1. The Coming of the Europeans into India (1600-1757) – The lure for trade and profit brought many trading companies to India. The trade –cum-political corporation called the English East India Company came to India and gave an expansive touch to India’s national commerce. It opened new markets for Indian goods in Europe and thereby increases the export of Indian manufacturers and encourage their production. This is the reason why the rulers tolerated and even encouraged the establishment of the Company’s factories in India.
2. British Protectionism Against Indian Imports— The increase volume of import of India textiles products into the British markets alarmed the British textiles manufacturers and created large scale unemployment among the working men of the weaving trade. Thus heavy duties were imposed on the import of Indian cloth. By 1720, laws have been passed forbidding the use of Indian cloth even when printed or dyed in England. Indian silk and cotton however still held its own position in European markets up to the middle of the 18th century when the English textiles industry began to develop on the basis of new technology.
3. English East India Company acquired monopolistic control (1757-1813) — After the battle of Plassey in 1757 the pattern of the Company’s commercial relations with India underwent a great change. The company used its political control over Bengal to acquire monopolistic control over Indian trade and production. Moreover it utilized the revenues of Bengal to finance its export of India goods. The company used its political power to dictate Texas to the weavers of Bengal. They were compelled to work for the company for the low wages and were forbidden to work for Indian merchants. The company at the same time monopolized the sale of raw cotton and made the Bengal weaver pay exorbitant prices for it. Indian textiles also had to pay heavy duties on entering England. The British Government was determined to protect its own industry whose product could not compete with the cheaper and better goods.
4. Rise of British Manufacturers - The industrial Reduction in Britain completely transformed Britain’s economy and its economic relations with India. Britain became increasingly urbanized as a result of the Industrial Reduction .Industrial reduction also led to the rise of powerful class of manufacturer whose interest was very different from that of the East India Company. They began to attack the trade monopoly of the company. Since the profits of this class came from manufacturing and not from trading, it wanted to encourage not imports of manufactures from India, but import of its own products to India as well as import of raw materials. But 1793/1813 they launched a powerful campaign against the company and its commercial privilege and finally succeeded in 1813 in abolishing its monopoly of Indian trade.
5. POST 1813 - Guided by the need of British industries, the government of India followed a policy of unrestricted entry of British goods. It also tried to increase the number of buyers in India by fresh conquest and direct administration of protected states. The public opinion in Britain advocated the modernization of Indian Society so that a greater number of Indians would develop a taste for machine made goods. It also advocated reduction in land revenue to enable the Indian peasants to buy foreign manufactures. Thus Indian land made goods were force an equal competition with the machine-made products of Britain and gradually faced extinction.
6. One way Free Trade Policy (After 1813) - Indian goods were subjected to heavy duties on their entry into England, while British goods were permitted free entry into their country. Thus India was forced to import new material like raw cotton and silk for British industries besides plantation products like indigo, tea and food grains which were short in supply in Britain. Thus after 1813 the...