Indian Big Business under the Raj

The East Indian Company ruled the British Raj before being taken over by the British

Crown on the Indian Subcontinent. Trading and business played a pivotal role in creating the

British Raj in the Indian Subcontinent. A joint-stock corporation called the East India

Company was established in 1600 to conduct commerce and business in the South East and

the Indian Ocean area. However, The Company colonized Southeast Asia, took over sizable

portions of the Indian Subcontinent, and established colonies and trading ports in the Persian

Gulf Residencies. Spices, silk, and tea, among other products unavailable in the British

Empire, were among the numerous imports that contributed to particular Indian significant

business growth during the British Raj. Through the industrialization of the British Raj and

other colonial British empire areas in Southeast Asia, numerous goods and commodities

unavailable in the British empire were imported in large quantities. The Company used the

Indian continent to produce these items and goods to create massive profit with minimal

investment. Local companies from the Indian state started emerging rapidly to make said

items and goods to keep up with the trade demand by the British Company. 

In the early 1750s, The East Indian Company remained heavily dependent on

indigenous bankers' advances until the end of the 1810s. In Bombay, mainly, the constant

transfer of the funds from Bengal was necessary to keep that deficit province solvable. Surat-

based bankers were being operated in close coordination with bankers in Benares, which was

then the leading financial hub in India. It was around the 1800s that the Company could

emancipate itself from before without being more dependent on the indigenous bankers by

setting up their treasuries that would provide The Company with the funds needed to finance

its military and administrative operations in the region without the help of indigenous banker.
Deprived of this link to the state, indigenous bankers entered a gradual decline process. The

creation of presidency banks, first in Calcutta (1806– 9), followed by Bombay (1840) and

Madras (1843), tended to accelerate that decline, as these official banks came to play a

central role in the functioning of the money market. Increasingly, indigenous bankers were

reduced to financing small traders and agriculturists.

In the early 1700s to 1800s, there were several attempts from the local Indian

businessman to create a company to conduct business with the local area by using the local

goods and items to trade. For example, there are business figures in the Indian big business

industry, such as Dwarkanath Tagore (1794– 1846), belonging to a famous family of Bengali

zamindars; he created with a British partner, William Carr, the firm of Carr Tagore,14 which

invested in an array of enterprises such as indigo farms, coal mines, steamship companies that

were successful for a while but were devastated, after his death, by the 1848 collapse of the

Union Bank, which had been closely linked to Carr Tagore. The crisis affected the firm's

British and Indian partners: whereas the former escaped relatively unscathed, while the latter

was ruined, and most of the enterprises they had created were transferred to the British

businessman, thus bringing to a disastrous end this first flourishing of Indian big business.

Another trade that made Indian businesspeople flourish was the China trade. In the 1770s, the

East India Company started promoting sales of Indian opium to China, in defiance of an

imperial edict prohibiting the sale of the drug, to avoid sending too many species to China in

payment for its increasing purchases of tea, the Parsi China merchants stepped in as

significant intermediaries The sale of Indian Opium to the Chinese state also help local Indian

business people to earn a profit and accumulate wealth through trade. The trade enabled a

new phase in creating a stable economic step during the early stage of the British Raj period. 
 Furthermore, during the 1850s, The British East India Company, whose political

influence in India grew steadily, used colossal revenue generated by the provinces under its

rule for purchasing Indian raw materials, spices, and goods. Thus the continuous inflow of

bullion that used to come into India on foreign trade stopped altogether. The Colonial

government used land earnings from conflicts in Europe and India, leaving little money for

India's development. In the 80 years (1780-1860 AD) when it was under colonial

administration, India went from exporting processed commodities for which it was paid in

gold to exporting raw resources and consuming created goods. Indian exports to markets in

Europe, Asia, and Africa were mostly made up of fine cotton and silk in the 1750s; by the

1850s, most of India's exports were made up of raw commodities such as natural cotton,

opium, and indigo. The building of the railway and the widespread use of train-based freight

transit made it possible for the Colonial government to expand trade. The flow of goods has

become easier to bring from all over the British Raj state due to the completion of the railroad

by the British. The rail network quickly expanded after the first passenger line opened in

1853, particularly in the 1880s and 1890s. India had the fourth-largest worldwide rail

network by the early 20th century. The initial construction of the lines was overseen by

private British businesses, who were compensated with a 5 percent dividend guarantee on

their capital investments. The East Indian Railway and Great Indian Peninsula Railway were

the largest and most significant early railroad firms. The Great Indian Peninsula Railway

began serving Bombay in the 1850s, while the East Indian Railway began serving Calcutta in

the 1850s. The railways switched from utilizing wood to coal to power the engines in the

1880s, and coal mining swiftly followed. However, some mines were held by Indians. British

companies held a similar dominance in the engineering sector, but Indian entrepreneurs made

their mark in other industries like cement and chemicals. The Indian commercial enterprise

Khataus in Bombay invented and pioneer the cement industry in the Indian Continent.
  The textile market was dominated mainly by the Indians and Parsi due to the

American Civil War (1861-1865). The war caused a worldwide shortage of cotton due to the

destruction of cotton farms in the North part of America. Due to the shortage of cotton, some

Indian operators took advantage to finance the development of the crop in the Deccan. They

sold cotton to Britain at very high prices for a few years and made enormous profits. From

1904 to 1907, the state was accompanied by a widespread campaign to use domestically

produced khadi rather than imported cloth. The Indian textile industry took advantage of it to

sell machine-made fabric as khadi, and in 1914 its share in the domestic cloth market reached

20 percent, as against 20 percent for artisanal cloth and 60per cent for import. Remarkably

for a colonial country, the textile industry was dominated by Indian capitalists, the Parsis,

prominent at the outset, having been joined by entrepreneurs from various other communities

such as the Gujarati, Hindus, and Muslims. The British government nationalized the East

India Company in the wake of the Indian Rebellion of 1857 and in accordance with the

Government of India Act of 1858. The Indian government's assets, executive authority,

infrastructure, and armed forces were taken over by the British government. In 1833, the East

India Company gave the UK government control of its commercial trade holdings in India.

The latter took over The East Indian Company's debts and liabilities, which were to be repaid

using taxes collected in India. The shareholders decided to accept a 10.5 percent yearly

dividend that would be financed by India for 40 years, with a final pay-off to repurchase any

outstanding shares. Until the East India Stock Dividend Redemption Act of 1873 went into

effect on January 1, 1874, the East India Company continued to exist only in a skeletal form,

administering the tea trade on behalf of the British government. This Act stipulated that The

East Indian Company would be formally dissolved on June 1, 1874, following the payment of

the last dividend and the commutation or redemption of its stock.

 During the 1914s, the First World War created a massive disruption in the global

economy due to the lack of international trade between countries of the war, which also

caused a severe bout of inflation, leading to a considerable rise in the price of foodstuffs

proved a boon for Indian big business. The threat of German submarines and a shortage of

shipping led to a fall in manufacturers' imports from the United Kingdom, of which Indian

industrialists took advantage. The cotton textile industry increased its cloth production by 50

percent during the war years, thus expanding its market share at the expense of British mills.

However, after making record profits during the war, the cotton textile industry was hit by a

post-war slump, and the number of textile mills continued to dwindle after 1922. The Indian

textile industry suffered from increased competition from Japanese mills, which had lower

production costs and made inroads into the market for ordinary cloth. The Tata steel mills

benefited from a big contract with the British army to supply rails destined for building a new

railway line in Mesopotamia (Iraq), meant to transport men and materials from Basrah to

Baghdad as an essential aid to the military operations against the Turks. The Tatas were able

to sell 200,000 tons of rails to the army, which allowed the Company to avoid looming

bankruptcy. The jute industry also received large orders from the military authorities, using

jute bags in the trenches, making record profits, as did the Marwari traders who sold the raw

material. Some Indian traders made a fortune through speculation on the stock exchange and

purchased jute mills, which ended the British monopoly in that industry. The sugar business

was the most prominent example. Although India cultivated much sugarcane, most of the

harvest was used to make GUR or Khansari, a type of sugar refined by an artisanal method.

Sugar from factories was primarily imported from the Dutch East Indies, and India had just a

few mills. The Sugar Protection Act of 1936, which imposed hefty customs tariffs on
imported sugar, resulted in an explosion of mills in the United Provinces and Bihar, where

most of the mill was developed by the Marwari entrepreneurs.

The Second World War (1939-1945) was a turning point for India's economy on a

global scale. India was now engaged in the war, which significantly impacted different

sectors of its economy. Prices of raw materials and foodstuffs rose, and tremendous overseas

demand for commodities like natural jute and oil seeds appeared. Industrialists benefited

from war orders but were also subjected to strict constraints; as the authorities set up a war

economy system, India became a front-line country. Some new industries were set up

expressly to supply war-related materials, such as aluminum and trucks. There were also the

beginnings of aircraft production. The profits were high during the war years have, cause new

confidence felt by Indian big business in the future of the country found expression in the

publication in the mid- 1940s by a group of prominent businessmen of a plan for the

economic development of India, which became known as the 'Bombay Plan'44 and served as

a blueprint for the monetary policy of independent India during the first post-independence

decade. Indian big business took advantage of a retreat of British capital following

independence to strengthen its position in branches that had been British- dominated, such as

the jute industry, coal mining, and even, albeit to a lesser extent, tea plantations. 

In conclusion, the colonization of India by the British Empire have a positive and

negative effect on the economy of the Indian state. The emergence and fall of India's

entrepreneurs due to the policy changes made by the colonial government had a drastic effect

on the economy of the Indian state during the colonization and after the country's

independence. The colonization brought a lot of new technologies and new business to the

land; however, the trades and sound that came together with the colonized era brought little
profit to the local businessmen but massive profit to the British empire. However, the

infrastructure and the economic knowledge the locals have learned have proved its success

after independence was granted to India. Today, India has ranked as the sixth largest

economy, with an annual GDP of 2.7 Trillion dollars in 2021.