Destruction of Industry and Late Development of Modern Industry

Indian industry was steadily destroyed. The destruction of textile competition of India is a glaring example of the de-

industrialisation of India. The British stopped paying for Indian textiles in pounds, choosing instead to pay from the revenue gained from Bengal and at very low rates, thus impoverishing the peasants further.

A thriving ship-building industry was crushed. Surat and Malabar on the western coast and Bengal and Masulipatnam on the eastern coast were known for their ship-building industries. The British ships contracted by the Company were given a monopoly over trade routes, while even the Indian merchant ships plying along the coast were made to face heavy duties. In 1813, a law by the British parliament prohibited ships below 350 tonnes from sailing between India to Britain; this effectively put a large proportion of Bengal- built ships out of commission on the Indo-British trade routes. In 1814, another law was passed under which Indian- built ships were refused to be considered ‘British-registered vessels’ which could trade with America and the European continent. So the decline of the Indian shipping industry was ensured.

The British did not allow the Indian steel industry to grow. Industries like the Tatas which began to produce steel after a lot of trouble getting the required permissions were restricted by being forced to produce a higher standard of steel for British use. The firms were not able to produce the lower standard of steel at the same time, so they were left out of the larger market that demanded the lower quality of steel. As restrictions were placed by Britain on Indian steel imports, this steel could only be used in India. Obviously, the growth of the industry was hampered.

Indian traders, moneylenders and bankers had amassed some wealth as junior partners of English merchant capitalists in India. Their role fitted in the British scheme of colonial exploitation. The Indian moneylender provided loans to hardpressed agriculturists and thus facilitated the state collection of revenue. The Indian trader carried imported British products to the remotest corners and helped in the movement of Indian agricultural products for exports. The indigenous bankers helped both in the process of distribution and collection. But, the colonial situation retarded the development of a healthy and independent industrial

bourgeoisie, and its development was different from other independent countries like Germany and Japan.

It was only in the second half of the nineteenth century that modern machine-based industries started coming up in India. The first cotton textile mill was set up in 1853 in Bombay by Cowasjee Nanabhoy and the first jute mill came up in 1855 in Rishra (Bengal). But most of the modern industries were foreign-owned and controlled by British managing agencies.

There was a rush of foreign capital in India at this time due to prospects of high profits, availability of cheap labour, cheap and readily available raw material, ready market in India and the neighbours, diminishing avenues for investments at home, willingness of the administration to provide all help, and ready markets abroad for some Indian exports such as tea, jute and manganese.

Indian-owned industries came up in cotton textiles and jute in the nineteenth century and in sugar, cement, etc., in the twentieth century. Indian-owned industries suffered from many handicaps—credit problems, no tariff protection by Government, unequal competition from foreign companies, and stiff opposition from British capitalist interests who were backed by sound financial and technical infrastructure at home.

The colonial factor also caused certain structural and institutional changes. The industrial development was characterised by a lopsided pattern—core and heavy industries and power generation were neglected and some regions were favoured more than the others—causing regional disparities. These regional disparities hampered the process of nation- building. In the absence of careful nurturing of technical

View

…deindustrialisation was a deliberate British policy, not an accident. British industry flourished and Indian industry did not because of systematic destruction abetted by tariffs and regulatory measures that stacked the decks in favour of British industry conquering the Indian market, rather than the other way around.

—Shashi Tharoor in An Era of Darkness

education, the industry lacked sufficient technical manpower. Socially, the rise of an industrial capitalist class and the working class was an important feature of this phase.