Late Development of Modern Industry

At a Glance

• First cotton mill 1853, Bombay, Cowasjee Nanabhoy
• First jute mill 1855, Rishra, Bengal
• Shipping Laws of 1813 and 1814 crushed ship-building
• Pattern Foreign-owned, lopsided, regionally uneven
• Exam link UPSC Prelims, Modern History: Economic Impact of British Rule

Where Does It Fit?

This is the seventh topic of the category on the economic impact of British rule. The previous topic covered famines and poverty. This topic covers the late development of modern industry. The next topic covers railways and the growth of trade. Previous topic: Famines and Poverty Under British Rule.

How Was Indian Industry Destroyed?

Indian industry was steadily destroyed. The destruction of Indian textile competition is a glaring example of deindustrialisation. The British stopped paying for Indian textiles in pounds, choosing instead to pay from the revenue gained from Bengal and at very low rates, impoverishing the peasants further. The wider process is in Charter Act of 1813: one-way free trade Tariffs Nearly 80 per…">Deindustrialisation: Ruin of Artisans and Handicraftsmen.

What Happened to Ship-Building and Steel?

A thriving ship-building industry was crushed. Surat and Malabar on the west coast and Bengal and Masulipatnam on the east were known for ship-building. British ships contracted by the Company were given a monopoly over trade routes, while even Indian merchant ships along the coast faced heavy duties. In 1813 a law of the British Parliament prohibited ships below 350 tonnes from sailing between India and Britain, which put a large part of Bengal-built ships out of commission on the Indo-British routes. In 1814 another law refused to treat Indian-built ships as British-registered vessels that could trade with America and the European continent, so the decline of Indian shipping was ensured.

The British did not allow the Indian steel industry to grow. Firms like the Tatas, which began to produce steel after much trouble getting permissions, were forced to produce a higher standard of steel for British use. They could not at the same time produce the lower standard, and so were left out of the larger market that demanded it. As Britain placed restrictions on Indian steel imports, this steel could only be used in India, and growth was hampered.

What Was the Role of Indian Traders and Bankers?

Indian traders, moneylenders and bankers had accumulated some wealth as junior partners of English merchant capitalists in India. Their role fitted the British scheme of colonial exploitation: the moneylender gave loans to hard-pressed cultivators, which helped the state collect revenue; the trader carried imported British goods to the remotest corners and helped move Indian farm products for export; and the indigenous bankers aided distribution and collection. The colonial situation, however, retarded the development of a healthy and independent industrial bourgeoisie, which developed differently from those of independent countries like Germany and Japan.

How Did Modern Industry Begin?

Modern machine-based industries began to come up only in the second half of the nineteenth century. 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 in Bengal. Most modern industries were foreign-owned and controlled by British managing agencies. A rush of foreign capital came because of the prospects of high profits, cheap labour, cheap and available raw materials, a ready market in India and neighbouring countries, shrinking investment avenues at home, the administration’s willingness to help, and ready markets abroad for some Indian exports such as tea, jute and manganese.

As an analytical point, modern industry came late and in a distorted form because the colonial government did not protect Indian firms, favoured British capital and did not train technical manpower, so that industry grew in a few regions and in light industries, which is part of why nationalists demanded protection and industrialisation on Indian capital. The workers and capitalists of this phase are in Working Class Movement: AITUC, Trade Union Act 1926 and Meerut Conspiracy Case. The tariff question is in One-Way Free Trade and the Tariff Policy.

Why Is This Topic Important?

• First mills Dates and founders are Prelims facts
• Shipbuilding laws A stock example of destruction of an industry
• Lopsided growth Causes of regional disparity

What Came Next?

The next topic covers the railways and the growth of trade. Next topic: Railways and the Growth of Trade.

Key People and Terms

• Managing agencies British firms controlling many Indian industrial companies
• Industrial bourgeoisie The class of industrial capitalists
• Foreign capital Investment coming from outside India
• Regional disparities Differences in development between regions
• Tariff protection Duties to protect domestic industry
• Core industries Heavy industries such as steel and power

Exam Corner

Mains Angle

Questions ask about the nature of industrial growth under colonial rule. These points add depth.

• Curbs Shipping and steel
• Ownership Foreign capital
• Pattern Lopsided and regional