Explain the interrelationship between trade, commerce and industry.

Industry, commerce and trade are closely interrelated and interdependent. They cannot function effectively in isolation. The interrelationship can be explained as follows:

1. Industry Provides the Base for Commerce:

• Unless goods are produced by industry, there can be no distribution by commerce.
• Commerce depends on industry for the supply of goods to be distributed.
• No commercial activity is possible in the absence of industry.

2. Industry Depends on Commerce:

• Industry cannot function without commerce. Industrial production is meaningless without distribution of goods through commerce.
• Commerce provides essential support to industry by distributing goods among consumers and supplying raw materials to producers.
• If industry is the backbone of commerce, commerce serves as the lifeline of industry.

3. Industry and Commerce Provide the Base for Trade:

• Trade depends upon industry for the goods to be bought and sold.
• Trade also depends on commerce — the auxiliaries to trade (transport, banking, insurance, advertising) make trade possible.
• At the same time, trade provides support to industry by maintaining a link between producers and consumers.

4. Commerce Depends on Trade:

• Commerce includes trade as its main component. Without trade (buying and selling), commerce cannot exist.
• Auxiliary services like transport, warehousing and banking exist primarily to support trade activities.

Example: Consider the production and sale of cars —

• An automobile factory (industry) manufactures cars.
• Cars are transported to showrooms (transport, part of commerce).
• They are stored at dealerships until sold (warehousing).
• They are advertised through media (advertising).
• They are sold to customers (trade), with banks providing loans (banking).
• They are insured against accidents and theft (insurance).

Thus, there is a high degree of inter-dependence between industry, commerce and trade. The relationship can be shown as: