Deindustrialisation

Topic: Colonial Economy: Land Revenue, Drain, Deindustrialisation · NCERT: Class 8, Ch 4 "The Colonial Era in India"; Class 10, Ch 3 "The Making of a Global World"; Class 10, Ch 4 "The Age of Industrialisation"

Meaning

Deindustrialisation means the decline of India's traditional craft industries under colonial rule. Cotton and silk weaving were hit hardest, and iron, steel and paper-making also suffered. India lost almost all of its export market and much of its home market by the middle of the 19th century [2].

It matters because India went from being the world's leading cloth-maker to a buyer of British machine cloth and a supplier of raw cotton. Craftsmen who lost their work were pushed onto the land, which added to rural poverty.

Explanation

Background: India's place in the cloth trade

• Before machine industries began in Europe, Indian silk and cotton goods dominated the world textile market. The finest cloth came from India.
• In the early 18th century, India was a major player in the world export market for textiles [2].
• Two routes carried Indian cloth abroad:
• Overland: Armenian and Persian merchants took goods from Punjab to Afghanistan, eastern Persia and Central Asia.

• By sea: three old ports:

  • Surat, which linked India to the Gulf and Red Sea ports
  • Masulipatam, on the Coromandel coast
  • Hoogly, in Bengal, which linked India to Southeast Asia

• The system was Indian-owned:

• Indian merchants and bankers paid weavers in advance.
• They supplied the yarn and shipped the cloth abroad.

• The profit stayed in India.

• Dacca (Dhaka) muslin, the finest cotton cloth, was so popular in England that it was strong competition for English textile mills [3].

Stage 1: political control comes first (1750s–1760s)

• By the 1750s the Indian-run network was breaking down.
• European companies won concessions (special trade favours from local rulers).

• Then they won monopoly rights (only they could buy or sell a good).

• Surat's gross trade fell from Rs 16 million at the end of the 17th century to Rs 3 million in the 1740s. That is a fall of about 80%.

• Bombay and Calcutta grew in place of the old ports. These were European-controlled ports. Trade now moved in European ships, and the credit came from European agents.
• In 1765, Mughal emperor Shah Alam II gave the East India Company the diwani (the right to collect and manage revenue) of Bengal, Bihar and Orissa. Clive became governor of Bengal the same year [4].
• The Company's policies drained first Bengal and then much of the subcontinent of its wealth. The Company also took unfair advantage of many local industries and slowly destroyed them [4].

Stage 2: the Company controls the weaver

• Tool 1: the gomastha.
• The Company removed the old traders and brokers who used to deal with weavers.
• In their place it put the gomastha (a paid servant of the Company).

• The gomastha had three jobs: watch over the weavers, collect the finished cloth, and check its quality.

• Tool 2: the advance system.

• A weaver was given an advance (a loan to buy yarn).
• In return they had to hand over all their cloth to the gomastha and could sell to no one else.
• Many weavers leased out their small plots of land (let someone else farm it) and wove full-time with family labour. This left them with no land to fall back on.

• In the early 19th century the Company set heavy production quotas and strict delivery deadlines. Under this pressure many artisans gave up weaving for other work [2].

• Why weavers hated the gomastha:

• Earlier merchants had lived in the weaving villages and helped weavers in bad times. The gomasthas were outsiders with no ties to the village.
• They came into villages with sepoys and peons (soldiers and hired servants).
• They beat and flogged weavers for late supply.

• They paid miserably low prices, and the loan meant weavers could not bargain.

• How weavers resisted:

• Desertion: weavers left their villages in the Carnatic and Bengal and set up looms elsewhere.
• Revolt: weavers rose against the Company together with village traders.
• Refusal: weavers refused advances and closed their workshops.
• Leaving the craft: many became agricultural labourers (farm workers paid wages).

Stage 3: Manchester and the double squeeze (19th century)

• Door 1: the export market closed.
• British industrialists got their government to put import duties on Indian cotton cloth entering Britain.
• Indian piece-goods (finished cloth) fell from 33% of India's exports in 1811–12 to 3% in 1850–51.

• In the mid-19th century, Britain put a large duty on Dhaka muslin entering Britain and pushed cheap British machine-made thread into Dhaka. Dhaka's weavers lost their work and the city declined [3].

• Door 2: the home market flooded.

• British goods were sold in India with minimal tariffs (almost no import tax).
• Britain also controlled sea trade and exchange rates, so it set the terms of trade.

• Cotton piece-goods rose from almost nil to over 31% of India's imports by 1850, and to over 50% by the 1870s.

• The 1860s raw-cotton crisis.

• The American Civil War cut off American raw cotton to Britain, so Britain bought Indian raw cotton instead.

• Indian weavers now had less raw cotton and had to buy it at very high prices.

• The last blow.

• From the end of the 19th century, Indian mills filled the market with machine-made cloth. Handloom weavers now faced machine competition from inside India too.

• Iron and steel and paper makers also lost their markets to imported goods.

• Result: Governor-General William Bentinck (1834) wrote: "The bones of the cotton weavers are bleaching the plains of India."

Time, place and evidence

• Period: mainly 1750s to the late 19th century, within British rule (1765–1947). The worst fall in the export trade came between 1811–12 and 1850–51.
• Regions: Bengal (including Dacca/Dhaka), the Carnatic, Surat (Gujarat), Masulipatam (Coromandel coast) and Hoogly. The new British centres were Bombay and Calcutta.
• Key people:
• Shah Alam II, who gave the diwani in 1765 [4]
• Robert Clive, governor of Bengal from 1765 [4]
• William Bentinck, who wrote the 1834 remark

• Merchants: Armenian and Persian traders, Indian bankers, and the Company's gomasthas

• How we know:

• Trade figures: Surat's trade (Rs 16 million to Rs 3 million), India's export share (33% to 3%) and India's import share (nil to over 50%).
• Official writings, such as Bentinck's 1834 statement.
• Company records of desertions and revolts in the Carnatic and Bengal.

• NCERT: Class 8, "The Colonial Era in India"; Class 10, "The Age of Industrialisation"; Class 12, "Colonialism and the Countryside".

• Debate: one scholarly source argues that the handloom decline was not general but limited to certain kinds of market and clothing [2]. For the exam, follow the NCERT view of a broad collapse.

Don't confuse with

• Drain of Wealth: this was India's wealth flowing to Britain through revenue, salaries and trade surplus, with nothing coming back. Deindustrialisation is the ruin of India's craft industries. The two are linked, but they are not the same thing.
• Industrialisation by Indian mills (late 19th century): this was machine production growing inside India. For handloom weavers it was a further blow, not a revival of their craft.
• Gomastha vs the earlier supply merchant: both dealt with weavers. The gomastha was a paid Company servant and an outsider who used force. The earlier merchant lived in the village and had close ties with the weavers.
• Raw-cotton exports in the 1860s: a rise in cotton exports does not mean the weaving industry recovered. Raw cotton went to Britain because of the American Civil War, which left Indian weavers short of raw material.

Prelims Hooks

• Indian piece-goods: 33% of India's exports in 1811–12 fell to 3% in 1850–51. Cotton piece-goods rose to over 31% of India's imports by 1850 and over 50% by the 1870s.
• Gomastha = a paid servant of the Company who watched over weavers, collected cloth and checked its quality. He was not a zamindar or a revenue officer.
• "The bones of the cotton weavers are bleaching the plains of India" → William Bentinck, 1834.
• Surat's gross trade: Rs 16 million (late 17th century) fell to Rs 3 million (1740s).
• Ports and their links: Surat → Gulf and Red Sea; Masulipatam → Coromandel coast; Hoogly → Southeast Asia. The overland route from Punjab was run by Armenian and Persian merchants.
• Order of events: decline of Surat (1740s) → diwani of Bengal, Bihar and Orissa (1765) [4] → collapse in export share (1811–12 to 1850–51) → raw-cotton crisis (1860s, American Civil War) → competition from Indian mills (end of 19th century).

Mains Points

• Political first, then technological.
• The Indian trade network had already broken down by the 1750s through concessions and monopoly rights. Surat's trade fell from Rs 16 million to Rs 3 million before British machines mattered.
• The sequence was: conquest → monopoly → advance system and gomastha → unequal tariffs → machine competition.

• Unequal tariffs (high duties on Indian cloth in Britain, minimal duties on British cloth in India) and British control of sea trade and exchange rates show this was a managed market, not a fair contest.

• Results for society.

• Weavers who had leased out their land and then lost their craft became agricultural labourers.
• This overcrowded agriculture, which was already under heavy land-revenue pressure, and it helps explain rural poverty and the famines of the colonial period.

• It links deindustrialisation to the drain of wealth and to colonial land revenue policy.

• Debate among historians.

• Some historians argue that handloom decline was specific to certain markets rather than universal [2].
• The fine-muslin export trade, as at Dacca, collapsed completely [3], while some other segments lasted longer [2].
• Mention this counter-view for balance, but build the answer on the NCERT position of broad destruction.

Related concepts

• Surat
• Gomastha
• System of advances
• American Civil War
• Cotton Supply Association
• Manchester Cotton Company
• Bombay Gazette

Read more

• Deindustrialisation I: the destruction of the weaver economy