TRADE IN MEDIEVAL INDIA

SUBJECT – HISTORY-I

SUBMITTED BY – KARTHIK SURESH,

ROLL NO. 2010-33,

1ST YEAR, 1ST SEMESTER.

SUBMITTED TO – DR. SANTHOSH ABRAHAM,

FACULTY MEMBER, HISTORY

NALSAR UNIVERSITY OF LAW, HYDERABAD

 CONTENTS

NO. CHAPTER PAGE

1 INTRODUCTION 1
2 TRADE IN VARIOUS REGIONS OF INDIA 3
(DOMESTIC TRADE)
3 INTERNATIONAL TRADE 5
4 ORGANIZATION OF MEDIEVAL INDIAN 7
TRADE
5 TRADE IN THE CHOLA EMPIRE 9
6 CONCLUSION 11
7 BIBLIOGRAPHY 12

CHAPTER 1 – INTRODUCTION
 Trade is the mainstay of any dynamic economy. Indeed, trade is the more important
wheel on which an economy runs. Trade arises from the basic want of goods. Needless to
say, trade has a very important role to play in any economy, be it ancient, medieval or in
modern times.

The system of trade in India was one of the most organized during the medieval times.
Indian products were regarded as those of high quality and reasonable price. All over the
world, Indian products were in demand.

Indian medieval trade can be divided into three types – regional, national and
international. Regional and local trade was where locally-made produce was traded within a
particular region. National trade took place in the large kingdoms of the Delhi Sultanate,
wherein huge quantities of goods and commodities were traded within the borders.
International trade took place either through land or by sea routes. International trade was
carried out with Malacca, China, Arabian Nations, Central Asian Nations, Sri Lanka, South
East Asian Kingdoms1 etc.

This project aims at elucidating the various trade practices used by the merchants in
India. It also shows the different types of mercantile interests shown by the Indian trader.

The Chapterization of the project is as follows –

1. Trade in the various regions of India, i.e. domestic trade shall be discussed at length in
the first chapter. The important ports in medieval India and the different commodities
the inland ports dealt with are discussed. The system of markets is also discussed, and
the King’s involvement in setting up of market is spoken of. The involvement of local
castes and tribes in trade has also been mentioned. The role of brokers and bankers are
also written. The trade patterns in regions, notably Bengal and South India are
discussed. The economic policies of some of the Delhi Sultanate rulers are also
spoken of.
2. In the chapter of ‘International Trade’, the various nations with whom trade occurred
have been mentioned, as also the products exported. The researcher brings on a very
different perspective on International medieval trade in India, that of religious
merchant competition between Hindu and Muslim Merchants. The land-routes of

1
Singh, Upinder, ‘A History of Ancient and Medieval India
 trade as described by Babur in his memoirs are discussed. Also, the role of Arsbs as
middlemen is spoken of.
3. In the third chapter, ‘Organization of Indian Trade’, the different means of trade
organization are covered. The guild system and its structure are described. Also
shown is the importance and forms of Hundi system. The internal banking and credit
system of traders also is briefly described. The guilds had become religion-based in
the later years, this transition is also discussed.
4. The fourth chapter deals with the Trading system, the Navy and the efforts the Chola
Kings made to boost trade in their kingdom. The Chola kings would fight wars so that
their trade links were secured. It was the first time in the History of India that a King
was fighting for such a cause. This shall be the focal point of discussion in this
chapter.

In this way, the researcher would like to present his project titled ‘Trade in
Medieval India’, to the reader.

CHAPTER 2 – TRADE IN VARIOUS REGIONS OF INDIA (DOMESTIC TRADE)

 In India, the domestic trade was of two types – local and national. Local trade
perceptibly involves locally available produce, like fruits, vegetables and grain. National
trade involved trade of lesser perishable commodities like cotton, wood etc. In India, the
trade was regulated by guilds and administrative officials of the king. These administrative
officials would run the markets as set up by the King.

In India, the important ports were Tamralipti near Haldia in Bengal, Tuticorin and
Nagapattinam in Chola Kingdom, and Nallasopara and Khambat were on the West coast, the
former near Mumbai, the latter on the Gulf of Cambay. The port cities were important centres
of international trade. These ports could handle larger vessels and were suitable for
international trade. Ghodbandar near Thane is one such example. During the medieval period,
Ghodbandar was the port which received Arabian horses from the Arabian lands. There was a
tax collection centre, a cargo bay etc. The Shalva and the Rashtrakuta kings used this port.
Also well known is the port of Calicut. This city was the main trading place from where
spices, cotton, silk, gold and silver were exported from here. One of the first renaissance-era
European explorers, Vasco-da-Gama, arrived here in 1498. Even before his arrival, Calicut
was a bustling port, one of the largest in India.

However, compared to the modern system of rule, the king was quite passive about
domestic, intra-regional trade. Only the most important happenings of domestic trade and
international trade were discussed in the King’s court2.

In concern with domestic trade, the local tribes and peoples played a pivotal role. One
such caste is the Banjaras of Rajasthan. They played a very important part in transporting
agricultural and other products from one part of the country to the other. Their operations
were on a large scale. They employed thousands of oxen on carts and wagons to transport
goods from one place to another. On the roads, they were guided by the Bhats of Rajasthan
and their caravans remained guarded. Brokers also played an important part in commercial
transactions. They charged commission from both sellers and purchasers. The bankers
provided capital in the form of loans and they also accepted deposits. Money-lenders lent
money on interest through bonds. The Hundi system was also favoured (more on Hundi
explained later).

2
S R Bakshi, ‘Advanced History of Medieval India’, page 291
 The merchants of India, says Bakshi3, were understood as honest and fair and were
respected wherever they went.

As mentioned earlier, Kings did not bother themselves with the affairs of trade. The
Sultans of Delhi, in this regard, were very busy in invasions and campaigns. Balban was by
far the first Delhi Sultan to approach economic matters with seriousness. The trade hotspots
of Kampil and Patiali4 were rid of robbers and thieves. Merchants thereby were able to travel
from one place to another without fear. Many changes in the economic field were made by
Alauddin Khilji. His predecessor, Firoz bin Tughlaq’s reign saw a terrible famine and the
condition of the Shivalik area was so bad that 20-30% of the population committed suicide 5.
Alauddin Khilji was aware of the economic problems and tried to sort them out. He was quite
successful in doing that. He reduced prices of important grains etc. However, his economic
policy was not based on sound principle and the merchants took advantage of this, charging
whatever price they liked after his demise6.

About Bengal, Mahuan, the Muslim medieval historian, wrote in 1406 that, after
Timur’s invasion and plunder, the areas near Delhi were not left with money at all. Only the
outlying provinces had financial stability. The rich people of Bengal built ships and carried
out foreign trade in them, via the port of Tamralipti. Many people engaged in trade and many
more were engaged in agriculture. The people had their own professions. The coin used in
Bengal was Tanka. The people produced two crops of rice a year and sold them locally. Other
commodities in common use such as wheat were in plenty. There were many kinds of fruits
available, most of which was sold locally.7

Bakshi says that trade and industry in India were directed primarily for the upper class,
for their demands and satisfaction. They had plenty of money, and they spent it recklessly.
Amir Khusrau, the famous poet-historian, wrote that a ‘stream of gold’ flows through the
streets of Delhi. However, the poor people suffer. Every pearl in the royal crown is but the
crystallized drop of blood fallen from the tearful eyes of the poor peasant, was poetically said
by Amir Khusro.8

3
Supra, page 292
4
Duiker, Spielvogel, ‘World History’, page
5
Upinder Singh, ‘A History of Medieval India, pg 403
6
Ibid, page 403
7
Ibid, page 405
8
Khan, ‘Poetry of Khusro’.
CHAPTER 3 - INTERNATIONAL TRADE

Inland trade on the Silk Route was also thriving. As Babur says in his memoirs, ‘There
are two trade-marts on the land route between Hindustan to Khorasan. One is Kabul and the
other is Qandahar. To Kabul came caravans from Kashgar which was the trade-mart to China,
Transoxiana, Turkistan etc. and from Qandahar to Khorasan i.e. Iran and West Asia. In Kabul
can be had the products of Khorasan, Rum (Turkey), Iraq and China, while it is Hindustan’s
own Market. Thus the inclusion of Kabul and Qandahar in the Empire creates a favourable
opportunity for the increase of India’s share in the great Trans-Asian trade’9.

India’s position in the International trade scenario was that of a resource supplier.
Indian goods, like spices, cotton, gold etc. were in heavy demand in the Arabian and the
European market. Indian products were considered to be of a high quality and reasonable
price. Indian merchants were, quite perceptibly, aware of this, and they would sell their wares
to middlemen (middlemen and commission agents in the International trade scenario were
usually Arabs). The Arabs would then on sell their wares to European merchants, earning a
large commission. In this way, Arabs introduced Indian culture to the Europeans. Indian
spices were used in many European dishes. Indian cotton was in great demand.

Foreign trade was mostly under Muslim merchants and some in Hindu hands. When
Ibn Batuta visited Khambhat (the port mentioned earlier), he saw that foreign merchants
formed an overwhelmingly majority of the population there. The Portuguese historian
Barbosa says that the Hindu and Muslim merchants at Cannanore travelled as far as Hormuz
in present-day Iran. The Hindu Chetty’s of Tamil Nadu traded with the Burmese Empire.
They also joined the colony of foreign merchants in Malacca engaging in wholesale business.
Orissa merchants had a prosperous trade with South East Asian merchants till about the 15th
Century based at Paradweep.

The Muslim merchants had one advantage over their Hindu counterparts, that of
religious restriction on Hindus. The well-known Kaala Paani principle (that a Hindu shall
lose his caste once he crosses home shores) made Hindu merchants reluctant to travel to
distant places. Also, after the advent of Muslim rule in the country, Muslim merchants were
required to pay only 50% of the import duties levied on Hindus. The role of Hindu traders in
international trade since then, declined.

9
Quoted from the ‘Babur-nama’ by Satish Chandra, ‘A History of Medieval India’.
 India had trade relations with the outside world from ancient times. During the
Sultanate period, however, the Arab supremacy over the seas had cut out direct Indian trade
with Europe. As a result, Indian traders had to deal with Arab middlemen to sell their
products in Europe. Exports from India included cloth, indigo, opium, saltpeter, precious
stones, sugar, medicinal herbs etc. The imports were confined to bullion and articles of
luxury like expensive cloth, oil paintings, mirrors, perfumes, fine swords, knives, sulphur,
quicksilver, porcelain, exotic wines etc. The main ports in the medieval period were
Khambhat, Surat, Bharuch, Lahri Bandar, Bassein, Chaul, Calicut, Goa, Cochin,
Masulipatnam and Satgaon.

The overland trade with the countries of Central Asia and Afghanistan was quite brisk.
Central Asian horses were imported in large numbers, largely through Multan. Furs, arms and
ammunition, and fruits were among other imports10. Other than the Indian ‘tanka’, the
Arabian Dinar was also an accepted currency in International trade.

Bengal and Gujarat were the main places for manufacturing units for textiles.
Metalwork was also an important industry. Indians knew how to produce fine steel.
Goldsmiths of India were famous for their inlay work. Foreign travelers marveled at the skill
of the Indian craftsmen. These items and commodities were most famous and they were
exported in large numbers.

In this way, international trade occurred in India.

CHAPTER 4 – ORGANIZATION OF TRADE IN INDIA

10
Bakshi, ‘Advanced History of Medieval India’, pg.292
 Taxation and the licensing of moneylenders and bankers is an indicator for the legal
acceptance of these occupations and the participation of the administration in their profits.
There is no evidence for the regulation of money lending and banking before, in the Manu
Code followed by Hindu businessmen in the medieval age.11 According to this code, bankers
had to pay a moderate Business tax, in addition to the regular taxes12, in exchange for
protection afforded by the King – for example, in his legal courts. Eventually, banking
became a privileged profession which required a royal warranty.

It is worth mentioning the involvement of Hindu temples and Buddhist monasteries in

money lending also. These temples were multifunctional institutions which performed many
non-religious, economic tasks. In this way, money lending was not only a matter of charity
but also a means of self financing for these religious institutions. Spencer (1968)13 went on to
say that Hindu Temple was a major institution through which early Indian economic life was
organized. Village deities and temple committees were very important in contemporary
money lending. The system of ‘Hundis’, in this regard, was of significant importance14. This
system was integral to India’s informal banking system, and the documentary existence of
Hundis dates back to more than 2000 years ago. It is the oldest known bill of exchange in
India. Indian merchants used Hundis extensively for both debit and credit within India, and
this was also accepted in Eastern Africa and Arabia for Indian goods like clothes and spices15.
For example, two brothers Tejpal and Vastupal drew an amount worth Rs. 9 Crore in Hundi
Bonds in the 10th Century to build the Dilwara temple in Rajasthan. On the other side of the
spectrum, a Hundi worth Rs. 42 was also found, dated in the 17th Century. The British East
India Company also used Hundis for trade with Indian merchants, until the British Indian
Rupee became legal tender. That was when the British made any form of hundi payment
illegal. The Hundi system was the precursor to the illegal Hawala system that operates today
in the Sub-Continent. Even today, reminiscent of British law, both Hundi and hawala are
illegal today.

11
Heiko Schrader,’ Changing Financial Landscapes in India and Indonesia’.
12
The Manu Code mentioned 1/32 part of the income as tax
13
As cited in Heiko Schrader,’ Changing Financial Landscapes in India and Indonesia’.

14
The handbook of social research ethics, By Donna M. Mertens, Pauline E. Ginsberg, Sage, 2009.

15
Markovitz, ‘History of India’.
 The Guilds were the major form of trade in this regard. The ancient Buddhist texts like
Angavija, Lalitavistara, Milindapanha, and Mahavastu refer to many professional guilds of
craftsmen. Milindapanha refers to some 60 types of crafts and guilds16. Potters, craftsmen,
artisans, shell and metal making etc were covered under these guilds. Jataka stories often attach a
kula (family) or putta (son) to suggest hereditary office positions in these guilds. The guilds were
basically to control and regulate the trade, to guard trade secrets, to settle disputes, to settle any
doubts regarding the occupation concerned etc. These guilds were operative in the Gupta as well
as Maurya period. The Indian merchant guilds enforced strict rules in trading practice, price
regulations and in the maintenance of standards of production. The Cholas were also organizing
guilds in circa 900 A. D17. The variety of craft specialization was good in Indian guild system.
Tamil-Brahmi inscriptions mention a mason, master mason, carpenter and goldsmith. In both
Ancient as well as medieval period, guilds were functional. This setup worked very well for the
protection of trade and, it was also a sort of lobby, in the King’s Court.

In later times the organizations of groups of merchants (they could not exactly be
called guilds), became based on religion. The Hindu merchants began to lose business to their
Muslim counterparts (circa late 1400’s-early 1500’s). Bakshi18 points out that large scale
business was in the hands of special groups or particular communities. The Multanis and
Banias of Gujarat were the most important business community of Northern and Western
India (these communities are prominent in the field of business even today). Internal trade
was almost entirely in the hands of Hindu merchants, while foreign trade had a Muslim
majority of merchants.

16
A History of Ancient and Medieval India, Upinder Singh, pg. 405

17
World History, Volume 1, By William J. Duiker, Jackson J. Spielvogel, Cengage, 2009.

18
S R Bakshi, Advanced History of Medieval India pg. 294.
CHAPTER 4 – ADMINISTRATION OF TRADE IN THE CHOLA EMPIRE

The overseas ventures of South India were ancient and extensive. South India had long
trading relations with the west through transhipments at the Northern ports. Tamil kingdoms
became prosperous and encouraged sea trade by developing harbours and providing quarters,
warehouses and workshops for Roman sailors and merchants. The ports had navigational
facilities like wharfs, repair yards, pilotage and even light houses19. This growth in trade resulted
with competition between the Chola, the Pandya and the Chera kings. Sri Lanka too was
involved. In due course of time the Cholas became powerful and prosperous. By the end of the
2nd century, voyages between India and South East Asia became frequent. The important South
Indian trading ports were Muzirs, Poduca, and Sopatma.20. Indians had better organization,
superior knowledge of agriculture and road building and an efficient civil service.

The great Chola king Rajaraja 1 (AD 985 to 1014) tried to take the Chera country under
his control and took the key port of Kollam, to strengthen his trade base. He is also said to have
attacked Maldives Island and Sri Lanka. His son Rajendra 1 (1014 to 1042 AD.) prepared a
naval expedition against Sri Vijaya21, first taking Andaman and Nicobar Islands to serve as an
advance base. The Chola fleet sailed on and took several coastal ports. However this attack was
only to break Sri Vijaya's commercial monopoly and not to occupy it permanently.

Raja Rajendra, the powerful Chola king of the 10th century, knew the great importance
of foreign trade and built a powerful navy meant for trade and war. He encouraged merchant
guilds, checked his rival kings, the Cheras and the Pandyas and suppressed Sri Lankan
competition by invading the island. He contained Arab competition in trade by sending a naval
expedition against Maldives to stop the Arabs from building and equiping merchant ships there.
His successors, Rajendra Chola 1 and Virarajendra continued and strengthened the maritime
tradition and made Tamil naval power invincible.

Rajaraja Chola's son, Rajendra Chola extended Chola rule by further conquest. In 1025
AD he crossed the Bay of Bengal with a strong fleet, overran Pegu (Modern day Sumatra island
in Indonesia) and later took the Andaman and Nicobar islands to use as a base for an attack on
Sri Vijaya. The object of the attack was not to conquest and rule, but to break Srivijaya's

19
Temple Urbanism in Medieval South India, James Heitzman Pg 732
20
Taken from http://pfr2006.nic.in/MaritimeHistory3.htm
21
The Penguin History of Early India from the origin to AD 1300, Romila Thapar pg 364-365
commercial monopoly and end the vexations suffered by Chola traders - after settling the
dispute, the two kingdoms had friendly relations.

Rajendra appears to have made a naval attack on Srivijaya a second time, for reasons,
which are not clear. The Kings of the Far East recognised his power and sought his friendship
after this attack, to help him consolidate his trade base.

Rajaraja‘s policy of annexation was influenced by the control of trade. He began by

attacking the alliance between Kerala, Sri Lanka and the Pandyas in order to break their
monopoly of western trade. The Pandyas had already been subjugated. The Arab traders were
well settled on the west coast and enjoyed the support of the Cheras. To eliminate Arab
competition in trade particularly in South-east Asia he tried to bring Malabar under his control 22.

He later led a naval expedition against the Maldives islands which had assumed
importance in the Arab trade. The Cholas although unable to strike directly at the Arab trade
caused havoc in Ceylon with a devastating campaign when the existing capital Anuradhapura
was destroyed and the Cholas moved the capital to Pollonnaruva. The confl
ict over the rich province Vengi resumed between the Cholas and the later Chalukyas.

Commerce flourished under the Cholas. Trade was carried on with West Asia and
China and South-east Asia. Trade with China reached unprecedented volume during these
centuries. Foreign trade provided an additional incentive to an already developing local
market. Controlled by merchant guilds, the high volume of trade led to the rapid growth of
towns from the 11th century onwards. There was also a marked increase in the number of
Chola coins that were minted as compared to those of earlier dynasties in this region. The
Cholas tried to encourage trade with China by sending embassies to the country. The articles
brought for trade by the Cholas included glass ware, camphor, brocades, rhino horns and
ivory. Their ships carried goods from West Asia and Africa to China. Roads were built across
the Chola country which not only facilitated the movement of goods for trade but also of
troops during wartime.

22
From http://www.historytution.com/cholas/chola-trade.html
CHAPTER 5 – CONCLUSION

After having understood the various patterns of trade and commerce in the country
during the medieval period, we understand that India was a very successful trade state. Indian
traders were able to bring lots of foreign goods and currency back home. Indian traders, as
mentioned earlier, were warmly received wherever they went, due to their honest and fair
nature. Indian trade routes fell on the centre of the world trading sphere, so there would be a
lot of trading activity at ports like Calicut etc.

The foreign merchants also preferred to come to India for trade. In Indian ports, like
Khambat, 60% of the floating population was of foreigner merchants, mostly Arabs and
Chinese23. This only shows the importance and value of India in the International Trade
scenario. The role of the King in this regard, and the role of guilds in International trade has
been exemplified.

The domestic trade set-up was also very successful. It has already been mentioned that
domestic trade included trade ‘within borders’, so commodities unavailable in some parts of
the country, could receive them through this type of trade. E.g. wheat, unavailable in South
India, could be brought in from the North. Also explained is the role of various tribes and
groups of people instrumental in logistics and transportation of goods. The role of bankers
and brokers has also been elaborated on.

The Cholas, one of the most powerful South Indian empires, has long been a benefactor
of trade. They have fought wars to protect their trade routes and their economic interests. In
pursuit of this, the Chola kings, especially Rajaraja I became so determined that many of the
Asian kingdoms in the South-East Asia and Malacca chose to ally with him to avoid losses in
conflict. The chapter has explained these aspects.

To conclude finally, the researcher wishes to say that trade was the mainstay of Indian
economic life in the medieval times, and that India was the world leader in this regard.

23
Bakshi, ‘Advanced History of Medieval India’.
BIBLIOGRAPHY

Books referred –

1. Thapar, Romila, ‘A History of Ancient India’, Penguin Books, 1st Edition, 2003.

2. Duiker & Spielvogel, ‘World History – Vol. 1’, Cengage, 6th Edition 2009.

3. Singh, Upinder, ‘A History of Ancient and Medieval India – from the Stone Age to
the 12th Century’, Pearson India, 2008 Edition.

4. Wink, Andre, ‘Al-Hind – Early Medieval India and the Expansion of Islam’, Brill
Publications, 2002 Edition.

5. Chandra, Satish, ‘Medieval India – from the Sultanate to the Mughals’, Har-Anand
Publications, 2005

6. Schrader, Heiko, ‘Changing financial landscapes in India and Indonesia – the

sociological aspects’, LIT Verlag, 1997

7. Chopra, Puri and Das, ‘A comprehensive History of Medieval India, Sterling

Publishers 2003

8. Chaurasia, ‘History of Medieval India from 1000 to 1707 AD’, Atlantic Publishers,
2002

9. Bakshi, ‘Advanced History of Medieval India’, Anmol Publications, 2004

Articles referred –

1. Hall, Kenneth, ‘International Trade and Foreign Diplomacy in Early Medieval South
India’, in Journal of the Economic and Social History of the Orient, Vol. 21, No. 1
(Jan., 1978), pp. 75-98

2. Avner Greif, ‘Contract Enforceability and Economic Institutions in Early Trade: The
Maghribi Traders' Coalition’, in American Economic Review, Vol. 83, No. 3 (Jun.,
1993), pp. 525-548.

Websites referred –

1. www.wikipedia.com

2. www.newworldencyclopedia.org/entry/Rajendra_Chola_I

3. www.britannica.com

Online Databases -

1. www.jstor.org

2. www.heinonline.com