Advent of Europeans in India

  • The 14th century onwards, significant changes occurred in Europe. Italy, the birth place of renaissance, had been prospering since the 11th to 12th century by supplying various artisanal goods to Europe from the East. Other European countries soon became eager to break the Italian monopoly over trade and began their search for new routes to India and the Spice Islands in Indonesia, then known as East Indies.
  • Asia and Africa were the ideal grounds for colonial powers to make their fortune. The Portuguese were the first ones to arrive, followed by the Dutch, the English, the Danes and the French.
  • Different trading companies were formed in Europe to carry out external trade. Industrial Revolution and capital formation in Europe led to the search for new markets and further strengthened the colonial pattern. Soon there was clash of interests and struggles started among these colonial powers. From this struggle, the English East India Company emerged victorious and established its monopoly over Indian trade.

Need for New Trading Routes

  • In popular western imagination, India was a fabled land of riches and of highly profitable trade. Many foreign rulers had invaded India for its fabulous wealth. Besides the plundering raids, a highly profitable trade between India and European countries dated back to the ancient times.
  • Since the days of the Roman Empire, Indian cloths, spices and drugs were in great demand in Europe. Initially, this trade between East and West was carried on along several routes but in beginning of the late fourteenth century a number of changes in the geopolitical conditions in West Asia and Europe forced the traders to search for new routes. Now let’s look at the changes or causes which brought the search for new trading routes.

Geographical Causes

  • Unstable Land Route: In the Middle ages (5th century CE to 15th century CE) the land route from the Middle East to Europe was preferred by the traders but with the rise of Arabs in the tenth century and their plundering raids along the route, the land route became unstable and dangerous for trade.
  • Safe Passage through Water: While the land with a number of passes fell within the territory of one or the other kingdom, the oceans and seas had not yet been brought under control and thus offered a safe passage.

Technological Advancement

  • Navigation: The period witnessed a number of technological advancements. The advancements in navigation (astrolabe for fixing the height of heavenly bodies for navigation and mariner’s compass) by the Arabs and ship building by the Europeans at a time when land route had become unstable made waterways a natural choice.
  • Use of Gunpowder: By the end of thirteenth century gunpowder, which was invented in China in the ninth century, spread to Eurasia. As sea voyages gained popularity in the fifteenth century, canons and gunpowder began to be used on ships to protect them from attacks.
    • The use of gunpowder made ships safe from attacks as it added more firepower, was easier to carry, was more stable and helped in making of most destructive weapons of the time.

Political Causes

  • Monopolies: The merchants of Venice and Genoa monopolized the trade between Asia and Europe. The western side, i.e. the Mediterranean area, was under the merchants of Venice and Genoa and eastern side, i.e. the Asian side, was under the Arab merchants. These merchants did not allow new merchants from other West European countries to trade through the old routes under their control.
  • Ottoman Empire: The Ottoman Turks captured Constantinople in 1453 and established the Ottoman Empire in the area stretching from Syria to Egypt. This brought the old routes under the Turkish control. Moreover, expansion of Turkish power in eastern Europe and growth of Turkish navy alarmed the Europeans.
  • Rise of New Nation States: The later part of the 15th century saw rise of centralised states with strong kings, like Spain and Portugal, who were keen to partake in trade with Asia. The Kings encouraged, often supported and sponsored geographical explorations and navigators.
Map of Ottoman Empire
Map of Ottoman Empire

Economic Causes

  • Economic Growth in Europe: The European economy was expanding rapidly due to expansion of land under cultivation, introduction of improved plough and scientific rotation of crops. As a result of this growth, there was rise of towns and an increase in trade.
  • Demand for Spices and Pepper: The economic revival in Europe increased demand for spices and pepper which were needed to make meat palatable.
  • Tolls and Taxes: The tolls and taxes were constantly increased on both the European as well as the Asian side of the trade, which reduced the profit margins.
  • Profit Maximization: Although the trade between Asia and Europe was carried on along several routes, yet it was highly profitable. However, raids along the land route and monopolies by various groups had been reducing the profits. Thus, there was attempt to maximize profit through new trade routes.

Psychological Causes

  • Renaissance: The cultural revival or Renaissance in Europe during the fourteenth century infused a spirit of daring and adventure among the people of Western Europe.
  • Glory: Above all the desire to achieve glory acted as inspiring factor for navigators and explorers.
  • Mercantilism: A set of economic doctrines and policies involving state intervention to promote national prosperity and strength known as mercantilism had gripped the European states in its clutches.

Religious Causes

  • Proselytizing Zeal: The explorers were motivated by zeal to spread Christianity into the new lands.

The Portuguese

The Portuguese were the first ones to arrive on the Indian scene. The reasons for arrival of the Portuguese in India were both economic as well as religious. They had come to seek spices especially pepper as well as to destroy the monopoly of Arabs and Italians over trade with the East. They also wished to spread Christianity in Asia and Africa and restrict the increasing influence of Arabs and Turks. Prior to the Portuguese, trade in the Indian Ocean was a monopoly of Arab merchants. But within 15 years of their arrival, the Portuguese completely destroyed Arab trade and established their control over Eastern trade which lasted nearly a century.

Early Efforts

  • Prince Henry the Navigator
    • Prince Henry of Portugal, nicknamed the ‘Navigator’ had become obsessed with the idea of finding a sea route to India. He was keen to circumvent the Muslim-dominated route ofthe Red sea.
    • However, Prince Henry died before his dream could be fulfilled. He is remembered as a great patron and sponsor of voyages than as a sailor.
  • Bartholomew Diaz (1487)
    • In 1487 Bartholomew Diaz reached the southernmost tip of Africa (which he named Cape of Storms) and became the first known European to reach the Indian Ocean from the Atlantic.
    • The Portuguese later renamed the cape as ‘Cape of Good Hope’ as it represented the opening of a new route to the East.
    • Diaz later used his experience in the construction of a ship which was later used by Vasco da Gama.
  • Vasco da Gama (First Portuguese India Armada, 1498)
    • Piloted by a Gujarati named Abdul Majid, Vasco da Gama sailed from the Cape of Good Hope and continued to India, reaching Calicut (Kozhikode) in 1498. He thus discovered a new sea route from Europe to India and became the first European to reach India by sea. This opened a new chapter in the history of India’s trade relations with Europe.
    • Vasco da Gama led two Portuguese India Armadas (or fleet of warships), the first and the fourth, sent under the patronage of King Manuel I of Portugal and was well received by the Zamorin (ruler) of Calicut, Manna Vikrama.
    • Vasco da Gama returned with a cargo which sold for 60 times the cost of his voyage.
  • Pedro Alvarez Cabral (Second Portuguese India Armada, 1500)
    • In March 1500, Pedro Alvarez Cabral led the Second India Armada (also the First Brazil Armada as it marked the arrival of Europeans to Brazil on the way) with the aim of making a treaty with the Zamorin of Calicut and setting up a Portuguese factory.
    • However, Cabral ran into a conflict with the local Arab Merchants who then attacked the Portuguese factory at Calicut, killing more than 50 Portuguese. Outraged, Cabral captured ten Arab merchants’ ships anchored in the harbour, massacred nearly 600 Arabs on board and confiscated the cargo before putting the ships on fire.
  • Vasco da Gama (Fourth Portuguese India Armada, 1502)
    • In 1502, Vasco da Gama revisited India and set up the following:
      • In 1503, the 1st Portuguese factory was set up at Cochin (Kochi).
      • In 1505, the 2nd factory was set up at Cannanore (or Kannur).
  • Soon, Calicut, Cochin, Cannanore and Quilon (Kollam) became important trading centres of the Portuguese. The Portuguese trading points or factories on land were called Feitorias—these were unfortified trading outposts which also served as bases for naval fleet called armadas. The early spice trade comprised of mainly pepper and cinnamon.
  • Formation of Portuguese State of India (Estado da India, 1503-04) The Portuguese State of India was meant to be a governing body of the various Portuguese fortresses and colonies overseas and it was required to function under a Viceroy. In effect, the formation of this body indicated that the Portuguese would no longer be content with mere spice trade but would set out to establish a Christian Portuguese state in the East and launch a holy war against Islam there.

Portuguese Governors

Francisco De Almeida (1505-09)

  • Almeida was appointed as the first Portuguese Viceroy of India for a term of three years and sent with sufficient armed ships to protect Portuguese interests. He was directed by the government to build such Portuguese fortresses that would aim to establish Portuguese control over trade of the Indian Ocean.
  • He adopted the ‘Blue Water Policy’ aimed at establishing naval supremacy of the Portuguese in the Indian Ocean, rather than over land. He is credited with the construction of Fort Anjediva on Anjediva Island lying at the border of Muslim Bijapur and Hindu Vijayanagar states.
  • In 1508, Portuguese fleet was attacked by joint Muslim naval force (Gujarat Sultanate and Mameluk Egyptian fleet) at Chaul and Dabul, with Almeida’s son losing his life in the battle of Chaul. Almeida, however, defeated the joint force in the Battle of Diu, thus establishing Portuguese supremacy over Indian Ocean.

Alfonzo-De-Albuquerque (1509-15)

  • He was the greatest Portuguese Viceroy in India and is also called as the real founder of Portuguese power in India. He set up his headquarter at Cochin.
  • In 1509, Albuquerque conquered Diu and in 1510 he conquered Goa from the Sultan of Bijapur, Yusuf Adil Shah. With the victory of Goa, regional kingdom of the Portuguese in India was established and Goa became ‘the first bit of Indian territory to be under the Europeans since the time of Alexander the Great’.
  • Under Albuquerque, the Portuguese established their domination over the entire Asian coast from Hormuz in Persian Gulf to Malacca in Malaya and the Spice Islands in Indonesia. They shied away neither from waging wars nor from piracy and plunder for expanding their influence. In Bengal, Hooghly and Balasore became the Portuguese trading centres.
  • Albuquerque thus made the Portuguese strong in India. He was an efficient administrator and integrated the locals into the administration. He wanted to establish permanent Portuguese settlements in India and with this aim in mind he encouraged his countrymen to marry Indian women and propagate Christianity. He also abolished sati in regions under his control.

Nino de Cunha (1529-38)

  • He was the next major Portuguese Governor after Albuquerque. In 1530, he transferred the government head office from Cochin to Goa, thus making Goa the official capital of the Portuguese in India.
  • In this way, the Portuguese succeeded in establishing their foothold in India. One of the main reasons for the success of Portuguese on the sea was the inability of Mughals to develop a strong navy. Southern India was also outside the direct territorial influence of the Mughals, thus allowing the Portuguese to establish control.
Cartaze System

This was a method used by Portuguese to extract money from Indian ships. Under this system, captains of all Indian ships sailing to a destination not reserved by the Portuguese were obliged to buy passes or license from the Viceroy of Goa. In the absence of a pass, their ships could be seized by the Portuguese.

Decline of the Portuguese

Several factors contributed to the decline of the Portuguese. The Viceroys who came after Albuquerque were weak and inefficient. Also in 1661, Portugal was at war with Spain and needed support from England. This led to the marriage of Princess Catherine of Portugal to Charles II of England and as dowry the insular and less inhabited areas of southern Bombay were handed over to the English (the Portuguese managed to retain all the mainland territory north of Bandra up to Thane and Bassein). This marked the beginning of the strong English presence in India.

Reasons for Decline of the Portuguese

  • Political Causes
    • After Albuquerque, the Portuguese administration in India became inefficient because his successors were weak & inefficient.
    • The Portuguese officials were neglected by the home government. Their salaries were low which encouraged them to indulge in corruption and malpractice.
    • Attachment to Spain: In 1580, Portugal got attached to the Spanish crown which linked it to the declining fortunes of Spain.
    • Aristocratic Dominance: The Portuguese society was dominated by aristocrats. The merchants lacked the social influence required to mould the state policy suitable to their interests.
    • Lack of Political Will: The Portuguese political masters were mainly concerned with establishing sea trading posts and not concerned in territorial expansion thus making them vulnerable to attacks on their trading posts.
    • The Portuguese drew a very thin line between trade and piracy, which also aroused the hostility of the natives.
  • Social Causes
    • Religious Conversions: The Portuguese were religious fanatics and resorted to forceful religious conversions in their spheres of influence. This led to a general sense of hostility among the locals against them.
  • Technological Causes
    • Rise of other Naval Powers: Rise of other naval powers like the Dutch and British increased the competition on the naval routes leading to armed conflicts with the Portuguese.
    • Loss of Spain’s Naval Supremacy: In 1588 Spain’s naval supremacy was challenged and busted by the British navy. This was a big jolt to Portuguese empire which had been attached to the Spanish empire.
  • Portuguese discovered Brazil which diverted their imperial interests away from India.

By mid-17th century, the Portuguese finally left India. But three of their settlements, namely Goa, Diu and Daman remained in their hands till 1961. In this way, Portuguese were not only the first to come to India but also the last ones to leave India.

Impact of Portuguese

  • Portuguese control of the Indian Ocean had significant socio-political, religious and economic consequences:
    • The Portuguese began to propagate Christianity in the Malabar and the Konkan coast. Missionaries like St. Francis Xavier, Father Rudolf and Father Monserette played a leading role in propagating the Christian faith. In 1540, all temples of Goa were destroyed.
    • The missionaries started schools and colleges along the west coast, where education was imparted in the native language.
    • The missionaries undertook research on Indian history and culture. Fa Heras has made a deep study on the Indus Valley Civilisation.
    • The Portuguese brought the printing press to India. The Bible came to be printed in the Kannada and Malayalam language.
    • The Portuguese introduced into India several types of crops, fruits & vegetables which they had obtained from different countries. These included—potato, sweet potato, tobacco, corn, ladys finger, chilly, pineapple, papaya, sapota, leechi, orange, black pepper, groundnuts, cashew, almonds, etc.
    • Portuguese influence also established the significance of navy in sea trade.


With all these developments, the Portuguese were reduced in their sphere of influence to Daman, Diu, Goa, East Africa and Timor. In a way the Portuguese became the victims of their early mover advantage as they kept on establishing only trading ports and did not make any significant territorial expansion to protect their interest.

The Dutch

As Portuguese power wavered in the aftermath of the Spanish union, the Dutch took over from them. The Dutch came to India for trade. They were innovative people in business as well as in shipping techniques. They had designed the fluitship (the Fluyt) which was much lighter and required a smaller crew, thus reducing its operating costs. These ships eventually proved to be superior to the bulkier and slower Portuguese ships. The Dutch were the first to start a joint stock company to trade with India.

Cornelius de Houtman (1596)

  • In 1596, Cornelius de Houtman was the first Dutch traveler to reach India.

Dutch East India Company (1602)

  • In 1602, the Dutch East India Company was formed and the Dutch Parliament gave it a charter empowering it to make war and peace with other states, acquire territories and build fortresses.
  • But the main interest of the Dutch was in the Indonesian archipelago and the Spice Islands and not India. They soon pushed out the Portuguese from the Malay Straits and the Indonesian Spice Islands of Java and Sumatra and even defeated English attempts there.
  • However, they discovered that Indian trade was necessary to carry out trade with South-West Asia, as there was a good demand of Indian cloth there. In return, Indians demanded pepper and spices. Hence, the credit of first making ‘Indian cloth’ as an item of export goes to the Dutch.

Dutch Factories

  • In 1605, the first Dutch factory was established at Masulipatnam in Andhra.
  • The second factory was set up in 1606 at Petapuli (Nizampatnam).
  • In 1610, the Dutch signed a treaty with the king of Chandragiri and established their headquarters at
    Pulicat. Here they minted their gold coins called pagodas.
  • The first Dutch company in Bengal was setup in Pipali (1627) later in Chinsurah (1635).
  • They soon established trading depots at Surat, Broach, Cambay and Ahmedabad in Gujarat, Cochin in Kerala, Nagapatam (or Nagapattinam) in Madras, Masulipatnam in Andhra, Chinsura (Gustavus fort) and Peepli in Bengal, Mahe on the Malabar Coast, Agra in present-day Uttar Pradesh and Patna in Bihar.
  • Dutch factories were also established at Kasimbazaar, Karaikal, Balasore, Baranagore and Golconda.
  • In 1690, the Dutch headquarters were transferred from Pulicat to Nagapattinam.

The head of Dutch factories were called factors who were classified as traders and the Dutch Model of Trade was based on Cartel or Cooperative System. The Dutch struck many decisive blows to the Portuguese at Goa, Malabar, Ceylon, Malacca, Colombo and Cochin and virtually replaced the Portuguese. But meanwhile, an important rival, the English had emerged.

Anglo-Dutch Rivalry

  • In 1623, Amboyna massacre took place in Indonesia where the Dutch killed 10 Englishmen and 9 Japanese. After this massacre, the Dutch began to restrict themselves to Malay Archipelago and the English to India.
  • In 1759, the Dutch were defeated by the English in the decisive Battle of Bedara (Bengal), ending the Dutch power in India (the English, however, had to bitterly contest another European rival, the French, before emerging fully victorious by the end of the 18th century).

Dutch Decline in India

  • Agreement between Dutch and British: The exchange of Dutch EIC’s Indian holdings with that of the Indonesian holdings of British EIC in 1667 in an attempt to settle the intermittent conflicts between the two trading companies, left India to the British EIC.
  • Interests in Spice Trade: The Dutch main interest did not lay in India, but in the spice trade with Indonesian Islands. Thus, they failed to foresee the fortunes India held.
  • Corruption: With the declining fortunes of Dutch EIC in India due to continuous confrontations with British EIC, the Dutch EIC officials colluded with British EIC officials for safe passage. This made the Dutch EIC possessions weak in India and ultimately led to Dutch moving out from India.
  • Steady Increase in British Influence: The steady increase in British influence as a result of the privileges received by it, enabled it to establish hold over trade in indigo, silk, among other items which resulted in decline of Dutch fortunes.
  • Naval Setback: With the failure of the Hugli expedition in 1759, the Dutch naval power received a severe setback.

The British (The English)

English East India Company (1600)

  • England too had become impatient to participate in the profitable Asian trade. In 1599, a company to trade with the East was formed under the auspices of a group of merchants known as the Merchant Adventurers. The Company popularly came to be known as the East India Company (or EIC, nickname- John Company).
  • In 1600, The East India Company was granted a royal charter by Queen Elizabeth giving it the exclusive privilege of trading east of the Cape of Good Hope for a period of 15 years. As compared to the Dutch Company, it was a much smaller concern. Its chief asset was its simple organisation – a court of 24 directors elected annually by the general court of shareholders.
  • In the beginning, the English Company concentrated on spice trade. The initial voyages of the Company were made to the Spice Islands in Indonesia. Soon the English discovered the importance of Indian goods especially textiles as a barter commodity for spice trade. Thus, in 1608, Surat in Gujarat was established as the trade transit point and the company ships were docked there. The Company now planned to open a factory at Surat in Gujarat and Captain Hawkins was sent to negotiate consent with the Mughal Emperor.

Captain Hawkins (1608)

  • In 1608, Captain William Hawkins was sent as a representative of the English Company to the Court of Jahangir to obtain permission to open a factory at Surat.
  • Hawkins was the first Englishman to set foot on Indian soil (Surat, 24 August 1608). He could speak Turkish language and he came in a ship named ‘Hector’.
  • He arrived at Surat and from there he went to the court of Jahangir at Agra in 1609. The English Company was given permission by a royal farman to open factories on the west coast. But the English were not satisfied with this concession as they wanted permission for the whole of the country.
  • Moreover, Hawkins had to leave Agra owing to Portuguese intrigue and the English realised that they would first have to deal with the Portuguese before gaining favours from the Mughals.

English Factories

  • A factory was merely a trading post within which were located the warehouses, offices and houses of the company’s employees. It is noteworthy that no manufacturing activity was carried out in this factory.

Early Factories

  • In 1611, the English opened their first factory in the south at Masulipatnam (Machilipatnam). In 1611 itself, the English defeated the Portuguese in the Battle of Swally Hole near Surat. This convinced Jahangir and, the English were allowed to set up a permanent factory at Surat in 1613.
  • In 1615, taking the policy of expansion further, Sir Thomas Roe was sent by King James I as an ambassador to the court of Jahangir. Roe was successful in obtaining royal farman permitting the British to trade and establish factories in all parts of the Mughal Empire.
  • Soon the English began to feel insecure in the absence of fortified settlements and made an attempt to fortify Surat (in 1625) but the Mughals frustrated the attempt and imprisoned the English. The English then decided to shift their focus to South India to avoid direct confrontation with the Mughals.
    • Conditions in South India were more favourable to the English as they did not have to face a strong Indian government there. The great Vijayanagara kingdom had been overthrown in 1565 and its place taken up by relatively smaller and weaker states.


  • In 1632, Sultan of Golconda issued a Golden Farman in favour of the English, permitting them to trade freely from the ports of Golconda on annual payment of 500 pagodas.
  • In 1639, Francis Day was able to obtain Madras on lease from the Raja of Chandragiri and shifted the centre of English activity to Madras. The Raja allowed the English to fortify Madras, to administer it and to coin the money on the condition that they will pay him half the customs revenue of the port. Thus the English set up a factory and built a small fort around it called Fort St. George.
  • In 1690, the British bought the Fort Devanampatnam, near Madras, and renamed it as Fort St David.


  • In 1651, at Hugh, the first English factory in Bengal was set up upon receiving permission from Sultan Shuja (second son of Emperor Shah Jahan), the Subahdar of Bengal. In 1658, all establishments of the Company in Bengal, Bihar, Orissa and Coromandel Coast were brought under the control of Fort St. George.
  • In 1690 Job Charnock established a factory at Sutanuti which was fortified in 1696 and called Fort
  • In 1698 the English Company obtained from Subahdar of Bengal Azim-us-Shan, the zamindari (i.e.
    right to collect revenue)
    of the villages of Sutanuti, Kalikata and Gobindapur on payment of 1,200
    rupees to the previous proprietors. In 1700, the Bengal factories were placed under Fort William. Soon the villages grew into a city known as Calcutta.


  • In 1662, King Charles-II of England received Bombay as dowry on marrying a Portuguese princess.
  • In 1668, the Crown transferred it to the Company on an annual rent of ten ponds and it was soon fortified in the wake of threats from the rising Maratha power. Bombay quickly replaced Surat as the principal depot of the Company on the West coast.

English and the Mughals

Internal Developments of the Company

  • Between 1615 and 1686, the company grew from strength to strength. In 1625, the Governors and Directors of the company were given judicial powers. In 1661, the company was empowered to send ships of war with men and ammunition for the safety of its possessions overseas. In 1683, it got full powers to declare war and make peace, to raise and maintain an army.
  • As early as the 1680s, the Company had plans to secure English dominion in India and was determined to make Indians pay for the conquest of their own country. On several occasions, the Court of Directors wrote to the Company authorities advising them to adopt such a civil and military policy that would secure a large revenue and enable the English to maintain their force and make English a nation in India.


  • In 1680, Aurangzeb had issued a farman that the Company’s trade was to be customs free everywhere except Surat. In 1688, hostilities between the English and the Mughal authorities first broke out when the English captured Hugli and declared war on Emperor Aurangzeb. The English had seriously misjudged the situation and underestimated Mughal strength; they were soon defeated and driven out of the factories in Bengal.
  • Realising that they were not yet strong enough to fight the Mughal power, they once again decided to rely on humble entreaties and flattery and get concessions from the Mughal emperor. Aurangzeb too readily pardoned the English for their mistake as he saw that foreign trade benefitted Indian artisans and merchants and enriched the state treasury. He therefore permitted them to resume trade on payment of 1.5 lakh rupees as compensation. The farman of 1691 granted by Aurangzeb exempted the English Company from payment of customs duties in Bengal in return for an annual payment.


  • In 1717, The East India Company succeeded in securing valuable privileges under a royal farman, Farman of 1717, by the Mughal Emperor Farrukhsiyar.
  • Described as the Magna Carta of the Company, the farman was instrumental in increasing the Company’s stronghold in Bengal. The Company later colonised Bengal followed by the rest of India.
Provisions of the Farman
  • The farman confirmed the privileges granted in 1691 and extended them to Gujarat. It contained following provisions:
    • The British were allowed duty-free trade in Bengal in lieu of an annual payment of 30,000 rupees.
    • Exemption from payment of all dues at Surat in lieu of one-time settlement of 10,000 rupees.
    • The Company retained its old privilege of exemption from payment of all dues at Hyderabad and for Madras was required to pay only the existing rent.
    • The Company was allowed to rent more territory around Calcutta.
    • The Company was allowed to use their own currency (minted at Bombay) throughout India.
    • The Company was also granted the right to issue passes or dastaks (a permit exempting payment of transit duties) for the movement of such goods.
    • The Company’s servants were also permitted to trade but were not covered under this farman and were required to pay the same taxes as Indian merchants.
      • However, the dastaks were later misused by the Company’s servants to carry out private trade. The Company’s’ servants were paid low salaries and their real income came from the permission the Company granted them to carry on private trade within the country, even as trade between India and Europe was reserved for the Company.
Farman as Source of Conflict
  • The provisions of the farman became a source of perpetual conflict between the Company and the Nawabs of Bengal. The strong Nawabs of Bengal such as Murshid Quli Khan and Alivardi Khan objected to the English interpretation of the farman of 1717. They exercised strict control over the English traders and prevented them from misusing the dastaks.
  • Despite strong political control by native rulers, commercial affairs of the company flourished. Madras, Bombay and Calcutta became the nuclei of such activities. Large number of Indian merchants and bankers were attracted to these cities.
  • As far as the company’s servants were concerned, they were keen to take up service in India despite low salaries. This was because they were permitted to carry on private trade in India on payment of same taxes as Indian merchants.

Reasons for Success of British East India Company

  • The British EIC was a late entrant in the race of European powers. They had their own set of challenges. The various reasons that helped the British EIC emerge a clear winner among all the other European powers are as follows:
  • Political Reason
    • Political Freedom: One of the most important reasons for success of British EIC was the tremendous amount of political freedom given to them by their government which their peers did not have. They were allowed to raise armies, wage wars, fortify forts and make treaties making them virtually a government in themselves.
    • Simple Organisation: The chief asset of the English Est India company was its simple organization. It had twentyfour directors elected annually by the general court of shareholders.
    • Use of Diplomacy: The English EIC appointed ambassadors to courts of Indian Rulers, e.g. appointment of Sir Thomas Roe to the Mughal court, held it secure right to open factory and trade in any party of Mughal Empire .
    • Kingmakers: Though this policy was introduced by French commander Dupleix during the Carnatic wars of succession, the British EIC used it to their advantage to gain control of major ports and high revenue generating areas. It’s because of this policy only the British EIC captured Bengal which acted as the base for Indian colonization.
    • Aggressive Foreign Policy: The State was willing to colonise and wage wars for economic benefit. Unlike her rivals it was willing to dedicate everything in her foreign policy to economic ends.
  • Economic Reasons
    • Financial Security: Unlike the other companies the British EIC was never starved of funds as it was backed by the British government. The British government was far better than its peers in terms of internal conflicts and corrupt administrators.
    • Privileges: The British EIC steadily spread its influence as result of privileges it received. The privileges enabled it to establish an increasing hold over trade of indigo, silk, cotton, among others. It also reduced the cost of trade in India.
  • Social Reasons
    • Non-interference in the Society: Unlike the other companies the British EIC treaded cautiously and did interfere in the social affairs of the country.
  • Technological Advancements
    • Superior Navy: The British EIC had a far more superior navy which not only helped them to carry cargo but also helped them to win and protect their frontier against other colonial powers.
    • Superiority in Art of War: The British EIC had more disciplined and professional fighting units. The British officials were also far more skilled in diplomacy and had won many wars before they were actually fought. .
    • Mechanized Military and Defence: The British EIC had the most sophisticated machinery of the time. This coupled with the fortification of their establishments whenever they got the chance made them invincible.
  • Geographic Advantage
    • Strategic Presence: The British EIC had major strategic ports in its kitty which helped it keep in check trade and conflicts with other companies during the period. The ports of Bombay, Madras and Calcutta gave them strategic advantage over the whole of India’s coastline.

The Danes (From Denmark)

  • The Danes came from Denmark and they were a minor colonial power to set foot in Indian soil. The
    Danish East India Company was established in 1616 and they set up trading outposts in 1620 at
    Tranquebar near Tanjore (Tamil Nadu)
  • In 1755, they founded a colony called Fredericknagore near Serampore in Bengal. Occupied twice by the English, the Danish colony failed as a commercial venture. In 1777, the Danish company went bankrupt and Serampore was transferred to the Danish Crown.
  • However, Serampore became a safe haven for missionaries in India and earned immense fame for the cultural and educational activities of the missionaries. In 1845, Denmark ceded Serampore to Britain, thus ending nearly 150 years of Danish presence in Bengal.

The French

The French were the last of the European colonial powers to set foot in India. They were also keen on profiting from the Asian trade.

The French Trading Company (1664)

  • In 1664, Colbert formed the Companie des Indes Orientales. The French trading company (under the governorship of Colbert) was granted a license by King Louis IV to trade with India and the East Indies.

French Factories

  • In 1667, the first French factory was set up at Surat with Francis Caron as its Director General.
  • In 1669, a factory was set up at Masulipatnam.
  • In 1672, Caron was replaced by Francois Martin who, in 1673, received a village as grant from the King of Bijapur Sher Khan Lodhi and founded it as Pondicherry. Pondicherry later emerged as the French capital in India, and Martin came to be known as the Father of Puducherry.
  • In 1674, the French also received a site near Calcutta from the ruler of Bengal where they built the town of Chandernagore (1690-92).
  • In 1693, the Dutch snatched Pondicherry but it was restored to the French under the Treaty of Reswick (1697). In this way, the French East India Company established its firm base in Chandernagore and Pondicherry.
  • The French also acquired control over Islands of Mauritius and Reunion in the Indian Ocean.
  • Between 1697 and 1739, the French further consolidated their position by adding several bases including Mahe, Karaikal, Balasore and Kasimbazar.

The real trouble started when the French won control of Tanjore which the British considered vital for their trade security.

Reason of French Rise in India

  • Backed by Government: The French EIC was fully backed by the French government. The French government’s resources were at its disposal.
  • Policy of Kingmakers: The policy of kingmakers was first used by the French among Europeans during the succession wars of Carnatic and Hyderabad under the leadership of Dupleix. He aimed to secure monetary, commercial or territorial favours from the victor. Later, the policy was mastered by the British.
  • Gains from War of Succession: After the Carnatic and Hyderabad wars of succession. The French got the territories near Pondicherry and Masulipatam. Moreover, Dupleix was made the honorary governor of east coast from Krishna to Kanyakumari. The gains could fund French EIC.
  • Lack of Central Authority in South India: South India lacked central authority since the death of Aurangzeb. This coupled with raids by the Maratha chiefs resulted in politically unsettled conditions and administrative disorganisation, which created conditions for the French rise in India.

Causes of French Decline in India

  • Political Causes
    • Dependency on French Government: The French EIC was heavily dependent on the French government. It was controlled by the french government which appointed its directors after 1723. The State control of the company smothered the drive, skill and initiative of the company.
    • Weak Organizational Structure: The French EIC suffered from weak organizational structure.
    • French Continental Preoccupation: The French government was preoccupied in continental ambitions, which involved the country into deeper political muddle in Europe and considerably strained her resources.
  • Economic Reasons
    • Lack of Financial Autonomy: The company ’s finances were completely in the hands of French government. In addition to this the finances/revenue from south India were inadequate to meet the needs of company’s operation in India.
    • Rampant Corruptions: The company was riddled with corrupt officials who made it difficult for the company to face the British challenge in India.
    • Static Society: The French society lacked dynamism which was seen in the English society.
Advent of Europeans in India

Pattern of European Trade

  • In the 16th century, when European powers first started trading with India, they had few goods to offer (only wine and oil) in return for Indian commodities. For nearly three centuries, they struggled with the problem of financing an adverse balance of trade with Asia. In the beginning, they used gold and silver to pay for their imports from the East. However, the European companies were severely criticised for doing so as flow of bullion out of the country was considered bad under mercantilist beliefs. It was only in the 18th century that a final solution came when the English began receiving Bengal revenues and revenues from export of opium to China.
  • As far as items of trade were concerned, Indian spices were the most sought after commodity in Europe, especially pepper. Towards the end of the 17th century, cotton textiles, silk, indigo and saltpeter gradually rose in importance in place of spices. The increase of imports of Indian textiles alarmed indigenous Englishmen who began pressurising the government to prohibit such imports. This led to the passing of protectionist regulations in England from 1700 onwards.
    • Note- Saltpeter, KN03 or Shora was an important ingredient in the manufacture of gunpowder. Being a heavy material, it was also used to stabilise the ships. Patna emerged as a major centre of saltpeter.
  • The change in European economy due to growth of industrial capitalism also affected its politicoeconomic relations with India. The industrial capitalists soon began resenting East India Company’s monopoly over Indian trade. Ranging from Adam Smith (Wealth of Nations 1776) to various business lobbies, all attacked the Company’s monopoly rights ultimately leading to the abolition of monopoly of the East India Company in Indian trade in 1813 and in China trade in 1833. Sometimes it was the English trade that followed their flag, sometimes the other way round, but together they ensured the rise of the British Empire in India.

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