The first phase of the India’s relationship with Europe was one of mutual trade and prosperity. Until the East India Company began to establish a monopoly for itself in Indian trade, pushing out European rivals, notably the French, followed by conquest, that first phase from 1600 to 1757 was not really an unequal ‘colonial’ relationship. The East India Company had a large vested interest in promoting the export of cotton textiles and silks from India which soon began to militate against British industrial interests. Political agitation in Britain began to demand curtailment in the trading privileges of the East India Company and an end to imports of Indian textiles.
(...) The second phase of India’s relationship with Britain and the East India Company, opened with the beginning of the conquest of India in 1757. The main interest of the East India Company was still to maximise the export of Indian textiles to Britain and Europe. To that was now added the direct extraction of surplus from the Indian countryside in the form of land revenue and other taxes and impositions. Conquest and plunder joined hands with trade. In the collection of land revenue, the paternalism of Indian feudalism was replaced with the unmitigated avarice and greed of the faceless officials of the Company.
(...) [The third phase:] The East India Company had a major vested interest in the preservation and expansion of exports of Indian textiles. It obtained Indian textiles for resale in the Far East as well as Europe, where they fetched a profit of three times their cost. But there were rising pressures in England against that trade and for protection and promotion of the cotton textile industry in Britain. It was not until the middle of the seventeenth century that a cotton textile industry emerged in England. It is generally held that it was the development of the Manchester textile industry that triggered off the Industrial Revolution in England. As Landes pointed out, the ‘threshold’ of the industrial revolution in England was first crossed in cotton manufacture’. (Landes, 1970:82) It is little realised that the prior destruction of the Indian cotton textile industry was a necessary pre-condition for progress of the British Industry. It is a myth that is universally believed by economic historians (Marx among them) that it was the mechanisation of English textile production that killed the Indian textile industry. That was not so. Active steps had to be taken by the British government to suppress the flourishing Indian textile industry. The East India Company had a large interest in the continuation of Indian textile exports that conflicted with those of the rising British bourgeoisie and, especially, the British textile interests. Under pressure from them, the Company’s profitable trading monopoly was ended in 1813 and in 1833 it was required to stop its commercial operations altogether. It then became exclusively an organ of colonial government.