De-industrialisation means the ruining of industries. One of the major debates of modern Indian history revolves around this question. The nationalist historians like Ramesh Chandra Dutt, R.P. Dutt, Tarachand, etc., wrote that due to various economic policies of the British and the Industrial Revolution of England, the traditional Indian industries heavily suffered, though slowly but certainly. The colonial historians, however, refuted this charge. Morris D. Morris, a US scholar, called de-industrialisation a myth.
It is also interesting to note that de-industrialisation was never seriously discussed by nationalist leaders as they discussed the drain of wealth. Even the literature of that period did not show any great concern on this issue. Statistically, too, it is not easy to prove the extent of industrial ruin in the colonial regime, as documents from villages and district towns related to local industries, the total number of employed people in them, and their role in revenue generation, are not available. Nevertheless, a historical analysis of industries in the pre-colonial era and colonial era may help us understand the various aspects of de-industrialisation.
Indian Industry in the 17th Century
The Seventeenth-century India had a balanced economy. Both agriculture and industry were developed and helped in the growth of internal and external trade. Indian cotton and silk products were in great demand in England.
Besides, Indian indigo, pepper, and saltpetre were also in great demand. Many people in England, especially the mercantilists and woollen and silk manufacturers, cried foul and complained that Indian trade led to the export of wealth from England. Under pressure from capitalists, the English government passed an Act in 1700 and banned all kinds of cloth, silk, muslin, and calicoes (printed or dyed), not only from India but also from Persia and China.
Despite the ban, Indian goods continued to hit English and other European markets through smuggling, mainly by the East India Company. In 1720, through another Act, a penalty of £5 was imposed on those who wore Indian silk or calicoes and £20 on those who sold it. Louis XI, the King of France, through an order in 1726, announced capital punishment for smuggling Indian cotton goods in France if a smuggler repeated the crime thrice.
Causes of De-industrialisation
1. The Industrial Revolution of England, which began in the 1750s and 1760s, was a great event in modern world history. It brought many positive changes for England and negative changes for India. The political defeat of Indians at the hands of the English complicated matters. After their victories at Plassey (1757) and Buxar (1764), the English East India Company exported raw materials like cotton from India to the mills of Manchester and Lancashire. Indian weavers were deprived of raw materials, which were either unavailable or available at much higher rates.
2. The manufactured English goods, especially cotton cloth, were much cheaper as they were made in mills, whereas Indian cloth was a handloom product and therefore relatively costlier. How long could hands have competed with machines?
3. The Charter Act of 1813 ended the monopoly of the East India Company, except in the tea trade and trade with China. Hundreds of English companies began entering and selling their products in a so-called 'free market.'
4. Almost all European nations adopted protectionist policies against Indian goods, with the exception of the Netherlands. European countries imposed heavy duties on Indian goods, as high as 200% to 400% on various items. In contrast, the import duty on English goods in India was nominal, as low as 2-10%. This unequal competition ruined Indian industries. Thus, political control over India was directly linked with the decline of industries.
5. The annexation policy of the British was also responsible for de-industrialisation. Local rajas, nawabs, and their officials were regular customers of various indigenously manufactured items like cloth, swords, furniture, and other household articles. The annexation of Indian states meant the loss of the largest market for Indian manufacturers. The new ruling class, including the Governor-General, governors, military officers, and civil servants, were English. Their tastes were different. They preferred English goods, whether it was cloth, furniture, ink, paper, utensils, shoes, or weapons. Even the rising Indian middle class imitated the lifestyle of the English and felt 'proud' and 'modern' using English goods. The purchasing power of common Indians was very poor due to high taxation, making it difficult for them to afford most manufactured items. Naturally, Indian industries had no other option but to await their demise.
6. Modern means of transportation, especially railways and roads, made the ruin of Indian industries almost inevitable. The mineral and agricultural production belts were connected with ports by railways, roads, or both. Similarly, ports were linked to markets where English goods arrived easily. This phenomenon brought a peaceful but painful demise to Indian industries.
It is almost fashionable among nationalist historians to always blame the British for all the ills in India. A retrospective analysis was not honestly done. Some internal weaknesses were also responsible for the ruin of Indian industries.
1. Indian manufacturers failed to find new markets. Indian traders did not explore other countries and continents. The element of the 'adventurous trader' was missing in India. Most Indian goods were handled by European companies.
2. No Indian rulers, except Tipu Sultan, ever made efforts to formulate or implement any trade policy. They did, literally, nothing to improve trade and commerce, either internally or externally. In their official meetings, they hardly discussed trade and commerce. For most of them, land revenue remained the primary and only source of income.
3. Indian rulers never prioritized building a powerful navy. The Mughals, based in north India, did not consider a navy, the sea, or commercial shipping important. Though the Marathas and Mysore had ships, their fleets could not match European ships. Indian coastal trade was monopolised by the Europeans—English, Portuguese, Dutch, and French—during the eighteenth century. When the Industrial Revolution began in England, they started bringing English goods to India. Had coastal trade been under Indian control, it would have been difficult for them to flood India with manufactured items.
Impact of De-industrialisation
1. The unique oriental balance between manufacturing industries and agriculture was greatly disturbed. During the Mughal era, peasants were also engaged in manufacturing activities, either fully or part-time. Even for the state, manufacturing units provided a significant source of revenue, apart from land revenue. The destruction of industries turned India into a primarily agricultural economy, mainly supplying raw materials to England.
2. Pressure on agriculture and the ruralisation of the economy increased. Craftsmen and artisans who lost their employment were forced to move into agriculture. They were 'unwelcome' and 'unwanted labourers.' This resulted in the subdivision of holdings, over-cultivation, and encroachment on village pastures and forest land. It also led to disguised unemployment in rural areas, a major concern for independent India's planners. The abundance of labour created unhealthy competition, leading to wage undercutting.
3. The loss of traditional Indian art and craftsmanship was significant. It was indeed a great cultural loss for India.
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