• Before the beginning of the formal rule of the British in India, there was a background of Indo-European economic relationship.
• The commercial contacts between India and Europe were very old via the land route either through the Oxus valley or Syria or Egypt.
• But, the new sea route via the Cape of Good Hope was discovered by Vasco da Gama in 1498 and thereafter, many trading companies came to India and established their trading centres.
• The British East India Company was a Joint- Stock Company established in 1600, as the Company of Merchants of London Trading into the East Indies.
• During this time, other trading companies, established by the Portuguese, Dutch, French, and Danish were similarly expanding in the region.
• The British Company gained footing in India in 1612 after Mughal emperor Jahangir granted the rights to establish a factory (a trading post) in Surat to Sir Thomas Roe, a representative diplomat of Queen Elizabeth Ist of England.
• They entered India as traders at the outset but by the passage of time indulged in the politics of India and finally established their colonies.
• The commercial rivalry among the European powers led to political rivalry. Ultimately, the British succeeded in establishing their rule India.
The Dutch

• In March, 1602, by a charter of the Dutch parliament the Dutch East India Company was formed with powers to make wars, concluded treaties, acquire territories and build fortresses.
• The Dutch set up factories at Masulipatam (1605), Pulicat (1610), Surat (1616), Bimilipatam (1641), Karikal (1645), Chinsura (1653), Kasimbazar, Baranagore, Patna, Balasore, Negapatam (all in 1658) and Cochin (1663).
• In the 17th century, they supplanted the Portuguese as the most dominant power in European trade with the East, including India.
• Pulicat was their centre in India till 1690, after which Negapatam replaced it.
• In the middle of the 17th century (1654) the English began to emerge as a formidable colonial power.
• After 60-70 years of rivalry with the English, the Dutch power in India began to decline by the beginning of the 18th century.
• Their final collapse came with their defeat by the English in the battle of Bedera in 1759.
• One by one the Dutch lost their settlement to the English and their expulsion from their possessions in India by the British came in 1795.

THE PORTUGUESE

• The Portuguese traveler Vasco da Gama reached the port of Calicut on 17 May 1498 and he was warmly received by Zamorin, the ruler of Calicut. He returned to Portugal in the next year.
• Pedro Alvarez Cabral arrived in 1500 and Vasco da Gama also made a second trip in 1502.
• They established trading stations at Calicut, Cannanore and Cochin.
• The first governor of the Portuguese in India was Francis de Almeida.
• Later in 1509 Albuquerque was made the governor of the Portuguese territories in India.
• In 1510, he captured Goa from the ruler of Bijapur. Thereafter, Goa became the capital of the Portuguese settlements in India.
• Albuquerque captured Malacca and Ceylon. He also built a fort at Calicut.
• Albuquerque encouraged his countrymen to marry Indian women.
• Albuquerque died in 1515 leaving the Portuguese as the strongest naval power in India.
• The successors of Albuquerque established Portuguese settlements at Daman, Salsette and Bombay on the west coast and at Santhome near Madras and Hugli in Bengal on the east coast.
• However, the Portuguese power declined in India by the end of the sixteenth century. They lost all their possessions in India except Goa, Daman and Diu in the next century.

THE DANES

• Denmark also established trade settlements in India and their settlement at Tranquebar was founded in 1620.
• Another important Danish settlement in India was Serampore in Bengal.
• Serampore was their headquarters in India.
• The Danes failed to strengthen themselves in India and they sold all their settlement in India to the British in 1845.

THE FRENCH

• The French East India Company was formed by Colbert under state patronage in 1664.
• The first French factory was established at Surat by Francois Caron in 1668. Later Maracara set up a factory at Masulipatam in 1669.
• A small village was acquired from the Muslim governor of Valikondapuram by Francois Martin and Bellanger de Lespinay in 1673. The village developed into Pondicherry and its first governor was Francois Martin.
• Also Chandernagore in Bengal was acquired from the Mughal governor in 1690.
• The French power in India declined between 1706 and 1720 which led to the reconstitution of the Company in 1720.
• The French power in India was revived under Lenoir and Dumas (governors) between 1720 and 1742.
• They occupied Mahe in the Malabar, Yanam in Coromandal (both in 1725) and Karikal in Tamil Nadu (1739).
• The arrival of Dupleix as French governor in India in 1742 saw the beginning of Anglo French conflict (Carnatic wars) resulting in their final defeat in India.

THE ENGLISH

• The English East India Company (also known as the East India Trading Company, and, after the Treaty of Union, the British East India Company) was formed by a group of merchants known as ‘Merchant Adventures’ in 1599.
• The Company was granted an English Royal Charter, under the name Governor and Company of Merchants of London Trading into the East Indies, by Elizabeth I on 31 December 1600, making it the oldest among several similarly formed European East India Companies, the largest of which was the Dutch East India Company.
• In 1608, the company decided to open a factory (the name given to a trading depot) at Surat.
• The English ambassador Captain Hawkins arrived at Jahangir’s Court to seek permission for trade with India. But initially it was turned down due to Portuguese intrigue. This convinced the English of the need to overcome Portuguese influence at the Mughal Court if they were to obtain any concessions from the Imperial Government.
• The Company achieved a major victory over the Portuguese in the Battle of Swally near Surat in 1612, where two English naval ships under Captain Best defeated a Portuguese naval squadron.
• These victories led the Mughals to hope that in view of their naval weakness they could use the English to counter the Portuguese on the sea. Moreover, the Indian merchants would certainly benefit by competition among their foreign buyers.
• Captain Bust succeeded in getting a royal firman by Jahangir permitting the English to build a factory in Surat, Cambaya, Ahmedabad and Goa in 1613.
• The English were not satisfied with this concession and in 1615 their ambassador Sir Thomas Roe reached the Mughal Court. They also exerted pressure on the Mughal authorities by taking advantage of India’s naval weakness and harassing Indian traders and ship from the Red Sea and to Mecca.
• Thus, combining entreaties with threats, Roe succeeded in getting an Imperial farman to trade establish factories in all parts of the Mughal Empire.
• Roe’s success further angered the Portuguese and a fierce naval battle between the two countries began in 1620 which ended in English victory. Hostilities between the two came to an end in 1630.
• In 1662 the Portuguese gave the Island of Bombay to King Charles II of England as dowry for marrying a Portuguese Princess. Eventually, the Portuguese lost all their possessions in India except Goa, Daman and Diu.
• The Company, benefiting from the imperial patronage, soon expanded its commercial trading operations, eclipsing the Portuguese Estado da India, which had established bases in Goa, Chittagong and Bombay.
• The Company created trading posts in Surat (where a factory was built in 1612), Madras (1639), Bombay (1668), and Calcutta (1690).
• By 1647, the Company had 23 factories, each under the command of a factor or master merchant and governor if so chosen, and had 90 employees in India.
• The major factories became the walled forts of Fort William in Bengal, Fort St George in Madras, and the Bombay Castle.
• In 1634, the Mughal emperor extended his hospitality to the English traders to the region of Bengal, and in 1717 completely waived customs duties for the trade.
• The company’s mainstay businesses were by then in cotton, silk, indigo dye, saltpetre and tea.
• By a series of five acts around 1670, King Charles II provisioned it with the rights to autonomous territorial acquisitions, to mint money, to command fortresses and troops and form alliances, to make war and peace, and to exercise both civil and criminal jurisdiction over the acquired areas.

IMPACT OF EUROPEANS ON INDIA’S FOREIGN TRADE

• With the arrival of the Europeans, particularly the Dutch and the English, there was a tremendous increase in the demand for Indian textiles for both the Asian markets and later the European market.
• The Asian markets for Indian textiles were developed over a long period. There markets were extensive and widespread and there was great diversity in their demand.
• There was a bilateral trade between the Coromandal and various parts of South East Asia such as Malacca, Java and the Spice Islands. In this trade, the Coromandal textiles acted as a link in a multilateral trade, embracing the Coromandal, South-East Asia, West Asia, and the Mediterranean. In this trade, Coromandal textiles were exchanged for South-East Asian spices which were in turn meant for the West Asian and Mediterranean markets.
• The European market for Indian textiles actually developed around the middle of the 17th century, and thereafter it grew by leaps and bounds.
• The intra-Asian trade witnessed severe competition among the various groups of merchants, such as the Portuguese, the Dutch, the English, the Danes, and the Indians consisting of both the Moors and the Chettis, whereas the European market for Indian textiles was dominated entirely by the European companies, particularly the English and the Dutch, with the Indian merchants acting essentially as middleman.
• European participation in the foreign trade of India showed a marked increase in the second half of the 17th century. This increase can be seen clearly in the sharp rise in their investments, a large part of which was in textiles meant for the Asian markets as well as the European market.
• Though initially European investment in Indian textiles considerably exceeded those ordered for the European market, by the end of the 17th century the situation was reversed with two-thirds of it going for the European market and only one-third for the Asian market.
• Among the various European companies competing for Indian textiles, the main rivalry was between the Dutch and the English, with the former initially having an edge but the latter gradually gaining supremacy by the turn of the 17th century and the beginning of the 18th century.
• With regard to the textile varieties that were exported from the Coromandal to South East Asia and other Asian markets, and later to Europe, the European records give a very long list.
• The various types, in order of importance, were long-cloth, salempors, moris (chintz), guinea-cloth, bethiles, allegias, sarassas, tapis, and the like.
• All these varieties were being exported even during earlier periods to several Asian markets such as the Moluccan Spice Islands, Java, Sumatra, Borneo, the Malay Peninsula, Siam, Tenasserim, Pegu, Arakan, Persia, Arabia, and the Red Sea ports.
• But the specialty of the period under study was the increased European orders which, though matching the already existing varieties, demanded measurements large than those in the Asian markets.
• Consequently, the Indian weavers had to change their methods and their looms to accommodate this European demand.
• Many of them did so quite profitably, but it necessitated long-term contracts and rendered spot orders improbable.
• The Indian economy, more specifically its textile trade and industry, during the second half of the 17th century, was a seller (i.e. producers) market. For, when the three European companies- English, Dutch and French were competing in the open market, making large orders from India, and these were supplemented by European private trade and Indian trade, the weavers had greater flexibility and large freedom of operation.
• The interchangeability of goods ordered by these various buyers, who were aiming at broadly the same export market, made it possible for weaver produced was bought up by one or the other eager customers.
• If, for instance, any cloth produced by the weaver was rejected by the companies, then the weaver could sell it to English private traders. This situation existed in many parts of the country where the three companies as well as the other buyers were in free competition.

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