In Brief
A managing director of a firm dealing in PPE products challenged the RBI's Clause 2(iii) of the 2020 Merchanting Trade Transactions Guidelines, which prohibits MTTs in goods not permitted under India's Foreign Trade Policy. The appellant argued the clause violated his fundamental rights to equality, business, and livelihood. The Supreme Court upheld the ban using a four-pronged proportionality test: the measure serves a legitimate public health aim; it is suitable because MTTs involve India's foreign reserves; it is necessary to prevent PPE hoarding; and its impact is balanced given the RBI's expert regulatory role. The Court emphasized judicial deference to the RBI as a specialized regulatory body and rejected the argument that lesser restrictive alternatives existed, holding the blanket alignment with FTP restrictions necessary to ensure policy consistency during the COVID-19 pandemic.
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