Chapter : 1. The Making of a Global World
Indian Trade, Colonialism and the Global System
Indian Trade, Colonialism and the Global System
(i) With industrialisation, British cotton manufacture began to expand, industrialists pressurised the government to restrict cotton imports into Britain and protect local industries. Tariffs were imposed on cloth imports into Britain. Consequently, the inflow of fine Indian cotton began to decline.
(ii) Excluded from the British market by tariff barriers, Indian textiles now faced stiff competition in other international markets. Share of the Indian textiles declined from some 30 percent around 1800 to 15 percent by 1815. By the 1870s this proportion had dropped to below 3 percent.
(ii) While exports of manufactures declined rapidly, export of raw materials (raw Cotton, Indigo and Opium) increased equally fast. Food grain and raw material exports from India to Britain and the rest of the world increased. But the value of British exports to India was much higher than the value of British imports from India. Thus Britain had a 'trade surplus' with India. Britain used this surplus to balance its trade deficits with other countries from which Britain was importing more than it was selling to. By helping Britain balance its deficits, India played a crucial role in the late-nineteenth-century world economy.
(iv) Britain's trade surplus in India also helped pay the so-called 'home charges' that included private remittances home by British officials and traders, interest payments on India's external debt, and pensions of British officials in India.
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