Deindustrialisation & Decline of traditional crafts

Deindustrialisation and Decline of Traditional Crafts – UPSC History Optional

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At the beginning of British rule in the mid-eighteenth century, Indian handicraft industries supplied about a quarter of all manufactured goods produced in the world. Within less than two centuries, this vast productive base had decayed beyond recovery — a process historians call “deindustrialisation.” While the nineteenth century saw Western Europe and North America undergo industrialisation, India experienced the opposite trajectory: industrial decline, shrinking export demand for its traditional goods, and a falling share of the population dependent on secondary (manufacturing) industries. This article examines the causes, extent, and consequences of deindustrialisation in colonial India — a theme central to both the economic history and the nationalist critique of British rule — for UPSC History Optional aspirants.

Understanding Deindustrialisation in the Indian Context

The decline of India’s traditional industries was a direct product of the establishment of British rule. The period of this decline was contemporaneous with the firm establishment of the Industrial Revolution in England and with England’s tightening grip over the strings of the Indian economy.

The peculiar situation in India, quite different from developments in Europe and North America, can be summarised as follows:

• Nineteenth-century India witnessed a steep decline of handicrafts — a process that continued well into the twentieth century.
• Unlike European countries, India was not compensated by a sufficient rise of modern industry.

As a result of these two factors, there was a net decline in the number and proportion of the Indian population engaged in industry. Even after the rise of modern industry in India following World War I, deindustrialisation continued — the percentage of workers in industry kept falling even as the percentage of the agricultural workforce rose.

• The economist Colin Clark compiled a table showing that between 1881 and 1911, the proportion of the workforce engaged in “manufacture, mining and construction” fell by half — from 35% to 17%.
• A recurring theme among nationalist writers of every shade of opinion — Moderates, Extremists, and Gandhites — was that Britain developed those aspects of the Indian economy (railways, ports, irrigation) that served the economic interests of industrialised Britain, while ignoring and even thwarting the growth of modern industry within India.
• During the freedom struggle, the slogans of “deindustrialisation” and Britain’s callous indifference to Indian industrial development became rallying cries of the anti-colonial movement.

Factors Responsible for the Decline of Handicrafts in India

The ruin of India’s traditional handicraft industries followed directly from the establishment of British rule, which brought about several important changes that together worked as factors of decline.

Competition from British Machine-Made Goods

• The decline was mainly driven by competition from machine-made goods imported from Britain. Britain’s capacity for mass production allowed it to flood Indian markets with cheap products, especially cotton textiles, against which traditional handicrafts could not compete.
• Initially, British imports — chiefly woollen textiles — had only a limited market in India, but the progress of the Industrial Revolution soon changed this picture entirely.

British Trade Policy and the Charter Act of 1813

• British trade policy also worked against the demand for Indian products. Britain actively promoted the export of its machine-made items to India.
• The nineteenth century was the age of Industrial Capitalism: Britain’s rising industrialists and trading interests launched a new economic offensive against India, based on the principles of free trade. Their persistent propaganda and lobbying led to the abolition of the Company’s monopoly of Indian trade by the Charter Act of 1813, fundamentally altering the character of Indo-British trade.
  • Where India had earlier been chiefly an exporting country, it now became an importing one — English twist and cotton stuffs flooded Indian markets, ruining the Indian weaving industry.
  • After 1813, one-way free trade was actively encouraged, especially in cotton textiles: Indian goods faced high tariffs in the English market, while British goods gained duty-free access to Indian markets.
  • The preferential tariff policies between 1878 and 1895 were designed to resolve a crisis in British industrial economy by securing a captive market in India — a market now being knit together by the railways.
• Demand for Indian goods was severely affected, and large numbers of artisans were forced to abandon their hereditary professions.
  • The government of William Bentinck noted in 1834: “The misery hardly finds a parallel in the history of commerce. The bones of the cotton weavers are bleaching the plains of India.”
  • In a similar vein, Karl Marx remarked: “It was the British intruder who broke up the Indian handloom and destroyed the spinning wheel.”

The Role of Railways

• Railways played a very prominent role in accelerating the decline of traditional industries. Their construction extended the reach of colonial economic impact into even the remotest parts of India.
• Railways facilitated the movement of British-made goods into the farthest corners of the country, while also enabling the extraction of raw materials from those same regions.
• The cotton textile industry was the most severely affected. Other major industries hit hard included silk, woollen textile, iron, paper, and lead.

Decline of Indian Rulers and Princely Patronage

• The decline of Indian rulers and princely states following the establishment of British rule reduced the demand for specific categories of goods, leading to a rapid decline in the artistic excellence and economic importance of Indian handicrafts.
• Native Indian courts, which had patronised fine arts and handicrafts — often employing the best craftsmen on regular salaries — began to disappear. These rulers and princely states had been major consumers of articles of pleasure and various types of weapons, and their decline meant the loss of a whole category of specialised, high-value demand.

Changing Tastes of New Social Classes

• The establishment of British rule brought significant changes in the very nature of demand. New classes emerged — European officials and a new Indian educated professional class — the former naturally patronising English-made products, and the latter imitating European standards while often scorning everything Indian.
• Other classes, such as zamindars and the educated elite, also began to imitate British tastes. Since traditional Indian industries could not cater to demands shaped by European ideals, the fall in demand for indigenous products adversely affected these industries further.

Decline of Craft Guilds and Use of Political Power

• British rule also adversely affected India’s craft guilds and craft organisations, dampening the institutional support that had once sustained traditional handicrafts.
• Britain also used its political power to actively strangle Indian handicrafts, through a range of imperial methods, including:
  • forcing British free trade upon India,
  • imposing heavy duties on Indian manufactures sold in England,
  • encouraging the export of raw materials from India,
  • transit and customs duties within India,
  • granting special privileges to British manufacturers operating in India,
  • compelling Indian artisans to divulge their trade secrets, and
  • holding exhibitions and building railways to further these ends.

Opposing Views on Deindustrialisation

Not all historians accept the nationalist thesis of deindustrialisation at face value.

• Western scholars such as Morris D. Morris and A. Thorner argued that the decline of handicraft industries was inevitable and a worldwide phenomenon — a logical and integral outcome of the Industrial Revolution and the rise of the factory system.
  • Morris challenged the “imperial exploitation thesis,” arguing instead that colonial rule “probably stimulated economic activity in India in a way which had never been possible before,” and that “the handloom weavers were at least no fewer in number and no worse off economically at the end of the period than at the beginning” — with possible “absolute growth” having occurred.
  • Thorner compared census data for 1881 with that for 1931 on workers engaged in agriculture and manufacture, concluding that “the industrial distribution of the modern working force from 1881 to 1931 stood still.” Both scholars conceded, however, that a major shift from industry to agriculture likely occurred between 1815 and 1880.
• Some modern economic historians have similarly questioned the nationalist thesis:
  • They argue that the actual rate of deindustrialisation, even if it occurred, is difficult to quantify, given the paucity of reliable data and the fact that many Indian artisans held multiple occupations, often combining craft work with agriculture.
  • Even taking cotton weavers as the chief victims of cheap Manchester-made textiles, there is evidence that Indian handlooms continued to produce coarse cotton cloth for poorer domestic consumers well into the 1930s, when they were finally overtaken by Indian mill-produced goods.
  • Even so, statistical data from Gangetic Bihar show that the proportion of the industrial population to the total population of that region declined from 18.6% in 1809–13 to 8.5% in 1901 — with an even sharper fall among weavers and spinners specifically, whose share of the total industrial population fell from 62.3% to 15.1% over the same period. This evidence lends support to the nationalist thesis.
  • While industrial employment declined, real income per worker in industry actually increased between 1900 and 1947, suggesting this was not simply a story of overall regress. This rise, as Tirthankar Roy has argued, was not due to the intervention of modern industry, but to rising per-worker productivity in the crafts themselves — achieved through technological specialisation and industrial reorganisation, such as the substitution of family labour by wage labour within small-scale industry (notably in the handloom textile sector).
    • Roy further suggests there is evidence of “a significant rise in labour productivity” in other small-scale industries as well, resulting from a process he calls “commercialisation” — producing for non-local markets, and a shift from local to long-distance trade. These factors helped sustain artisanal industry but did not lead to successful industrialisation, with the structural change and economic development that would require.
  • The basic occupational structure of the subcontinent remained substantially unchanged between 1881 and 1951, with agriculture accounting for roughly 70%, manufacturing 10%, and services 10–15% of the workforce.

The Decline Was Not Universal

The decline of Indian handicrafts was not a uniform, pan-Indian process — its timing and intensity “differed from one part of the country to another.”

• Rajasthan, for instance, was only opened up by the railways after 1911, so the decline of its handicrafts occurred correspondingly later.
• Despite heavy odds, Indian handicrafts could not be completely wiped out. The rural population — steeped in poverty and tradition — continued to purchase comparatively cheaper khadi cloth and village-made iron and wooden agricultural implements.
• The Swadeshi movement at the beginning of the twentieth century popularised indigenous products on patriotic grounds, creating fresh urban demand for khadi. In the Gandhian era, village industries received active encouragement, and the popularisation of khadi helped keep Indian handicrafts alive.

Negative Consequences of the Ruin of Handicraft Industries

• The decline destroyed the self-sufficiency of the village economy.
• The destruction of traditional industries led to overcrowding in the agrarian sector: as the artisan class lost its livelihood, it had no option but to turn to agriculture, generating further pressure on the land and pauperisation.
  • Since this displaced class possessed neither land nor capital, its members largely became agricultural labourers.
• Occupational, commercial, and industrial centres declined as a result — the adverse impact on economic activity was felt sharply in major centres such as Surat, Dhaka, and Murshidabad.
• The void left by the decline of traditional industries could not be filled by the growth of modern industry.
• The decline of traditional industries represented the loss of an important productive field, creating an “economic hollowness” that is closely linked to the poverty and penury that marked this period of Indian history.

Positive Consequences of the Ruin of Handicraft Industries

• The growth of an industrial market in India gave impetus to the availability of both domestic and foreign goods, extending beyond luxury and military items to items of everyday use.
• India gradually developed as an extensive industrial market, which spurred the growth of modern forms of exchange, in turn promoting economic integration — both within India and with the wider world economy.
• The decline of traditional industries also marked the decline of pre-capitalist handicraft industries shaped by feudal ideals and values, thereby creating the base for modern industry.
• The artisan class associated with medieval handicrafts gradually merged into the modern labour class, laying the foundation for the growth of modern industry and the emergence of a new working class — a key component of the newly established capitalist economy, and, in that sense, a marker of historical dynamism.

Ruralisation of the Indian Economy

With deindustrialisation, the Indian economy tended to become increasingly agricultural.

• Millions of manufacturing workers in industrial towns such as Dacca, Murshidabad, and Surat were rendered jobless and drifted back to villages in search of a livelihood.
• This growing dependence of the population on agriculture for subsistence, and the corresponding tilt of the Indian economy towards producing agricultural goods and raw materials at the neglect of industrial development, has been described as a trend towards the ruralisation or peasantisation of the Indian economy.
• British writers of the nineteenth and twentieth centuries took pride in describing India as “traditionally an agricultural country.” A close examination of British economic policy, however, makes it clear that Britain deliberately adopted policies that ruined India’s competing handicraft industries, and then developed India’s agricultural resources so as to turn it into an “agricultural farm” of industrialised Britain.
  • As early as 17 March 1769, the Court of Directors instructed the Company’s agents in Bengal to encourage the manufacture of raw silk while discouraging manufactured silk fabrics — an objective to be achieved by forcing silk winders to work inside the Company’s own factories and prohibiting them from working at home.
  • Endorsing this policy of “compulsion cum encouragement,” a Select Committee of the House of Commons in 1783 desired a perfect plan of policy “to change the whole face of that industrial country, in order to render it a field of the produce of crude material subservient to the manufactures of Great Britain.”
  • R. C. Dutt rightly noted that this resolution settled England’s policy towards India until 1833, and thereafter “effectively stamped out many of the national industries of India for the benefit of English manufactures.”
• The Industrial Revolution transformed the pattern of England’s own economic development — its expanding textile industries needed raw material for its factories and markets for the sale of finished products. This called for a shift in the methods of British colonial exploitation in India, replacing mercantile capitalism with free trade capitalism. The abolition of the Company’s trading monopoly (by the Charter Act of 1813) and the winding up of its commercial business (by the Charter Act of 1833) must both be understood against this backdrop.
• Industrialised Britain sought to develop India’s vast agricultural potential, but the poor quality of Indian raw material posed a snag. To remedy this, British nationals needed to be permitted entry and settlement in India — the Charter Act of 1833 accordingly removed all restrictions on European immigration and the acquisition of landed property in India.
  • British capital consequently flowed into developing India’s plantation industries — tea, coffee, indigo, and jute cultivation — with the Government of India providing generous facilities.
  • The Assam Wasteland Rules granted extensive tracts of land, up to 3,000 acres per holder, as freehold property exempted from land tax on payment of fixed sums.
  • Tea planters in Assam used force and fraud to recruit labour for their estates, and the Government of India provided a legislative umbrella that effectively legalised this exploitation: Act XIII of 1859 and the Inland Immigration Act of 1882 made breach of contract a criminal offence and authorised planters to arrest a runaway labourer without a warrant.

The Shift from Industry to Agriculture: The Statistical Picture

• Alice and Daniel Thorner have estimated that the major shift from industry to agriculture in India occurred between 1815 and 1880; unfortunately, no statistical record exists prior to the first census of 1881.
• R. P. Dutt, examining census data from 1891 to 1921, calculated a steady rise in the percentage of the population dependent on agriculture:
  • 1891: 61.1%
  • 1901: 66.5%
  • 1911: 72.2%
  • 1921: 73.0%
• The census of 1931 put the figure engaged in “agricultural and pastoral pursuits” at 61.1% — but Vera Anstey ascribed this apparent decline to a change in classification rather than an actual change in occupation, calling it “illusory.”
• This overwhelming pressure on agriculture created serious distortions in the Indian economy, aggravating problems in the agrarian sector. The increase in the number of persons dependent on agriculture did not mean an increase in agricultural production — it instead reflected the growing impoverishment of the rural masses.
• A range of historical, political, economic, and social factors blocked the modernisation of Indian agriculture, functioning as a kind of “built-in depressor.” This agricultural “stagnation,” amid a rising population, accounted for the recurring famines and increasing poverty seen through the nineteenth century and into the first quarter of the twentieth.

After the First World War

• Modern manufacturing grew rapidly only after World War One, but the overall rate of increase in secondary-sector income before World War Two stood at just 3.5% per annum — not “fast enough to set India on the path of an industrial revolution.”
• One reason for this limited overall economic development was that the colonial state, far from being a mere “night watchman,” officially professed a laissez-faire policy while actually practising discriminatory intervention — amounting to “non-market pressures exerted by the government.”
• Since 1813, when Indian trade was freed from the East India Company’s monopoly, India came to be seen as a lucrative field for British private capital, chiefly in railways, jute industry, tea plantations, and mining.
  • The Indian money market was dominated by European banking houses. Indian entrepreneurs largely failed to compete because their European counterparts had far greater access to and command over capital, thanks to close ties with banks and agency houses — Indian entrepreneurs, by contrast, had to depend on kin, family, and caste networks.
  • British economic interests in India operated through Chambers of Commerce and Managing Agency Houses, which shaped government policy and eliminated indigenous competition.
  • On the eve of World War One, roughly sixty such agency houses dominated the jute industry, coal mining, and tea plantations, controlling 75% of India’s industrial capital and nearly half of total industrial employment.
• Whatever industrialisation did occur in India was therefore mostly — though not exclusively — driven by British capital, with profits regularly repatriated, aided by discriminatory official policies.
  • The tea plantations of Assam offer a striking example of such economic favouritism: developed from 1833 under direct government sponsorship, with the aim of reducing expensive tea imports from China. Plantations were later transferred to individual capitalist ownership, with native investors deliberately excluded.
  • The Inland Emigration Act of 1859 secured planters a steady supply of labour by preventing migrant workers from leaving the plantation sites.
  • Tea remained dominated by British capital until the 1950s, as did coal mining in eastern India.

India’s Economic and Financial Obligations to the Empire

Between 1880 and World War One, successive financial crises exposed India’s incapacity to shoulder the financial burden of serving the empire. These crises stemmed from several factors:

• Growing Indian demands for a fairer share of resources.
• The development of an articulate political opinion, which made any increase in the rate of internal taxation a politically risky proposition.
• Macro-economic factors, including fluctuating exchange rates, trade depressions, and the vagaries of nature.

These pressures weakened the imperial goal and eventually resulted in greater devolution of power.

• Gradually, import tariffs were imposed against British textiles — a measure that virtually amounted to protection for Indian industries.
• There was also a broader shift within the British industrial economy, in which the Indian market lost some of its earlier importance for Britain’s growth sectors.
• British investment in the Indian capital market declined, as did reliance on the Indian army for imperial defence.
• Consequently, India’s role within the wider imperial structure was gradually subordinated to its own domestic requirements, and the imperial goal and ideology were muted to accommodate mounting financial and political pressures within India. Some historians regard this diminution of Britain’s imperial economic interest in India as a major factor behind the eventual decision to transfer power.

Conclusion

The story of deindustrialisation in colonial India is not one of simple, linear decline but a contested and regionally uneven process — accelerated by British trade policy, the Charter Acts of 1813 and 1833, the spread of the railways, and the deliberate use of political power to favour British manufactures, yet also debated by historians who point to continuing artisanal productivity, regional variation, and the limits of available data. What is not in dispute is its consequence: a ruralised, agrarian-dependent economy, an impoverished peasantry, and — eventually — the erosion of the very imperial economic interest that had once justified colonial rule. For UPSC History Optional aspirants, deindustrialisation remains one of the clearest threads connecting India’s economic history to the ideological foundations of the nationalist movement.