Industrial revolution of Britain

Q how did the emergence of industrial Britain affect Indian eco during early years of 19 century?
explain
[Early II STAGE]
A

the sequence of events that took place was as follows

1. Industrial Revolution
2. Laissez faire taking over Monopoly: EIC losing monopoly status in India
3. Lancashire captures Indian markets.
4. Reemergence of Marwaris traders
5. De-industrialization.
6. Fundamental Change. India becoming exporter of agricultural raw materials from
exporters of industrial finished goods
7. Problems of Tribute Realization :Opium Trade

Initial scenario: before IR there was barter system and nobody was gaining much
The only source of income for British was land revenue. And they had to pay in gold to Indian
traders for barter system.
Here India is net exporter of finished goods.
Industrial revolution
Took place in 1770 in Britain and changed the way production was done in Britain. There was
great increase in production and productivity. And it decreased the price of handloom cloth and a
great investment took place in this sector. It thus shows that industrial revolution led to
development of entire industry in Britain. After IR steam engine came and this led to the
development op British industry. The demand
Of support industry and raw material increased as the production increased eg to make steam
engines iron and steel demand, mining increased for iron and so on

Use of steam in
cotton industry

Increase in Production & Larger Investments in Greater demand for

productivity
steam engines and
these industries
handlooms
Demand for Iron & Greater demand for
Steel industry
heavy eqpt

Greater demand for coal

and greater production

Laissez Faire:
This period also saw emergence of a new class in Britain of entrepreneurs, this new class not
traders but were producers of goods. They thrived on lower prices and knew that they can enhance

their profits maximum by expanding their markets. They were not worried of competition as they
produced cheap and hence wanted removal of monopoly. They wanted Laissez Faire unlike
mercantile monopoly. Once Britain became a production powerhouse it needed markets and its
own market was limited. This led to exports to India. Cotton mills came up in Lancashire
UK was a small market and Lancashire wanted to export its goods to India but there was conflict
of interest with EIC who thrived on handlooms produced in India.
Once Britain became a production powerhouse it needed markets and its own market was
limited. This led to exports to India.
Cotton mills came up in Lancashire and jute mills in Dundee.
These factories produced goods cheaply. The brits flooded Indian markets with these cheap
goods. Thus the demand for goods of Indian industry decreased. Traditional Indian
handicraft also suffered. This was deindustrialization of Indian industry as now there was no
demand of Indian goods in India or abroad.
So now Indians began exporting raw materials for British industries.
India was the only producer of jute and thus demand for Indian jute was there
Indian cotton was short staple. So- when America started supplying long staple cotton then
demand for this also fell with British industries.
Lancashire captures Indian markets.
Reemergence of Marwaris traders
These 2 things happened more or less together. Lancashire was in no way associated with EIC. So
when they came they challenged the monopoly of EIC. During the tenure of EIC the Indian trading
class had suffered badly. They were either wiped out or were forced to become their agents.
But when Lancashire came to India they wanted trading partners who had networks in the country.
So they again had an opportunity to flourish again.
De industrialization:
Lancashire through parliament got Monopoly charter removed in 1813 and thus monopoly
of EIC was broken. There was a change in objective from seizing Indian commodities to seizing
Indian markets. The English exports not only wiped out exports of Indian cotton goods but also
challenged them in their home market. Lancashire did not pay any import duty on goods whereas
Indian cotton weavers had to pay an excise duty, thus their price became more than imported
goods from outside. This led to massive shutdown of industries in India and is called the de
industrialization of Indian industries.
The impact of this de industrialization was that Indian middle class became poorer due to
unemployment and there was decline of other industries like cutlery, guns, machinery etc
because of diversion of surplus from India and decline in income of middle class.

Problem in Realization of tribute

The de industrialization of India seriously affected the entire mechanism of the transfer of wealth
from India to Britain and raised serious obstruction to the realization of tribute. Till now the
realization of tribute had taken in the form of export of Indian manufacturers. Rationally this could

have been compensated by diversion of raw cotton to English factories. But this was not possible
because Indian cotton was too short-stapled for English factories. Similarly raw silk could not
compete with Chinese and Italian silk for English factories and its export remained limited.
New goods like raw jute and indigo were identified for trading purposes by EIC but they were not
preferred coz they were raw and value addition was not very much. So need for new material led
to the identification of opium as a trade good.
The problem became very acute by 1830. The solution was found in opium trade.
NOTE: opium wars etc are towards the middle of 19 cent . our question is abt early 19 cent.
So cant say whether we shud write abt opium or not.
Opium trade
British found a major market for opium in china. Chinese aristocracy consumed opium for
centuries. British slashed opium prices and smuggled it into china through shanghai and Hong
Kong ports. Chinese king tried to stop this trade and fought two wars with Britain Known as
Opium Wars (1840-42 & 1856-58). After the war china lost and opium trade was legalized.
British sold opium produced in India to china and took tea and silk from china to England.
A large amount of Bombay and Bengal capital can be traced to illegal opium trade.
UK
Cotton goods
Imports>Exports

Tea/ Silk
Export>Import

India

China
Opium
Only Exports

The following figure showing imports and exports of Britain to Asia shows the gain to Britain by
this triangular relationship.
Year
1854
1855
1856

Imports
Exports
Excess Imports over exports
23
12
11
24.3
13.1
11.2
29.6
15.4
14.4
* All values in millions pounds

after this will come stage according to ieph notes and according to me too
dont think we need to write anything more

Fundamental Change. India becoming exporter of agricultural raw

materials from exporters of industrial finished goods