The Company Grows In Power

PORTUGUESE, DUTCH AND THE BRITISH
The Portuguese had begun trading in India in the 16th Century. During 17th Century the Dutch build up their navy to be the strongest in the world. Now they were able to challenge Portuguese and set up trading posts in the subcontinent. The British East India Company had started in 1605. British traders sent ships to the subcontinent, setting up their first settlement in 1611 at Masulipatam on the Bay of Bengal. By the mid 17th century British had about 27 settlements. The most important coastal settlements were Madras, Bombay and Calcutta. The British called them ‘Presidencies’. The Company could make large profits because
Ø The Company had the monopoly of sale of Indian Goods in the Britain.
Ø Company merchants were able to ‘cut out the middlemen’. Because they bought goods directly from Indian Manufacturers and owned their own ships they did not have to pay other merchants or ship owners.
Ø The Company developed new markets for the Indian Goods in Africa and North America.

In the early years, Company settlements were defended by a small number of troops. Later the Company began to train local soldiers called ‘Sepoys’. Soon there were small armies at Bombay, Calcutta and Madras in 1717, for example, there were 360 soldiers and by 1742 they increased to 1,200. The new armies made the company much more powerful as local Rajahs and Nawab rulers asked to borrow its soldiers to fight battles. In return the company at first asked for trading agreements and later asked for land. In this way British began to take on political role. Once the company had began to rule areas-directly or indirectly-trade became less important because the company made money by collecting taxes.