Deindustrialisation II: Indian mills, entrepreneurs and industrial growth

Detail

The first factories

• First cotton mill: Bombay, 1854. It began making cloth in 1856.
• Growth was fast. By 1862 Bombay had four mills, with 94,000 spindles (machines that make thread) and 2,150 looms (machines that weave cloth).
• First jute mill: Bengal, 1855. The second came in 1862. Jute is a rough fibre used for sacks and ropes.
• Elgin Mill, Kanpur — started in the 1860s. The first Ahmedabad cotton mill came a year later.
• Madras got its first spinning-and-weaving mill in 1874.
• Bombay was already the base for this. By 1860 the city was India's largest cotton market, and the American Civil War (1861–65) cut off American cotton to Britain, which set off a big trade boom in Bombay [3].

  Note: Britannica dates Bombay's first spinning and weaving mill to 1857, not 1854 [3]. Keep the NCERT date (mill set up 1854, production from 1856) for the exam.

Where the money came from — the China trade

• Indian businessmen first made money by helping the British sell opium to China. Profits from that trade were then put into mills.
• Dwarkanath Tagore (Bengal) — set up six joint-stock companies in the 1830s–40s. A joint-stock company raises money from many shareholders. His firms sank in the business crises of the 1840s.
• Parsi merchants of Bombay — Dinshaw Petit and Jamsetjee Nusserwanjee Tata. They also earned by shipping raw cotton to England.
• Seth Hukumchand, a Marwari trader, set up the first Indian-owned jute mill in Calcutta in 1917. (Earlier jute mills were European-owned.)
• The father and grandfather of G.D. Birla also made their money this way.
• Other capital came from trade with Burma, the Middle East and East Africa, and from Indian banking networks inside the country.

Tata and the steel plant

• J.N. Tata set up India's first iron and steel works at Jamshedpur in 1912.
• Extra detail: Tata began planning a large ironworks in 1901; in 1904 the geologist Pramatha Nath Bose wrote to him inviting him to start an ironworks in the princely state of Mayurbhanj [2].
• The company, Tata Iron and Steel Company (TISCO), was incorporated in 1907, and the plant and its factory town were built at the village of Sakchi, in present-day Jharkhand [2].
• In 1919 the Viceroy Lord Chelmsford named the town Jamshedpur, after Jamsetji Tata [2].

• Under his sons Sir Dorabji Tata (1859–1932) and Sir Ratanji Tata (1871–1932), TISCO became India's largest privately owned steelmaker [2].

  Note: Britannica says the Jamshedpur steel plant opened in 1911 [2]; NCERT says 1912. Write 1912 in the exam.

• Key limit: machinery, railway equipment and locomotives were still mostly imported. So capital-goods industries (industries that make machines for other industries) never really developed before Independence.

How the colonial state blocked Indian business

• Indian merchants were not allowed to trade with Europe in finished goods.
• They were pushed into exporting only raw materials and food: raw cotton, opium, wheat, indigo.
• They were pushed out of shipping too. Jamsetjee Jeejeebhoy sold his ships by the 1850s.
• European Managing Agencies ruled industry till World War I — Bird Heiglers & Co., Andrew Yule, Jardine Skinner & Co.
• A managing agency ran mills on behalf of the owners.
• Indian financiers gave the money; Europeans took every decision.
• Their chambers of commerce kept Indians out.
• They chose businesses that produced for export: tea and coffee plantations, mining, indigo, jute.

Workers and the jobber

• Factory workers rose from 584,000 in 1901 to over 2,436,000 in 1946.
• Workers came from districts around the city. In 1911, over 50% of Bombay's cotton-mill workers came from Ratnagiri district.
• Most kept one foot in the village — they moved back and forth by season, working in the mill and then going home for farm work.
• Hiring ran through the jobber:
• An old, trusted worker picked by the mill owner.
• He brought recruits from his own village.

• He then took money and gifts from them and controlled their lives inside and outside the mill.

• Wartime demand made these mills very large employers; by the Second World War, Bombay mills were turning out some 5,000,000,000 yards of cotton cloth a year, about 35% of it going into war supplies [4].

Pattern of growth — coarse yarn, then cloth

• Early Indian mills did not fight Manchester head-on. They made coarse yarn (thick, cheap thread), which:
• fed Indian handloom weavers, and

• was exported to China.

• From 1906 that plan broke. Chinese and Japanese mills captured the China yarn market.

• So Indian mills shifted from yarn to cloth. Piece-goods (cloth) production doubled between 1900 and 1912.
• Two things helped:
• the swadeshi boycott of foreign cloth, and
• industrialists pressing together for tariff protection (higher taxes on imported cloth).

World War I — the turning point

• Manchester mills got busy with war orders, so British cloth stopped flooding India.
• Indian mills supplied the home market plus the army: jute bags, uniform cloth, tents, boots, saddles.
• Production boomed.
• After the war Manchester never won back its Indian market. Indian industrialists kept replacing foreign goods with their own.

Small-scale industry did not die

• Big industry stayed a small slice of the economy.
• In 1911, about 67% of large industries sat in just Bengal and Bombay.
• Registered factories employed only 5% of the industrial workforce in 1911 and 10% in 1931.
• Handloom cloth production almost trebled between 1900 and 1940.
• Mill thread killed hand-spinning, but not hand-weaving.
• Weavers adopted the fly shuttle — a device that pushes the thread across the loom by cord, so one weaver weaves faster and wider.

• By 1941, over 35% of handlooms had it; in Travancore, Madras, Mysore, Cochin and Bengal it was 70–80%.

• Fine weaves mills could not copy: Banarasi and Baluchari saris, Madras lungis. Rich buyers kept buying these even in famine years, so this demand was safe.

Making the buyer — labels and advertising

• Manchester cloth bundles carried labels and calendars printed with images of Indian gods and kings, to make foreign cloth look familiar and trustworthy.
• Indian mills answered with advertisements carrying the swadeshi message — buying Indian cloth was made a national duty.

Prelims Hooks

• First cotton mill in India: Bombay, 1854; production started 1856.
• First jute mill: Bengal, 1855; second in 1862.
• First Indian-owned jute mill: Seth Hukumchand, Calcutta, 1917.
• Elgin Mill is at Kanpur (1860s); Madras's first spinning-weaving mill: 1874.
• TISCO incorporated 1907; NCERT dates India's first iron and steel works at Jamshedpur to 1912; town named Jamshedpur in 1919 by Viceroy Lord Chelmsford [2].
• Geologist Pramatha Nath Bose wrote to J.N. Tata in 1904 about an ironworks in Mayurbhanj; plant built at Sakchi village [2].
• Managing agencies to remember: Bird Heiglers & Co., Andrew Yule, Jardine Skinner & Co.
• Factory workers: 584,000 (1901) → 2,436,000+ (1946); over 50% of Bombay cotton-mill workers in 1911 came from Ratnagiri.
• Registered factories held only 5% (1911) and 10% (1931) of the industrial workforce; 67% of large industry was in Bengal and Bombay (1911).
• Fly shuttle: in over 35% of handlooms by 1941; 70–80% in Travancore, Madras, Mysore, Cochin, Bengal.

Mains Points

• Industrial growth was real but lopsided. Cotton, jute and steel grew, yet machines, railway gear and locomotives stayed imported — so no capital-goods base existed at Independence. This explains why the Mahalanobis model after 1956 put heavy industry first.
• The state shaped who could invest. Bans on Indian trade in finished goods with Europe, loss of shipping, and European managing agencies that took Indian money but no Indian advice mean Indian "backwardness" was a policy outcome, not a failure of enterprise.
• Nationalism and industry fed each other. Swadeshi boycott after 1905, the shift from yarn to cloth, demands for tariff protection, and swadeshi advertising show economic nationalism became a business strategy as much as a political one.
• Deindustrialisation was uneven, not total. Hand-spinning died, but handloom weaving almost trebled in output from 1900 to 1940 through the fly shuttle and fine, mill-proof weaves — so the story is restructuring of craft, not simple destruction.