The British Impact on Indian Industry

The British Impact on Indian Industry

Before reading the Article Please See the Chart India Since 1 AD Till 1870 was either 1st or Second in share of World GDP,The British Rule totally destroyed Indian Industry,Its Culture and above all confidense of Indians,We are use to of reading & appreciating Communist & European version of Indian Stories (Which basically are meant for defaming Ancient Indian Culture, Economics,Beleaves) Below mentioned Details is a beautiful & True statistic's  view of Mr A.Maddisson.The details & Views are pulled from his Great Report submitted to & published by OECD

Share of World GDP, 20 Countries and Regional Totals, 1-2001 AD

                                                             (per cent of world total)

  (AD)    1     1000     1500     1600     1700     1820     1870     1913     1950     1973   2001

China  26.1   22.7      24.9      29.0       22.3      32.9     17.1       8.8         4.5       4.6     12.3

India   32.9   28.9      24.4      22.4       24.4      16.0     12.1       7.5         4.2       3.1      5.4

UK                             1.1     1.8           2.9        5.2         9.0        8.2       6.5       4.2       3.2

USA                          0.3      0.2           0.1       1.8          8.8      18.9      27.3     22.1    21.4

India had a bigger industry than any other country which became a European colony,

and was unique in being an industrial exporter in pre–colonial times. A large part of this industry was destroyed as a consequence of British rule.

Between 1757 and 1857 the British wiped out the Moghul court, and eliminated three–quarters of the aristocracy (except those in princely states). They also eliminated more than half of the local chieftainry (zamindars) and in their place established a bureaucracy with European tastes. The new rulers wore European clothes and shoes, drank imported beer, wines and spirits, and used European weapons. Their tastes were mimicked by the male members of the new Indian “middle class” who acted as their clerks and intermediaries. As a result of these political and social changes, about three quarters of the domestic demand for luxury handicrafts was destroyed. This was a shattering blow to manufacturers of fine muslins, jewellery, luxury clothing and footwear, decorative swords and weapons.My own guess would be that the home market for these goods was about 5 per cent of Moghul national income and the export market for textiles probably another 1.5 per cent.

The second blow came from massive imports of cheap textiles from England after the Napoleonic wars. Home spinning, which was a part–time activity of village women, was greatly reduced. Demand for village hand–loom weaving changed with a substantial switch to using factory instead of home–spun yarn.

Modern cotton mills were started in Bombay in 1851, preceding Japan by 20 years and China by 40.Production was concentrated on coarse yarns which were sold domestically and to China and Japan.Exports were half of output. India began to suffer from Japanese competition in the 1890s. Exports to Japan were practically eliminated by 1898. Shortly after, Japanese factories in China began to reduce

India’s market there. By the end of the 1930s, Indian exports of yarn to China and Japan had disappeared, piece goods exports had fallen off, and India imported both yarn and piece goods from China and Japan.

If the British had been willing to give tariff protection, India could have copied Lancashire’s textile technology more quickly. Instead British imports entered India duty free. By the 1920s when Indian textile imports were coming mainly from Japan, British policy changed. By 1934 the tariff on cotton cloth had been raised to 50 per cent with a margin of preference for British products. As a result there was a considerable substitution of local textiles for imports. In 1896 Indian mills supplied only 8 per cent of Indian cloth consumption, in 1913 20 per cent and in 1945 76 per cent. By the latter date there were no imports of piece goods.

Modern jute manufacturing started in 1854 and the industry expanded rapidly in the vicinity of Calcutta. It was largely in the hands of foreigners (mainly Scots). Between 1879 and 1913 the number of jute spindles rose tenfold — much faster than growth in the cotton textile industry. Most of the jute output was for export.

Coal mining, mainly in Bengal, was another industry which achieved significance. Its output,which by 1914 had reached 15.7 million tons, largely met the demands of the Indian railways.In 1911 the first Indian steel mill was built by the Tata Company at Jamshedpur in Bihar. TheIndian industry started 15 years later than in China, where the first mill was built at Hangyang in 1896.The first Japanese mill was built in 1898. In both China and Japan the first steel mills (and the first textile mills) were government enterprises.

Indian firms in industry, insurance and banking were given a boost from 1905 onwards by the swadeshi movement, which was a nationalist boycott of British goods in favour of Indian enterprise.During the First World War, lack of British imports strengthened the hold of Indian firms on the home markets for textiles and steel. After the war, under nationalist pressure, the government started to favour Indian enterprise in its purchase of stores and it agreed to create a tariff commission in 1921 which started raising tariffs for protective reasons.

Many of the most lucrative commercial, financial, business and plantation jobs in the modern sector were occupied by foreigners. Long after the East India Company’s legally enforced monopoly privileges were ended, the British continued to exercise effective dominance through their control of the banking sector39 and the system of “managing agencies”. These agencies, originally set up by former employees of the East India Company, were used both to manage industrial enterprise and to handle most of India’s international trade. They were closely linked with British banks, insurance and shipping companies. Managing agencies had a quasi–monopoly in access to capital,and they had interlocking directorships which gave them control over supplies and markets. They dominated the foreign markets in Asia. They had better access to government officials than did Indians. The agencies were in many ways able to take decisions favourable to their own interests rather than those of shareholders. They were paid commissions based on gross profits or total sales and were often agents for the raw materials used by the companies they managed. Thus the Indian capitalists who did emerge were highly dependent on British commercial capital and many sectors of industry were dominated by British firms, e.g. shipping, banking, insurance, coal, plantation crops and jute.

Indian industrial efficiency was hampered by the British administration’s neglect of technical education, and the reluctance of British firms and managing agencies to provide training or managerial experience to Indians. Even in the Bombay textile industry, where most of the capital was Indian, 28 per cent of the managerial and supervisory staff were British in 1925 (42 per cent in 1895) and the British component was even bigger in more complex industries. This naturally raised Indian production costs.At lower levels in the plant there was widespread use of jobbers for hiring workers and maintaining discipline and workers themselves were a completely unskilled group who had to bribe the jobbers to get and retain their jobs. There were also problems of race, language and caste distinctions between The Impact of Western Development on the Rest of the World management, supervisors and workers. The small size and very diversified output of the enterprises hindered efficiency. It is partly for these reasons (and the overvaluation of the currency) that Indian exports had difficulty in competing with Japan.