and supplied a putting-out system based an imported machine-made yarn

,
providing weavers with raw materials and marketing the product. These indi-genous
bankers were also involved in the financing of agriculture and the trade in raw
cotton; when these trading and moneylending activities lost some of their
profitability in the late 187 os, as a result of increased competition from European
trading firms spreading out from Bombay City, the Ahmedabad shroffs diversified
into cotton yarn production.15 The Ahmedabad industry grew particularly fast
between 1900 and 1913, by which date it had become a major centre of mill-made
cloth production as well as yarn. The close inte-gration of trading, moneylending
and modern industry within the city's busi-ness community, and sometimes even
inside the same family groups, gave the Ahmedabad cotton textile industry its
distinctive profile and provided the foundation for its eventual success after 1918 as
the supplier of better-quality cloth to the domestic market.

Throughout the nineteenth century the Indian market was important to the British
cotton industry, and in the second half of the century just under a quarter of
Lancashire's total exports was sent to South Asia. Before 1914 almost all India's
cloth imports came from Lancashire, but this dominance began to change in the
192os; by 1929 Lancashire supplied only 65 per cent of imported cotton cloth by
weight, and 45 per cent in 1937. Despite this decline, the Indian market remained
Lancashire's best customer until 1939. This meant that the spectre of competition
from Indian industry obsessed British cotton manufacturers from the late nineteenth
century onwards, lead-ing to successive agitations in Lancashire for the adjustment
of Indian tariff policy to suit their interests. Indian tariffs were reduced in 1862 and
abolished in 1882 in the name of free trade; when fiscal necessity required a new
tariff of 5 per cent in 1894, Lancashire insisted that a countervailing excise be
imposed on Indian manufacturers to remove any protective effect. In reality,
however, the degree of competition between Indian and British machine-made cloth
was limited, with the Bombay mills catering for the cheapest end of the mar-ket
where Lancashire could not follow them.

By 1913 the cotton textile industry, centred in Bombay and Ahmedabad, was well
established as the most important manufacturing industry in India. Its output levels
made it one of the largest in Asia, and significant in global terms, but it displayed a
number of distinctive features that impeded its fur-ther development. Firstly, the
industry was largely run by firms of managing