and branded outlets in cities — and asks how middlemen help goods travel from factories to consumers.

Trade refers to buying and selling of goods and services with the objective of earning profit.

On the basis of the location of buyers and sellers, trade is internal trade (within a country) or external trade (between countries).

Key Concepts

10.2 Internal Trade

  • Buying and selling of goods and services within the boundaries of a nation.
  • No customs or import duty is levied, as goods are domestic production for domestic consumption.
  • Payment is made in the country's legal tender or other acceptable currency.
  • Two categories: wholesale trade (large quantities, for resale or intermediate use) and retail trade (small quantities, to ultimate consumers).
  • Aim: equitable distribution of goods within the nation, speedily and at reasonable cost.
  • 10.3 Wholesale Trade

    Wholesalers sell to retailers, merchants and industrial/institutional users — not significantly to ultimate consumers. They take title of goods, bear risk, buy in bulk and sell in small lots, grade, pack, store, transport, promote and extend credit. They create time and place utility.

    10.3.1 Services to manufacturers

  • Facilitating large-scale production (pooling small orders → economies of scale)
  • Bearing risk (fall in prices, theft, pilferage, spoilage, fire)
  • Financial assistance (cash payment; advances for bulk orders)
  • Expert advice (customer tastes, market conditions, competition)
  • Help in marketing function
  • Facilitating production continuity
  • Storage (time utility)
  • 10.3.2 Services to retailers

  • Availability of goods
  • Marketing support (advertising, sales promotion)
  • Grant of credit
  • Specialised knowledge (new products, decor, shelf space)
  • Risk sharing (retailers buy small quantities)
  • 10.4 Retail Trade

    A retailer sells goods and services directly to ultimate consumers; retailing is the final stage of distribution. However or wherever the sale is made, if it is to the consumer, it is retailing.

    10.4.1 Services to manufacturers and wholesalers: help in distribution (place utility), personal selling, enabling large-scale operations, collecting market information, help in promotion.

    10.4.2 Services to consumers: regular availability, new product information, convenience in buying, wide selection, after-sales services, credit facilities.

    Terms of Trade (box): Cash on Delivery (COD); Free on Board / Free on Rail (FoB/FOR — seller bears expenses up to delivery to the carrier); Cost, Insurance and Freight (price includes insurance and freight up to destination port); Errors and Omissions Excepted (E&OE).

    10.5 Types of Retail Trade

    Bases: size, ownership, merchandise handled, and fixed place of business.

    10.5.1 Itinerant retailers (no fixed place; small resources; daily-use goods; doorstep service):

  • Peddlers and hawkers — carry goods on bicycle, handcart or head; convenient but quality/price not always reliable.
  • Market traders — open shops at different places on fixed days (e.g. every Saturday); low-priced goods for lower-income groups.
  • Street traders (pavement vendors) — near railway stations and bus stands; do not change place as often as market traders.
  • Cheap jacks — independent temporary shops that shift locality depending on potential; also offer repair services.
  • 10.5.2 Fixed shop retailers (greater resources, credibility and services):

  • Small: general stores, speciality shops, street stall holders, second-hand goods shops (the summary also mentions single line stores).
  • Large:
  • - Departmental stores — "a pin to an elephant" under one roof; central location; joint stock company; combine retailing with warehousing; centralised purchasing, decentralised sales. Indian examples: Akberally (Mumbai), Spencers (Chennai).

    - Advantages: attract large number of customers, convenience, attractive services, economy of large-scale operations, promotion of sales.

    - Limitations: lack of personal attention, high operating cost, high possibility of loss, inconvenient location.

    - Chain stores / multiple shops — similar-looking shops in many localities; standardised branded goods; central procurement; branch managers; fixed prices, cash sales; examples: Bata, DCM, Nirula's, Raymonds.

    - Advantages: economies of scale, elimination of middlemen, no bad debts, transfer of goods, diffusion of risk, low cost, flexibility.

    - Limitations: limited selection, lack of initiative, lack of personal touch, difficult to change demand.

    - Departmental store vs multiple shops — location, range of products, services offered, pricing, class of customers, credit facilities, flexibility.

    - Mail order houses — sell through mail; payment in advance, by VPP (Value Payable Post) or through a bank; suitable only for goods that can be graded, cheaply transported, described through pictures, etc.

    - Advantages: limited capital, elimination of middlemen, no bad debts, wide reach, convenience.

    - Limitations: no personal contact, high promotion cost, no after-sales service, no credit, delayed delivery, possibility of abuse, dependence on postal services.

    - Consumer cooperative store — owned, managed and controlled by consumers; at least 10 people register under the Cooperative Societies Act; one man one vote; limited liability; accounts audited by the Registrar.

    - Advantages: ease in formation, limited liability, democratic management, lower prices, cash sales, convenient location.

    - Limitations: lack of initiative, shortage of funds, lack of patronage, lack of business training.

    - Super markets — self-service, low price, wide variety, cash only, central location.

    - Advantages: one roof low cost, central location, wide selection, no bad debts, large-scale benefits.

    - Limitations: no credit, no personal attention, mishandling of goods, high overheads, huge capital requirement.

    - Vending machines — coin-operated sale of beverages, tickets, milk, chocolates, newspapers; ATMs are an example in banking. Useful for pre-packed, low-priced, high-turnover goods of uniform size; high installation and maintenance cost.

    Goods and Services Tax (GST)

  • Implemented from 1 July 2017 under the credo "One Nation, One Tax".
  • A destination-based single tax on supply of goods and services; replaced 17 indirect taxes (8 Central + 9 State) and 23 cesses.
  • CGST + SGST on intra-state supply; IGST on inter-state supply and imports.
  • Input tax credit removes the cascading effect (tax on tax).
  • Four slabs: 5%, 12%, 18% and 28%; exports and SEZ supplies are zero-rated.
  • GST Council: chaired by the Union Finance Minister; quorum 50%; States have two-thirds weightage and Centre one-third; decisions by 75% majority.
  • A National Anti-profiteering Authority is to ensure cost reductions are passed on to consumers.
  • 10.6 Role of Commerce and Industry Associations

    Examples: ASSOCHAM, CII, FICCI. They interact with government on:

  • Inter-state movement of goods (vehicle registration, highways — e.g. Golden Quadrilateral announced at a FICCI AGM)
  • Octroi and local levies
  • Harmonisation of sales tax and VAT
  • Marketing of agro products
  • Weights and measures and prevention of duplicate brands
  • Excise duty
  • Promoting sound infrastructure
  • Labour legislation
  • Key-Facts Sheet

  • Internal trade: no customs duty.
  • Wholesaler services to manufacturers: 7; to retailers: 5.
  • Retailer services to manufacturers/wholesalers: 5; to consumers: 6.
  • Cooperative store: minimum 10 members; one man one vote.
  • GST: 1 July 2017; slabs 5/12/18/28; 17 taxes + 23 cesses subsumed.
  • Exam Focus

  • Short: meaning of internal trade; characteristics of fixed shop retailers; how wholesalers help manufacturers get economies of scale; street traders vs street stall holders.
  • Long: why itinerant traders survive; features of departmental stores and difference from multiple shops; why cooperative stores are less expensive; usefulness of mail order houses and suitable products.
  • Key Terms

  • Internal trade (आंतरिक व्यापार)
  • Wholesaler (थोक व्यापारी)
  • Retailer (फुटकर / खुदरा व्यापारी)
  • Itinerant retailer (फेरीवाला / भ्रमणशील फुटकर व्यापारी)
  • Hawker (फेरीवाला)
  • Departmental store (विभागीय भंडार)
  • Chain store / multiple shop (बहुसंख्यक दुकानें)
  • Mail order house (डाक आदेश गृह)
  • Consumer cooperative store (उपभोक्ता सहकारी भंडार)
  • Super market (सुपर बाज़ार)
  • Vending machine (स्वचालित विक्रय मशीन)
  • Place utility / time utility (स्थान उपयोगिता / समय उपयोगिता)
  • Input tax credit (इनपुट कर क्रेडिट)
  • Common Mistakes

  • Saying wholesalers sell mainly to consumers — they sell to retailers and industrial users.
  • Confusing market traders (fixed days, changing places) with street traders (near stations, rarely change place).
  • Mixing up departmental stores (central location, credit, varied pricing) with chain stores (many locations, cash, fixed prices).
  • Writing that GST is origin-based — it is destination-based.
  • Forgetting that IGST (not CGST/SGST) applies to inter-state supply.
  • 💡 Key Learning Points

    • ✓Internal trade is buying and selling within a nation, with no customs duty, and is divided into wholesale and retail trade.
    • ✓Wholesalers give seven services to manufacturers and five to retailers, creating time and place utility.
    • ✓Retailers serve manufacturers/wholesalers (distribution, personal selling, market information, promotion) and consumers (availability, convenience, selection, after-sales service, credit).
    • ✓Retailers are itinerant (hawkers, market traders, street traders, cheap jacks) or fixed-shop (small shops and large stores such as departmental stores, chain stores, mail order houses, cooperative stores, super markets).
    • ✓GST (from 1 July 2017) is a destination-based tax with CGST/SGST for intra-state and IGST for inter-state supply, and slabs of 5, 12, 18 and 28 per cent.

    👨‍🏫 Teaching Tips

    • →Ask students to trace how a bar of soap reaches their home and name every middleman involved.
    • →Take a walk (or virtual survey) of the local market and let students classify each shop into the types studied (the book's project).
    • →Draw a comparison chart on the board of departmental stores vs multiple shops using the seven bases in the book.
    • →Role-play a mail order sale using VPP to show why it suits only certain goods.
    • →Use the GST classification activity from the exercises: students find the GST slab for everyday items from newspapers and websites.
    • →Invite students to discuss why hawkers survive despite malls — link to convenience and doorstep service.
    • →Use a flow diagram to show how input tax credit removes the cascading effect.

    📋 Assessment Questions

    1. Can the student explain services of wholesalers to manufacturers and retailers?
    2. Can the student classify retailers into itinerant and fixed-shop types with examples?
    3. Can the student distinguish between departmental stores and multiple shops on at least five bases?
    4. Can the student state the advantages and limitations of cooperative stores and super markets?
    5. Can the student describe the key features of GST and the role of chambers of commerce?

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