The Mughal Empire continued on the decline which had begun since the death of Aurangzeb. This gave opportunity to subordinate state to strike out their own Empire independent of the Mughal influence. Thus different Mughal principalities like Hyderabad (by Nizam-ul-mulk), Rajputs (like Sawai Jai Singh), Jats (under Churaman and Badan Singh), Sikhs (under Ranjit Singh) and Pathans and Rohillas (led by Muhammad Khan) strived to carve out independent states. Moreover, the anarchy increased with the raids of Nadir Shah and Abdali (also known as Ahmad Shah Durrani). These subordinate states had started conducting political affairs independent of any influence of Mughal central authority.

THE ERA BEFORE COMING OF EAST INDIA COMPANY

THE ASIA-EUROPE TRADE: It was since the Greek times that Asia and Europe had engaged in trade via both sea and land links. It was through the land routes that the commodities changed many hands till they reached either Asia or Europe Even after a multitude of taxes and middlemen, trade remained highly profitable. Arab merchants were largely responsible to transport the material through Asia Minor and Middle East. But these routes came under control of the Turkish Ottoman Empire when they occupied Asia Minor and captured Constantinople in 1453 Moreover, the sailors of Venice and Genoa (both-in Italy) monopolised the sea trade with Asia and did not let western Europeans like Portugal and Spain to have any share in this trade. This led these western European states (Portugal and Spain) to search for new  and safer sea routes to India and more sought after Spice Islands of Indonesia (then known as East Indies). Some of the factors which enabled these states to look for new routes were

1.  Great advances in Shipbuilding and navigation science had taken place in 15th century.
2.  The spirit of Renaissance had brought forth a new generation of sailors who were not averse to adventure and risks associated with discovering new waters.
3.  The governments sponsored the expenses and thus helped lower the risks taken by these adventurous sailors.
4.  They wanted to break the monopolies of Arab and Venetian traders and avoid the hostile Turkish Empire.
5.  Direct trade relations with the East would be highly profitable as compared to dealing with several middlemen.

Thus began an era of geographical discoveries by Spanish and Portuguese sailors. These were-
1492- Christopher Columbus of Spain, who set out to discover India, discovered America instead.
1498- Vasco da Gama of Portugal, discovered a new sea route to India via Cape of Good Hope (round the southern coast of Africa). He landed at Calicut and went back with a cargo which sold for 60 times the cost of his voyage.

TRIANGULAR TRADES
1.  Slave ships carried manufactured goods from Europe to Africa.
2.  They exchanged these goods for Negroes and carried them across the Atlantic Ocean.
3.  They exchanged these slaves for raw materials from plantations and mines in the colonies and sold it to European market.

It was this slave trade and production from plantations which become the basis of commercial prosperity of Western Europe and North America. These profits and later on wealth drained from colonies like India in 18th and 19th century provided the capital for industrial Revolution.

THE PORTUGUESE: The superiority of Portuguese ships and navigation science helped them dominate and monopolise the East Asian trade in the 16th century. Their influence spread throughout East Asian coast from Persian Gulf to Malacca and Spice Islands of Indonesia. They waged wars to protect their monopoly against European rivals. They established trading settlements in India at Cochin, Goa, Daman and Diu. They managed to secure many trading concessions from Mughal emperors who, although more powerful on land lacked naval strength. It was under the viceroyalty of Alfonso d’Albuquerque, that Goa was captured in 1510.

THE DUTCH: The Dutch were facing problems in countering the hegemony of the Portuguese and therefore they formed a chartered Dutch East India Company (the acronym VOC in Dutch) in 1602. It is often considered to be the first Multinational Company in the world. It also issued stocks and paid 18% dividend for almost 200 years. This Company was issued a 21 year charter by the Dutch parliament empowering it to make war, conclude treaties, acquire territories, coin money and build fortresses. The Dutch also spread their influence north of the Indonesian Islands up to India. Their trading depots were established in

• Western India- Surat, Broach, Ahmedabad and Cambay.

• Southern India- Cochin, Nagapattinam in Madras.

• Eastern India- Masulipatnam in Andhra Pradesh, Chinsura in Bengal, Patna

• Northern India- Agra

The EAST INDIA COMPANY

The English were late to arrive at the Asian trading because of which they faced resistance from the Portuguese and later the Dutch monopoly. They wanted a share in the Asian trading pie which comprised highly demanded commodities in Europe such as – spices, calicoes, silk, gold, pearls, drugs, porcelain and abony. The Portuguese were already having a windfall by then and this made English merchants impatient to chart their own trading organization in 1599. This organization, popularly known as East India Company, was formed under patronage of a group of merchants called as ‘Merchant Adventure’.

The East India company gained a royal charter to trade exclusively in the East by Queen Elizabeth on 31st December 1600. It opened a factory (the name given to trading depot at that time) at Surat in the west coast of India in 1608 and at Masulipatnam in southern India in 1611. It was easy for the Company to bribe local rulers or intimidate them to agree to their terms in southern India as the local rulers were weak and unorganized. This was primarily due to fall of Vijayanagar Empire in 1565. The British were able to benefit from the chaos and disunity in southern India and shifted their base to Madras in 1639. All they needed was a lease from the local Raja who not only granted it, but also let them fortify their place, coin money and administer it for half a share in customs revenue from the port. Thus, the British established Fort St. George around their factory in Madras. A ‘factory’ here should not be confused with some kind of manufacturing unit. There was nothing manufactured in these places.

In fact, these were fortified settlements having warehouses (to keep inbound and outbound cargo), offices, employee quarters etc. Captain Hawkins was sent to the Royal Mughal court to appease the Emperor. This resulted in Company getting a permission by the Mughal Emperor Jahangir to open fectories at several places along the west coast. This royal Farman to open factories was extended to the whole Mughal Empire in 1615 when Sir Thomas Roe Broach, Ahmedabad, Agra and Masulipatnam by 1623. The British expanded their presence to eastern India by opening factories in Orissa as early as 1633. Factories were opened at Patna, Balasore (Odisha), Dhaka, Hugli etc. their aspirations for political power were gaining ground. Bengal was sought to be an independent settlement as British secured permission to trade from Hugli in 1651. They were eagerly looking forward to appropriate Indian revenues by gaining political power, thus, conquering the country with its own resources.

This led to a race for Indian trading market amongst all the European trading companies which served as a proxy to nation states looking to colonise Asia. The Island of Bombay was given to king Charles II of England by the Portuguese in 1662 as dowry for marrying a Portuguese princess. The Portuguese eventually lost all their outposts except Daman, Diu and Goa. The Island of Bombay was fortified when it was acquired by East India Company from British government in 1668. Soon, they shifted their main centre of trade in western coast to Bombay from Surat. The rise of Marathas was preventing them to safely carry out their trading activities and Bombay provided a safe haven. The British ambition of gaining political power led to increase in confrontationist attitude with the Mughals. The British seized Hugli and declared war on Mughal Empire in 1686. However, the British were overconfident about their capability. They were powerful seafarers but lacked the ability to challenge the Mughal Empire on land. Thus, the war was over very quickly and it resulted in expulsion of the British from their factories. They had to abandon the mainland and stay put in a small island just outside mouth of the Ganges. Their factories at Surat, Masulipatnam and Visakhapatnam were seized and the Fort at Bombay was taken over. Their ill founded notion of superiority was shattered and sycophancy. Finally, they were able to regain the trade concessions and were permitted to carry out trade on payment of Rs 1,50,000 to the Mughal Empire under Aurangzeb. However, the British with their superior navy were able to stifle all of India trade to Iran, west and east Asia, northern and eastern Africa.

The setback which the British suffered made them wait for some time. Nevertheless in 1698, they were able to acquire zamindari for three villages- Sutanati, Kalikata and Govindpur. It was here that they built Fort William to surround its factory (later came to be known as Calcutta). The then generation of rulers, under Aurangzeb, and the Nawabs of Mughal principalities shortly after the death of Aurangzeb, such as Nawabs of Bengal-Murshid Quli Khan and Alivardi Khan were strong and exercised a strict supervision on the English. They did not allow the British to built fortifications or administer their areas independently. Hence, the British were able to consolidate their foothold only in southern india where neither Mughals nor any other central authority was present. In addition to its lack of military might, the British also faced competition and conflict from other European powers like the Dutch and the French (the Portuguese were already out of India except for small possessions like Goa, Daman and Diu).

The Dutch were already engaged in intermittent conflicts with the English on the issue of share in trade from Spice Islands of Indonesia. The English fell out of the sharing agreement with the Dutch in 1654 and conflicts continued till there was another agreement in 1667. According to this new agreement, the Dutch gave up the struggle for Indian trade in return for the English giving up the claim on Indonesia. Thus, the Portuguese and the Dutch were out of India by that time. Finally, there remained the French and the English imperial powers to vie for hegemony in the India subcontinent.