1. Background

• In 1600, the East India Company acquired a charter from the ruler of England, Queen Elizabeth I, granting it the sole right to trade with the East. This meant that no other trading group in England could compete with the East India Company.
• With this charter the Company could venture across the oceans, looking for new lands from which it could buy goods at a cheap price, and carry them back to Europe to sell at higher prices.
• The Company did not have to fear competition from other English trading companies.
• Mercantile trading companies in those days made profit primarily by excluding competition, so that they could buy cheap and sell dear. The royal charter, however, could not prevent other European powers from entering the Eastern markets.
• By the time the first English ships sailed down the west coast of Africa, around the Cape of Good Hope, and crossed the Indian Ocean, the Portuguese had already established their presence on the western coast of India and had their base in Goa.
• In fact, it was Vasco da Gama, a Portuguese explorer, who had discovered this sea route to India in 1498.
• By the early seventeenth century, the Dutch too were exploring the possibilities of trade in the Indian Ocean.
• Soon the French traders arrived on the scene.
• The problem was that all the companies were interested in buying the same things.
• The fine qualities of cotton and silk produced in India had a big market in Europe. Pepper, cloves, cardamom and cinnamon too were in great demand.
• Competition amongst the European companies inevitably pushed up the prices at which these goods could be purchased, and this reduced the profits that could be earned.
• The only way the trading companies could flourish was by eliminating rival competitors.
• The urge to secure markets therefore led to fierce battles between the trading companies. Through the seventeenth and eighteenth centuries, they regularly sank each other’s ships, blockaded routes, and prevented rival ships from moving with supplies of goods.
• Trade was carried on with arms and trading posts were protected through fortification.
• This effort to fortify settlements and carry on profitable trade also led to intense conflict with local rulers.
• The company therefore found it difficult to separate trade from politics.

2. Trade of East India Company in Bengal

• The first English factory was set up on the banks of the river Hugli in 1651.
• This was the base from which the Company’s traders, known at that time as “factors”, operated. The factory had a warehouse where goods for export were stored, and it had offices where Company officials sat.
• As trade expanded, the Company persuaded merchants and traders to come and settle near the factory. By 1696 it began building a fort around the settlement.
• Two years later it bribed Mughal officials into giving the Company zamindari rights over three villages.
• One of these was Kalikata, which later grew into the city of Calcutta or Kolkata as it is known today.
• It also persuaded the Mughal emperor Aurangzeb to issue a farman granting the Company the right to trade duty-free.
• The Company tried continuously to press for more concessions and manipulate existing privileges. Aurangzeb’s farman, for instance, had granted only the Company the right to trade duty-free.
• But officials of the Company, who were carrying on private trade on the side, were expected to pay duty.
• This they refused to pay, causing an enormous loss of revenue for Bengal.

3. Trade relating to Battles

• Through the early eighteenth century the conflict between the Company and the nawabs of Bengal intensified.
• After the death of Aurangzeb, the Bengal nawabs asserted their power and autonomy, as other regional powers were doing at that time.
• Murshid Quli Khan was followed by Alivardi Khan and then Siraj Ud Daulah as the Nawab of Bengal.
• Each one of them was a strong ruler.
• They refused to grant the Company concessions, demanded large tributes for the Company’s right to trade, denied it any right to mint coins, and stopped it from extending its fortifications.
• Accusing the Company of deceit, they claimed that the Company was depriving the Bengal government of huge amounts of revenue and undermining the authority of the Nawab. It was refusing to pay taxes, writing disrespectful letters, and trying to humiliate the Nawab and his officials.
• The Company on its part declared that the unjust demands of the local officials were ruining the trade of the Company, and trade could flourish only if the duties were removed.
• It was also convinced that to expand trade it had to enlarge its settlements, buy up villages, and rebuild its forts.
• The conflicts led to confrontations and finally culminated in the famous Battle of Plassey.

4. Battle of Plassey

• When Alivardi Khan died in 1756, Siraj Ud Daulah became the Nawab of Bengal.
• The Company was worried about his power and keen on a puppet ruler who would willingly give trade concessions and other privileges.
• So it tried, though without success, to help one of Siraj Ud Daulah’s rivals become the nawab.
• An infuriated Siraj Ud Daulah asked the Company to stop meddling in the political affairs of his dominion, stop fortification, and pay the revenues.
• After negotiations failed, the Nawab marched with 30,000 soldiers to the English factory at Kasimbazar, captured the Company officials, locked the warehouse, disarmed all Englishmen, and blockaded English ships.
• Then he marched to Calcutta to establish control over the Company’s fort there.
• On hearing the news of the fall of Calcutta, Company officials in Madras sent forces under the command of Robert Clive, reinforced by naval fleets. Prolonged negotiations with the Nawab followed.
• Finally, in 1757, Robert Clive led the Company’s army against Sirajuddaulah at Plassey.
• One of the main reasons for the defeat of the Nawab was that the forces led by Mir Jafar, one of Siraj Ud Daulah’s commanders, never fought the battle.
• Clive had managed to secure his support by promising to make him nawab after crushing Siraj Ud Daulah.
• The Battle of Plassey became famous because it was the first major victory the Company won in India
• After the defeat at Plassey, Siraj Ud Daulah was assassinated and Mir Jafar made the nawab.
• The Company was still unwilling to take over the responsibility of administration.
• Its prime objective was the expansion of trade.
• If this could be done without conquest, through the help of local rulers who were willing to grant privileges, then territories need not be taken over directly.
• Soon the Company discovered that this was rather difficult.
• even the puppet nawabs were not always as helpful as the Company wanted them to be.
• After all, they had to maintain a basic appearance of dignity and sovereignty if they wanted respect from their subjects.
• When Mir Jafar protested, the Company deposed him and installed Mir Qasim in his place. When Mir Qasim complained, he in turn was defeated in a battle fought at Buxar (1764), driven out of Bengal, and Mir Jafar was reinstalled.
• The Nawab had to pay Rs 500,000 every month but the Company wanted more money to finance its wars, and meet the demands of trade and its other expenses.
• It wanted more territories and more revenue. By the time Mir Jafar died in 1765, the mood of the Company had changed.
• Having failed to work with puppet nawabs, Clive declared: “We must indeed become nawabs ourselves.”
• Finally, in 1765 the Mughal emperor appointed the Company as the Diwan of the provinces of Bengal.
• The Diwani allowed the Company to use the vast revenue resources of Bengal.
• This solved a major problem that the Company had earlier faced. From the early eighteenth century, its trade with India had expanded.
• But it had to buy most of the goods in India with gold and silver imported from Britain.
• This was because at this time Britain had no goods to sell in India.
• The outflow of gold from Britain slowed after the Battle of Plassey, and entirely stopped after the assumption of Diwani.
• Now revenues from India could finance Company expenses. These revenues could be used to purchase cotton and silk textiles in India, maintain Company troops, and meet the cost of building the Company fort and offices at Calcutta.

5. Aftermath Happenings

• The Mughal Empire declined in the first half of the eighteenth century. The political vacuum was filled by the rise of regional states like Bengal, Hyderabad, Awadh, Punjab and Maratha Kingdoms.
• But these regional powers could not provide lasting political stability resulting in a lustful chance for the British East India Company to establish a territorial empire in India.
• Now a set of institutions and regulations were required to rule India through colonial mechanisms. They adopted three methods to expand the British Empire.

• • Wars and conquests,
  • Subsidiary Alliance System,
  • annexation of territories through the adaptation of the doctrine of lapse.
• The initial method was outright military conquest or direct annexation of territories; it was these areas that were properly called British India.
• Later on to consolidate its position diplomatic efforts through treaties and agreements with indigenous rulers were also made.