The Mughal State’s Relationship with Commerce
Medieval History › Medieval Economy & Trade · Topic 8.4
The Mughal state helped trade by law and order, roads and sarais, protection of merchants' property, illegal road cesses, pure silver coinage and cash revenue, and by direct interest in arms and shipbuilding, while letting European companies trade by farman. It did not push business interests as actively as Britain, France or Holland, and merchants, though rich, had low status and no right to run towns.
5 min read · UPSC Prelims · History · Medieval Economy & Trade
At a Glance
- Protection Laws from Sher Shah and Jahangir
- Roads Roads and sarais
- Coin Pure silver rupee; batta
- Direct action Arms and shipbuilding
- Limit Less active than European states
- Exam link UPSC Prelims, Medieval History: Medieval Economy & Trade
Where Does It Fit?
This is the fourth topic of the category on medieval economy and trade. The previous topic described overland trade, and this one examines how the state treated commerce. The next topic covers economic trends in the early eighteenth century. Previous topic: Qandahar, Lahore, Multan Colonies Iran, Baku, Astrakhan,…">Position of Indian Merchants in Overland Trade.
How Did the State Protect Trade?
In short: the Mughals kept order, protected merchants’ property and ran cheap, safe roads, though local officials could still harass traders.
Emperors from the time of Sher Shah passed laws protecting merchants’ property. Jahangir’s ordinances provided that if anyone, unbeliever or Musalman, died, his property was to be left for his heirs and no one should interfere; if there were no heirs, inspectors and guardians were to hold it and spend its value on mosques, sarais, bridges, tanks and wells. Local officials could always abuse their power to harass traders, yet property was generally safe. Means of transport were cheap and adequate, roads were reasonably safe and risks could be insured, and sarais at regular distances were as good as in Europe at the time. Bernier said merchants tried to look poor so as not to be squeezed like filled sponges, which does not seem fully correct. See Sher Shah’s Administrative Reforms (Currency System, Roads, Sarais, Land Revenue Settlement).
What Economic Policies Helped Commerce?
| Policy | Effect |
|---|---|
| Customs | Taxes levied on goods at their entry into the empire |
| Hundis and sarrafs Nodes Burhanpur and Agra Helped…">Rahdari | Road cess declared illegal, though some local rajas continued to collect it |
| Coinage | Silver rupees of high purity minted in mints across the empire; any trader could take silver to the mint for coins on paying a batta (discount); the rupee became a standard coin in India and abroad |
| Cash payments | Standing army and many officials (not the nobles) paid in cash; land revenue under zabti assessed in cash |
| Marketing | The state’s share of the crop was usually sold in the villages through grain dealers; about 20 per cent of the rural produce was marketed, giving rise to qasbas |
| Direct stimulus | Akbar and Aurangzeb took interest in gun manufacture; Indian steel swords were in demand abroad |
| Shipbuilding | In 1651 Shah Jahan began building sea-going vessels, four to six a year for voyages to West Asia, and six were commissioned the next year; Indian shipyards soon built ships on European models and freight rates to West Asia fell |
How Did the Ruling Class Take Part in Trade?
Nobles, royal princes and princesses and royal ladies took part in freighting goods on foreign ships and even owned ships; Mir Jumla owned a fleet trading with Persia, Arabia and Southeast Asia, and even Aurangzeb’s chief qazi had commercial interests. The English factor at Surat remarked in 1614 that large and small were merchants. Some nobles or princes misused position to corner sales and purchases or force artisans and traders to sell cheap, but not to a degree that seriously harmed trade. The Mughal ruling class was thus not unconcerned with business, as discussed in The Ruling Classes – Nobility and Rural Gentry. The state also issued trade concessions to European companies, such as Jahangir’s farman of 1618 for the English at Surat, which Sir Thomas Roe obtained.
What Were the Limits?
Trade and traders continued to have a low social status. Merchants had traditional rights to life and property but not the right to administer towns, which European merchants had acquired in special circumstances, and such rights tended to be curtailed where strong territorial states grew, as in France and Britain. Merchants did have influence where their interests were concerned: each community had a leader, the nagarseth, who interceded with officials, and merchants struck work (hartal) in Ahmedabad and elsewhere to press demands. The Mughal state was not as active in pushing its business interests as states such as Britain, France and Holland. As an analytical point, the Mughal state treated commerce as a source of revenue and a part of a stable order, not as an object of national policy, which helps explain why Indian traders prospered but did not shape state strategy, a theme taken up in Overseas Trade and the Role of European Trading Companies.
Why Is This Topic Important?
- Policy facts Rahdari, batta, shipbuilding
- Comparison Mughal versus European states
- Interpretation Why merchants lacked power
What Came Next?
The next topic describes economic trends in India in the first half of the eighteenth century. Next topic: Jagirdari crisis and heavy revenue demand Shock Nadir Shah, 1739 Strength Bengal, Gujarat, Coromandel trade Exports Calicoes: 9½…">Trends in India’s Economy During the First Half of the 18th Century.
Key People and Terms
- Rahdari Road cess
- Batta Mint discount
- Nagarseth Merchant community head
- Hartal Strike
- Farman Royal order
- Mint Place where coins were struck
Exam Corner
Points to Remember
- Rahdari declared illegal.
- Silver coined for a batta.
- Shipbuilding began 1651.
- Merchants held no right to administer towns.
- Nagarseth interceded with officials.
Do Not Confuse With
- Batta and rahdari Mint discount versus road cess
- Mughal and European states Passive commerce policy versus active business promotion
- Farman and ordinance Royal grant versus general rule
Memory Hook
Order, roads and rupee; ships built, cess banned; merchants protected but not powerful.
Mains Angle
Questions on state and commerce ask for supports and limits. These points add depth.
- Supports Order, coinage, roads
- Direct role Arms and ships
- Limits Status and political power
A Question You May Face
An original practice question, not a past paper question.
“How did the Mughal state influence trade and commerce? Discuss its limits.”
How to Answer
- Protection Property and safety.
- Policy Coinage, customs, cash revenue.
- Direct role Arms, ships.
- Limits Merchant status.
GS Relevance
Frequently Asked Questions
How did the Mughals protect merchants?
Emperors from Sher Shah's time passed laws protecting merchants' property, and Jahangir's ordinances left a dead person's goods to his heirs. Roads and sarais were maintained and safety on roads was generally good, although local officials could still harass traders.
What was batta in Mughal coinage?
Batta was a discount paid when a trader took silver to the royal mint to be turned into coins. Because any trader could do this, the pure silver rupee became a standard coin in India and abroad.
What was rahdari?
Rahdari was a road cess on goods that the Mughals declared illegal, since customs were to be levied only on goods entering the empire. Some local rajas, however, continued to collect it despite the ban.
How did the Mughal state promote shipbuilding?
In 1651 Shah Jahan began a programme of building sea-going vessels, with four to six ships built a year for voyages to West Asia. Indian yards soon built ships on European models and freight rates to West Asia fell.
Why did merchants lack political power?
Merchants had rights to life and property but not to administer towns, and trade had a low social status. They could use leaders like the nagarseth and strikes, but the state did not actively push their business interests.
PYQ Practice — Statement Analysis
1 Road cesses (rahdari) were declared illegal by the Mughals.
Some local rajas still collected them.
2 Shah Jahan started a shipbuilding programme in 1651.
Four to six ships were built each year.
3 Merchants held the right to administer towns in Mughal India.
They did not.
4 Traders could take silver to the mint on payment of a batta.
The rupee became a standard coin.
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