Indian Ocean Trade

UNIT 8 INDIAN OCEAN TRADE NETWORK* Network

Structure

8.0 Objectives
8.1 Introduction
8.2 Indian Ocean Trading Network
8.3 European Trading Companies
8.3.1 The Portuguese
8.3.2 English East India Company
8.3.3 Dutch East India Company, the Verenigde Oostindische Compagnie (VOC)
8.3.4 French East India Company
8.4 Changes in the Trading Network in 17th century
8.5 European Trading Companies and Political Powers of Subcontinent
8.6 European Trading Companies and Indigenous Trading Communities
8.7 Changing Character of Trade in the Indian Ocean
8.8 Let Us Sum Up
8.9 Answers to Check Your Progress Exercises

8.0 OBJECTIVES
After going through this unit, you would be able to understand:
• the character of trading network in the Indian Ocean;
• about the role of European trading companies played in the Indian Ocean;
• how coming of European Trading companies changed the character of trade;
• relationship between political powers in India and European Trading companies
and
• various commodities being traded during this period.

8.1 INTRODUCTION

India with it’s strategic location in the Indian Ocean trading network became one of the
most important centres of the maritime trading network. Indian traders and merchants
were known for their entrepreneurship and were supported by a well laid out banking
system. The Mughal rule contributed to the growth of urbanization, trade and commerce
and in the manufacturing sectors. The advent of the European mercantilist companies
added a growing tension and competition in the trading circuit. The Indian maritime
trading network remained by and large unchanged over the course of the sixteenth, the
seventeenth and the eighteenth centuries. However, the arrival of the Europeans into
the Asian Seas at the beginning of the sixteenth century, brought in modifications in the
traditional trading network. The two major parts of the trading network were the Red

*
Dr. Sohinee Basak, Independent Researcher, New Delhi 115
Production and Sea and Persian Gulf and the South East Asia, to China Sea and Japan. The linkages
Commercial Practices
of the Indian merchants were not only found in India but also in the foreign lands. The
Indian merchants from ancient times moved far and wide for trading. Indian diaspora
comprising mostly of the merchants and traders were found from Southeast Asia to
Africa. Even within the country the traders and the businessmen often formed alliances
on personal and professional lines.

8.2 INDIAN OCEAN TRADING NETWORK

The history of commercial traffic in Indian Ocean goes back to a very remote past and
networks of trade covering different centres of production and manufacturing have
been found all along the littoral of maritime India. Because of the strategic importance
of its geo-physical location in the mid way between the West Asia and South East
Asia, India always held a prime economic position in the process of long-distance
commodity movements. Given the large agrarian landscape with diverse crop production,
the subcontinent had immense economic potential and capacity to put on the market a
wide range of tradable goods at highly competitive prices. These included both food
items such as rice, sugar and oil as well as raw materials such as cotton and indigo.
While the bulk of this trade was coastal, the hinterland ensuring regular supply of cargo
needed for the overseas trade led to the emergence of several hubs of regional trade in
the vicinity of principal maritime centres of exchange.
In the beginning of the 16th and 17th century, the contribution of the Arabian Sea to the
world trade mainly centered on bullion, gold, pearls, diamonds, pepper and to some
extent silk. (R.J. Barendse, The Indian Ocean World of the Seventeenth Century,
M.E. Sharpe, London, 2002) The European share of export trade was certainly large.
The external trade of India had two main links: one connected with China and South
East Asian countries and the other connected with the ports of the West Asia and East
Africa. It is evident from Couto and other contemporary Portuguese sources, that
Cambay, Surat, and other Gujarati ports were directly connected in the trade with
Atjeh and the Red Sea, with or without the Portuguese cartazes which they were
supposed to carry. An essential element of the growth of Indian Ocean trade in the 17th
century was that sector of trade between the Coromandel Coast and Southeast Asia.
The term Coromandel Coast is here used to cover that stretch of the east coast of
India from Nagapatnam in the south to Ganjam in the north.
The part played by the Gujaratis in the maritime trade of Malacca before 1511 is well-
known, and there are numerous if scattered references to their presence in Atjeh during
the period with which we are concerned. ( C.R. Boxer, “A Note on Portuguese Reactions
to the Revival of the Red Sea Spice Trade and the Rise of Atjeh, 1540-1600”, Journal
of Southeast Asian History, Vol. 10, No. 3, International Trade and Politics in
Southeast Asia 1500-1800, (Dec., 1969) Various kinds of silk like camlets,
manufactured in Gujarat were exported to Persia and Arabia. Carpets and tapestry
were produced in Diu and were exchanged for several sorts of commodities. Coral,
copper, quick-silver, vermillion, lead, alum, rosewater, madder and saffron were
imported to India from Aden and Mecca. The most important constituent of the
manufacturing sector in the Indian economy was the textiles. These ranged from painted
or printed coarse cottons to the most exquisite Dacca muslins and the gold embroideries
of Gujarat. The voyage from Gujarat to Mecca carried in Muslim ships or naos of 500
to 1000 khandis. They carried black Canequis, linen, cotton, cawry, various kinds of
spices as pepper, cloves, cardamom, nutmeg, cinnamon, etc. They chiefly brought
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back gold coins called Venezianos which were equal to 1200 reis each; much coral, Indian Ocean Trade
Network
many camlet of different colours, quicksilver, vermilion, silver in form of patacas or
biscuits. Finer quality of opium was imported from Aden as the opium that grew in Diu
was inferior in quality. Great volumes of gold and silver, both in form of coins and ingot
were also brought to this town from the Arabian ports. Gujarat, also had great trading
relations with Hormuz, Sheher and Barbara and with the East African ports of Melinde
and Mombasa.
Horses appeared to have been originally brought from the Red Sea and the Persian
Gulf areas. Horses were also brought to Diu from Muscat. These were the Arabian
horses which were in high demand as warrior horses. The link to the Gulf was of a
considerable proportion, as it was its only Asian source of silver. The three principal
routes through which silver entered the Mughal terrain, the ports of Red sea, Persian
Gulf and Cape route channels. Most of these silver trading tracks used to converge
at the ports of Gujarat and northern Konkan from where they were routed to
Ahmedabad for minting. Ivory, gold and slaves brought by these traders from East
Africa and also bullions from Persian Gulf ports caused the neighbourhood of Gujarati
ports to evolve as major hub for bullion-trade and handicrafts, besides being market
for slaves. Manufacturing of specialized-labour-intensive objects like embroidery
works, carving, ivory-works, gem cutting, cleaning and processing of precious stones
coming from Deccan developed in an unprecedented way in areas adjacent to coastal
Gujarat. The immense flow of bullions made the Mughals to set up their best mint in
Ahmedabad. The merchants of Diu occasionally sent ships to Kung and Basra. The
commerce of Muscat was controlled by a group of Indian merchants who were
mostly the Kaphol banias from Diu and the Mappilas of Kerala. Kaphol banias
were associated with the Jaariba war fleets and the urban notables and were exempted
from taxes.
The Red Sea route was the most important for the Gujarati traders, especially for the
Surat. The competition in this route was felt between the Gujaratis and the Europeans
between 1620 and 1630 and must have intensified after the famines of Gujarat, when
the supply of goods for export was cut off for sometimes. Substantial amount of trade
was carried on between India, Iran, Turan and others west Asian regions from Surat.
As per the English estimate, one million rupees worth of Indian cotton textiles was
shipped from Surat to Iran in 1661. Some of these clothes may have been shipped to
Turan via the caravan route through Kirman and Mashad or westward to Ottoman
cities. These sales would have generated substantial amounts of Iranian silver much of
which had been brought to Surat mint. (Stephen Frederic Dale, Indian Merchants
and Eurasian Trade 1600-1750, Cambridge University Press, Delhi, 1994) The Surat-
Mocha trade consisted overwhelmingly of Gujarat textiles on the outward voyage and
precious metals on the incoming one.
The trade routes from Bengal went to Sri Lanka, Malabar, and the Maldives. To all
these areas, Bengal again exported textiles and foodstuff, and the rice export to the
Maldives was in fact one of the constant features of Bengal trade in the sixteenth and
seventeenth centuries. In return, Bengal imported Ceylonese cinammon and areca,
Malabar pepper, and the cauri shells of the Maldives. In Bengal, these cauris served
as a medium of exchange in small transactions, and were particularly important given
the absence there-in the period-of coined money of less value than the silver tanka.
The trade to Southeast Asia was the staple of Coromandel’s long distance trade,
especially to the ports of south Coromandel. By the middle decades of the century this
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Production and trade was well set along clear routes and terminal points. It was moving southwards,
Commercial Practices
away from Paleacat which showed a decline in the second half of the century and
towards Devanampatnam, Pondichery, Cuddalore, Porto Novo and Nagore.
Coromandel textiles penetrated deep into Southeast Asian markets in the seventeenth
century, through already established trade centres of Acheh, Melaka, Makassar and
Bantam and from these to interior markets of Sumatra, Java, the Moluccas and the
Malay Peninsula.
The exchange in the trade between the Coromandel Coast and the Indonesian
Archipelago was based on barter trade with Indian textiles in exchange for different
articles, primarily pepper. Beside the finer spices from the Moluccas, Southeast
Asian pepper was also the main export article in the companies’ trade with Europe.
Because spices normally could not be procured for silver payment in the Indonesian
Archipelago, the striking dominance of Indian textiles is clearly visible in the rapid
growth of purchases on the Coromandel Coast. The character of the trade between
Coromandel and Southeast Asia was highly determined by an interdependency of
cloth and pepper.

Map 8.1 : Indian Ocean Trading Network

Ref: Ghulam Nadri, Eighteenth Century Gujarat, The Dynamics of its Political Economy, 1750-
1800, Brill, Leiden, 2009

A growth area for the export of Coromandel textiles was the kingdoms of mainland
Southeast Asia: Arakkan, Pegu, Tenasserim, Ayuthya. The trade to Burmese and
Siamese ports of Mrauk-u, Syriam, Mergui, Tavoy, Tenasserim and Ayuthya expanded
in the second half of the seventeenth century. Coromandel textile producers had geared
themselves to the Southeast Asian markets, manufacturing goods in response to the
particular tastes of the various regions. By far the most voluminous exports were the
coarse weaves from staple cotton that could be used as articles of clothing affordable
by the poorer sections of society. When these were dyed in bright colours and made
into dresses suitable for wear by men and women, they had a brisk demand in Southeast
Asia. To suit more affluent tastes, there were printed cotton cloths called chintz with
delightful floral and geometric patterns and the finer varieties of muslins in which
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Coromandel exports competed with those of Gujarat and Bengal. By this time, varieties Indian Ocean Trade
Network
of textiles bearing Southeast Asian regional geographic names had made their
appearance in the weaving villages and everyone in the trade was familiar with the
demands of the different parts of Southeast Asia. Rice was carried in substantial quantity
to Acheh and the Sumatran ports and to Melaka and the Malay ports. Steel
manufactured in the Salem district and from the Deccan was exported in moderate
quantity. Indigo, hides, rock-fish skins were among other goods exported. At times
there was a trade in slaves, taken direct from Coromandel or re-exported from Burma
and Arakkan. Imports to Coromandel from Southeast Asia were equally diverse. Pepper
and spices were imported. The spices were not sold in large quantities in south
Coromandel as they were in Golconda. Tin was a lucrative import and was in great
demand throughout the region. So was copper which was brought from Burma and
Siam, before the Dutch introduced direct imports from Japan. Elephants and horses
were profitable imports. Elephants were brought in large numbers from Acheh, Kedah,
Burma and Siam and horses from Acheh. Aromatic woods such as sandalwood, various
dyes and gums from Southeast Asian forests had numerous uses in Indian manufacture
and were in great demand.

Map 8.2 : Ports of Coromandel Coasts

Ref: Radhika Seshan, Trade and Politics on the Coromandel Coast 17th and Early 18th centuries,
Primus, New Delhi, 2012, p. 9
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Production and
Commercial Practices

Map 8.3 : Mughal Gujarat

(Ghulam A. Nadri, op.cit.)

8.3 EUROPEAN TRADING COMPANIES

During the 16th and 17th centuries many trading centres of Indian Ocean came under
the European control. The Portuguese, Dutch, English and the French challenged each
other’s supremacy and resulted in the change in the control of different port towns. But
the main challenges came when these nation-states (Dutch, French and English)
organized their merchants into chartered companies in the beginning of the 17th century
to rival the royal monopoly that was dominated by the Portuguese in the 16th century.
(You have already read details in Unit 13 of BHIC 107)
First off the mark in 1600 was the English joint-stock East India Company (EEIC). It
was followed two years later by the Dutch East India Company, the Verenigde
Oostindische Compagnie (VOC). Drawing upon the burgeoning capitalist economy of
the Netherlands, the VOC was organized to trade and earn profit. It was also much
more aggressive than the EEIC and took the initiative in challenging the Portuguese in
the Indian Ocean. Among the main products that these two companies traded were
cloth and spices. These companies might have started as trading enterprises, but in the
end, they were looking for much more. They became empire builders, and their goals
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began to extend beyond mere trade. The English East India Company mostly traded in Indian Ocean Trade
Network
cloth and fabric. Meanwhile, the Dutch East India Company dealt largely with the
trade of spices. Both carved out their own little niche in each aspect of trade. However,
that did not stop the English East India Company from trying to intrude on the Dutch’s
spice trade. India was central to the English Company trade throughout accounting for
95 per cent and 84 per cent of the total imports during the latter half of the 17th century.
The share of raw silk, textiles and tea increased in the second half of the 17th century.

8.3.1 The Portuguese

The Portuguese system of commerce depended very much on the notion of monopoly
trade for the Lusitanians and licensed (cartaz-based) trade for the Asians. The cartazes
or passes were not only used to forbid transport of the commodities reserved to the
Portuguese Crown, notably spices, and of itinerant Turks and Abyssinian Muslims, but
also were to make Indian traders call and pay duties at one or more Portuguese ports.
Throughout the 16th and 17th century the ‘trade from India to India’ or trade within
Asia was a very important component of the Portuguese trade in Asia. As early as
Alfonso de Albuquerque, the intra Asian trade of the Portuguese was more important
than the trade between Goa and Lisbon. (Om Prakash, European Commercial
Enterprise, The New Cambridge History of India, Vol.5, Cambridge University
Press, New York, 1998, p. 49)
The Portuguese demanded forty two pardaos per horse from Hormuz and Sind, which
were taken to Diu. The custom duties and its horse trade made it quite a profitable
centre for the Portuguese. Muscat’s meagre revenue used to reach Diu, partly in bullion,
partly in horses, dates and fruits to Diu and Chaul. Because of the tensions in the
waters, Portuguese administration used to send yearly two to three frigates to escorts
the ships of traders to Sind and Diu. However, Muscat’s customs mainly depended on
the trade between Basra and West Coast of India. With the loss of Muscat, the
Portuguese shipping to Gulf was reduced to a considerable number.
The profit of this lucrative trade often went to the private traders rather than the Portuguese
Crown. Private Portuguese traders from Diu were active in the trade with Gulf and
Hormuz for a long period of time. Portuguese country traders at Goa in 1630 invested
2,850,000 xerafins in that trade, an investment which was 15 times the value of the
Portuguese exports from India in the same year to Lisbon. (George Bryan Souza,
Portuguese, Dutch and Chinese in Maritime Asia, c. 1585-1800, Ashgate Variorum,
Surrey, 2014, p. 121) Between 1580 and 1640, the volume and value of the private
cargoes accounted for almost 90 per cent of the total value of trade imported over the
period 1580-1640 from Asia. Even though the amount of private trade could be
exaggerated, the quantity of trade was quite substantial. The Portuguese became a
part of the existing trading network and modified the existing trading network. One of
the important innovations of the Intra Asian trade of the Portuguese was the opening
up of the long distance trade between Goa and Nagasaki and introduction of monopolies
which were often not implemented strictly. Diu and Daman’s trade with West Africa in
textile became the pillar of the Portuguese empire in India. Though, over the years the
Portuguese supremacy in the Indian Ocean region decreased, the port cities continued
to be flourishing trading centres. The Portuguese realised the economic importance of
Diu and Daman for the Portuguese crown. This impacted in the Portuguese policy
making which started to promote liberal trading policies from the 17th century onwards.
The trading network of the merchants of Diu and Daman were instrumental in forging
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Production and new trade routes and diversification of trading commodities in the face of the challenges.
Commercial Practices
With the increase in the competition of the Dutch and the English and the decline of the
Portuguese power in Asia, the Portuguese started to be depended more and more on
the Indian network and the indigenous networks of commerce along with the private
trade of the Portuguese officials.

8.3.2 English East India Company

The English East India Company was established in 1600 CE as a joint stock company
with a monopoly on trade with the East Indies that was guaranteed by a monarch. It
started as a joint stock company that focused on trade because the English needed
more materials and resources. The English private traders consisted of two groups: the
servants of the English East India Company and the merchants settled in India. Their
trade was both to westward and eastward sectors of India’s maritime trade and
extended to the Red Sea and the Persian Gulf regions, besides the ports on the western
coast of India. The English private shipping was most probably at the expense of the
Gujarati trade. While the number of ships visiting Bengal from Surat in the early 18th
century was about fifty, it dwindled to a trickle by the 1730s. It has been estimated
that the total number of Gujarati fleet in the late 17th century was well over a hundred,
of which normally two belonged to the Mughals while the great Surat merchant,
Mulla Abdul Goffur, alone owned seventeen. It was from around the 1760s that
there was a substantive growth in the eastward trade at the expense of the trade to
western Indian Ocean which was described as a ‘commercial revolution’ by Holden
Furber.
Occasionally the English brought spices through their Sumatran factories to Madras
and when this happened the sale of Dutch spices was adversely affected. The English
were sometimes able to- bring Malabar and Indonesian cinnamon but the quality of
this cinnamon was so inferior to the Ceylon cinnamon of the Dutch that it left no impact
on Dutch sales.

8.3.3 Dutch East India Company, the Verenigde Oostindische

Compagnie (VOC)
The Dutch were most knowledgeable in Indian trading methods, very proficient with
the Indian market. The Dutch East India Company was created in 1602 by the merger
of several companies, which allowed the companies to work as one instead of
competing against each other. They had some influence with Indian native rulers and
their officials. It was these factors that contributed to their staying power in the trade in
the first half of the 18th century against very unfavourable odds. The successful challenge
by the Dutch and the English East India Companies to the Portuguese monopoly of the
all-water routes to the East Asia at the beginning of the 17th century led to the increase
in the volume and value of Euro-Asian trade. The commodities traded also underwent
a major change. Pepper and other spices were accounted for an overwhelming
proportion of the total imports, but were replaced by textiles and raw silk as major
items of trade. Indian textiles became the single most important commodity in the intra-
Asian trade of the Dutch East India Company (VOC). In spices Dutch had a virtual
monopoly and profits were excessive. A certain fixed quantity was sold every year.
Prices of spices were fixed very rigorously so that it may not be profitable for competitors
to buy spices and sell them in other places where the Dutch had factories. The Dutch
could dictate prices and sell a constant quantity of these spices. But if prices were fixed
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too high then it did affect sales. It was found that the prices fixed in 1697 were too high Indian Ocean Trade
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and reductions were made in cinnamon and cloves. Cinnamon was not sold in Ceylon
by the Dutch to private traders but was only sold in the Coromandel factories. Precious
metals dominated the total exports. In case of the Dutch company, the goods exported
were woolen, silk and other textiles manufactured at Leiden and non precious goods
such as wines and beer. India figured predominantly in the VOC’s trade within Asia as
well as that between Asia and Europe. Items such as saltpetre, indigo and opium were
procured from India. The principal importance of the India trade lay in the supply of
textiles and raw silk for Asian and European markets.

8.3.4 French East India Company

The French who were late-comers to the field of maritime enterprise in the East
endeavoured hard to stake their claims to the trade of the Indian Ocean. This involved
them in protracted negotiations with local political authorities as well as merchant groups,
not all of which were cordial or effective. French trade was beginning to be effective in
the early years of the seventeenth century. The return to them of Pondicherry in 1699
and the wise management of their Governor Francois Martin (1699-1706) had paved
the way for profitable trade and investment. Orders comparable to those of the English
and the Dutch begin to be made from 1710 onwards, though they were not as regular
and were dependent on the arrival of ships and capital from Europe.
The Danish Company had its fort and factory at Tranquebar, near enough to distract
the markets that usually fed Nagapatnam.
Check Your Progress 1
1) Write a note on the Trade network in Indian Ocean
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2) Examine the character of Portuguese trade practices in Indian Ocean.
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3) Briefly discuss the character of trade carried out by European Trading Companies
in the 17th Century.
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Production and
Commercial Practices 8.4 CHANGES IN THE TRADING NETWORK IN
17TH CENTURY
The flow of the wealth from the east did not mean economic growth for the Portuguese,
but only increased the power and wealth of a particular section of the society. As a
result of the continuous wars and because of the high level of corruption, the Portuguese
treasury in India was empty. The Portuguese tried to overcome the fiscal crisis by
resorting to customs collection rather than actual trade. On the west coast, while the
Portuguese strongholds like Goa declined, Surat prospered. A report submitted to the
Crown in 1627 CE explained that the revenue from the Goa customs was half of what
it had been a decade before and that in consequence what had previously been a
substantial surplus on current account had been transformed into a deficit. Gujarati
goods were carried mostly in the Portuguese vessels under the protection of the
Portuguese cartazes. But with the decline of the Portuguese naval superiority, because
of the recurring attacks of the Dutch and the English, the merchants though still had to
take the cartazes, could not be given the required protection by the Portuguese, which
also led to the movement of the Indian merchants to take the protection of the Dutch
and the English. The merchants’ loss of one route was compensated by the opening of
new avenues with the Dutch and English.
The decline of Gujarat’s maritime linkages between the Red Sea and the Persian Gulf
was fuelled by the growing political insecurity, and the breakdown of law and order
with the decline of the Mughals in the first half of the 18th century. Though Gujarati
shipping was at its height, the increased volume of Gujarat’s exports had negatively
affected markets in the Red Sea and elsewhere in the Indian Ocean. (Ashin Dasgupta,
“Indian Merchants and the Trade in the Indian Ocean”, The Cambridge Economic
History of India, ed. Tapan Raychaudhuri and Irfan Habib, Orient Longman,
Hyderabad, 1982, p.433) Between 1698 and 1710 the voyages between Red Sea
and Gujarat was often unprofitable because of political instability in Gujarat’s hinterland
and fleecing of Gujarati traders at Mocha to meet the cost of Yemeni civil war. Yet the
trade between the Persian Gulf and Red Sea with the west Coast of India survived due
to the traditional network of trade, though there was a substantial decline in the quantity
of trade.
The trading relationship between the Portuguese and the Dutch and the English had a
deep relationship with the wider political scenario from Latin America to Europe and
Africa. The situation in the East was different from the circumstances in Europe where
Portugal’s place in British external commerce was determinant. The decade of 1630s
witnessed devastating losses for the Portuguese country traders because of the Dutch.
The Dutch wanted to control the pepper trade and silver trade which were mostly
carried on by the Portuguese. The Gujarat textiles were important for the procurement
of the pepper, and thus the control of maritime trade of Gujarat was important to the
Dutch. The control of textile trade was one of the major issues of contention between
the European powers.

8.5 EUROPEAN TRADING COMPANIES AND

POLITICAL POWERS OF SUBCONTINENT
Merchant and state relationships seem to have changed, with changing political fortunes.
The two Deccan states of Golconda and Bijapur had expanded eastwards up to the
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Coromandel Coast. Consequently, new administrative arrangements had been set up Indian Ocean Trade
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with Golconda military general controlling the coast and hinterland of Coromandel.
Similarly Bijapur military officers administered the southern hinterlands of Cuddalore
and Porto Novo. The presence of the Maratha administration in the hinterland of
Cuddalore and Porto Novo was destabilizing to trade. Coromandel merchants had to
adjust to the changing political system. Previously some of them had taken out revenue
farms along the coast and the hinterland that included ports and weaving and rice-
producing villages. Control of these farms conferred important advantages on these
merchants in providing privileged access to trade commodities and the ability to supervise
production. Prominent merchants of the Chulia Muslim community have markedly
different career patterns. They did not move physically to settle in any of the European
ports but remained in their traditional homeland ports.
Unlike the ruling families of Golconda and the Mughals, the southern rulers did not
directly participate in overseas trade by owning ships and sending out voyages. This
had a contradictory effect on the merchants. On the one hand, it reduced direct state
intervention in the trade process. Both in Golconda and in the Mughal province of
Gujarat and Bengal, state involvement in overseas trade had resulted in periods of
interference and direction of the market at critical moments to the advantage of the
ship-owning ruler. Internal political changes disturbed a system to which the merchants
had become accustomed and from which they were deriving advantages. The changes
accelerated towards the last decades of the century, straining merchants’ efforts to
come to terms with them. External changes came from a great distance in the shape of
European involvement in the trade of the Indian Ocean. Some of these changes had
beneficial effects, others affected them adversely. The cumulative effect of the internal
and external changes was to shake up the placid world of the Coromandel merchant
and point to major realignments of commercial links in the eighteenth century.

8.6 EUROPEAN TRADING COMPANIES AND

INDIGENOUS TRADING COMMUNITIES
The partnership between the Europeans and the Indian mercantile class often did not
mean friendship, on many occasions it was intense and sustained competition. Indian
merchants were not a subservient factor within a structure dominated by the Europeans.
The Indian merchants were not always dealt with a single European company and can
be seen having trading relationship with the Portuguese, English and the Dutch
simultaneously. This was especially prevalent in the brokerage sector of Surat. With
the emergence of the Dutch and the English, the Indian merchants had participation in
direct trade between Asia and Europe or Eastern markets, which was earlier mostly
controlled by Portuguese. Thus, though the competition at sea between the European
powers reduced their profits at that same time it opened new avenues and many of the
merchants often shifted from one port town to other.
The merchants can be termed as the commercial elite, in the words of Sanjay
Subrahmanyam and CA Bayly, with cultural and trading links with smaller merchants
as well as with other inter regional trading magnates, but unlike the portfolio capitalists
very few of them had political inclinations and did not depended on political favours for
their financial gains. Moreover, the trading firms or houses mostly reproduce their
capital and influence over the market over generations and were not easily affected by
the economic or political vulnerabilities, as was the case with the portfolio capitalists.
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Production and Ruby Maloni pointed out the European patronage affected the life cycle of the cities,
Commercial Practices
with the introduction of new techniques, market policies, institutions and also language,
but the indigenous groups were succeeded to uphold their identities.

8.7 CHANGING CHARACTER OF TRADE IN THE

INDIAN OCEAN
Jacob C. van Leur characterized Asian trade as a “small-scale peddling trade” based
on ineffective method of trading. He argued that the Asian merchant was a peddler and
the trade was overwhelmingly in luxuries. Steensgaard reiterated Van Leur’s thesis of
peddling trade even while admitting that the peddling trade could make use of fairly
sophisticated commercial methods, such as “partnerships, and combined credit and
transfer transactions by means of bills of exchange” and was based on erratic market
prices. He tried to compare the commercial organizations of the caravan, i.e., peddling
trade and those of the European trading companies, and demonstrate the organizational
superiority of the Companies over the caravans. Niels Steensgaard pointed about that
the Dutch and the English companies were instrumental in bringing about a revolution
in the organization and conduct of Euro-Asian trade from 17th century onwards. Unlike
the Portuguese, the success of the Dutch and the English was not based upon the
government monopolies or the use of violence but on their ability to compete in the
markets. However, there were instances where it is evident that the Dutch and the
English companies took extensive steps in gaining the monopolistic control over the
governments.
Ashin Das Gupta argued that the concept of peddler was not necessarily in conflict
with the fact that in addition to the predominance of small merchants who travelled the
maritime routes in the Indian Ocean with their bundle or two of coarse cloths, wealthy
ship-owning merchants such as Mulla Abdul Ghafur also participated in the Indian
Ocean trade. However, as Sushil Chaudhuri points out luxury goods were important
items of Indian Ocean trade and that India’s prime import was bullion but at the same
time mundane goods for use in daily life were actually the principal items of trade.
Textiles were one of the major items of export. Some of them were undoubtedly-
expensive and fine stuff but the overwhelming majority was inexpensive and course
piece-goods for everyday wear. Another commodity that was quite dominant in the
export list was staple food items like rice, wheat, oil, sugar, and other items.
The joint stock company and the guild system came with the European. The embodiment
of the guild system of the banias of Diu was the Companhia dos Mazanes, founded
in 1689. The Companhia acted as a collective body to bargain and safeguard the
interests of the bania community. The close ties between the family organization and
long distance trade in the Indian Ocean portrays how successful capitalist enterprises
are closely linked to social organization based on kinship. Marriage alliances played a
very important role in building traditional ties of network. The opium trade of Daman in
18th century depended on these traditional network. These feature of the Indian Ocean
often ensured the availability and distribution of wealth, helped in forging international
contacts and set up hospitality for the foreign trader in culturally different lands. It was
mostly passed on among several generations and the merchants were able to diverse
their wealth. The failure of the English East India Company’s attempts to monopolise
the opium trade between India and China can be attributed to the power and influence
of the network of the opium dealers and merchants in the country.
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Weber had pointed out the predominance of traditional ties detrimental for the growth Indian Ocean Trade
Network
of capitalism. However, domestic units and wider kinship groups often played a very
critical role in commercial activities in the Indian Ocean region and also in West. Though
the English and the Dutch joint stock companies were run by directors and shareholders,
it also depended on the personal network of ‘nephews and friends’. However, the
Indian merchants often followed the etiquettes and social norms not written solely
according to religion or caste but the business ethics. (Ashin Das Gupta, “Some Attitudes
Among the 18th century Merchants”, The World of the Indian Ocean Merchant
1500-1800: Collected Essays of Ashin Das Gupta, Compiled by Uma Das Gupta,
Oxford University Press, New Delhi, 2001, p. 106) The ambitious and entrepreneur
skills of the Indian merchants and traders helped them to adapt and adopt in the face of
challenges and tensions.
Check Your Progress 2
1) Write a note on the changes in Trade network in Indian Ocean in the seventeenth
Century.
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2) Discuss briefly the attitude of political powers of Indian subcontinent towards
European trading companies.
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8.8 LET US SUM UP

The strategic location of India in the Indian Ocean trading circuit helped in the
unprecedented growth in its maritime economy from prehistoric times. Mughals were
instrumental in bringing about changes in the trading network of India. They brought
stability and acted as a bridge between the hinterland and the ports. However, the
Mughals were territorial power and did not give much importance to the maritime
routes. The trading class often went in alliance with the Europeans, as they realized that
the Indian rulers will not be able to provide them support in the high seas which the
Europeans will do. The relations between the Europeans and the Indian mercantile
class were often intense and sustained competition. The indigenous traders and merchants
played a pivotal role in the economy of the region. The Gujaratis had been one of the
most ambitious and the entrepreneurial population of the country. The Indian traders
modified their trading activities with the coming of the Portuguese in the Indian Ocean.
They got a large amount of profit and magnified it considerably thanks to their
collaboration with the Portuguese. They worked as bankers, brokers and the link
between the indigenous network of market and the international trading network.
However, the Indian merchants did not always deal with a single European company 127
Production and and can be seen having simultaneous trading relationship with the Portuguese, English
Commercial Practices
and the Dutch. The emergence of the Dutch and the English, facilitated the Indian
merchants to have participation in direct trade between Asia and Europe or Eastern
markets, which was earlier mostly controlled by Goa. Indian merchants were not a
subservient factor within a structure dominated by the Europeans.

8.9 ANSWERS TO CHECK YOUR PROGRESS

EXERCISES
Check Your Progress 1
1) See Section 8.2. Importance of variety of agrarian production coupled with artisanal
products as commodities of trade should also be highlighted. Indian Oceanic Trading
network must include trade routes in the Bay of Bengal as well as Arabian Sea.
2) See Section 8.3.1 Portuguese attempts to monopolize trade and imposition of
custom duty to them needs elaboration
3) See Section 8.3. The focus of the answer should be on the 17th century, therefore
role and emergence of English, and Dutch East India Companies need elaboration.
Conflict with Portuguese should also be discussed.
Check Your Progress 2
1) See Section 8.4 Unlike Portuguese, English and Dutch tried to understand the
complexity of trade network within Indian Ocean and made serious inroads.
Thereafter linking it with trade requirements of European markets.
2) See Section 8.5 Abundance of agrarian and artisanal products in India almost
made ruling elite oblivious to the significance of oceanic trade companies, thus
either indifference was predominant response.
Recommended Readings
Chandra, Satish. ed. 1987. The Indian Ocean: Explorations in history, commerce,
and politics. New Delhi: Sage Publications.
Raychaudhuri, Tapan& Habib, Irfan. ed. 1982. The Cambridge Economic History
of India, Vol. I: c. 1200-1750, London: Cambridge University Press.
Gupta, Ashin Das and M. N. Pearson, eds. 1987. India and the Indian Ocean
1500-1800. Delhi: Oxford University Press.
Jain, L. C. 1929. Indigenous Banking in India, PLACE London.
Mehta, Makrand. 1991. Indian Merchants and Entrepreneurs in Historical
Perspective, Delhi: Publisher.
Subrahmanyam, Sanjay. ed. Money and the Market in India 1100-1700. Delhi:
Publisher.

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