De-industrialisation: Causes and Impacts

De-industrialisation means the ruining of industries. One of the major debates in modern Indian history revolves around this question. Nationalist historians like R.C. Dutt, R.P. Dutt, Tarachand, etc. wrote that due to various economic policies of the British and the Industrial Revolution in England, traditional Indian industries heavily suffered, though slowly but certainly. The colonial historians, however, refute 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 the 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, district towns related to local industries, the total number of employed people in it, and its 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

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. "Almost everything that used to be made of wool or silk, relating either to dress of the women or the furniture of our houses, was supplied by the Indian trade" (Weekly Review, 1708, Thomas, P.J., pp. 30). 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 calicos (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 calicos 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 in England, which began in the 1750s and 1760s, was a great event in the modern world. 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 victory at Plassey (1757) and Buxar (1764), the English East India Company exported raw materials like cotton from India to Manchester and Lancashire mills. The Indian weavers were deprived of raw materials. Either it was not available to them or, if available, at a much costlier rate.

2. The manufactured English goods, especially cotton cloth, were much cheaper as they were made in mills, whereas Indian cloth was a handloom product, so relatively costlier. How long could hands compete 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 started coming and selling their products in a 'free market'.

4. Almost all European nations adopted protectionist policies against Indian goods with the exception of Holland (the Netherlands). The European countries imposed heavy duties on Indian goods, as high as 200% to 400% on various items. In India, however, the import duty on English goods was nominal, as low as 2-10%. This unequal competition ruined Indian industries. Thus, the 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. The 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 biggest market for Indian manufacturers. The new ruling class, the Governor General, Governors, military officers, and civil servants were English. Their taste was different. They preferred English goods, be it cloth, furniture, ink, paper, utensils, shoes, or weapons. Even the rising Indian middle class copied the lifestyle of the English and felt 'proud' and 'modern' in using English goods. The purchasing power of common Indians was very poor due to the high rate of taxation, so they could not afford to purchase most of the manufactured items. Naturally, Indian industries had no other option except to wait for their demise.

6. The modern means of transportation, especially railways and roads, made the ruin of Indian industries almost inevitable. The mineral belt and agricultural production belt were connected with ports through rail, road, or both. Similarly, the ports were connected with the markets where English goods reached easily. This phenomenon brought a peaceful but painful demise of Indian industries.

It is almost a fashion among nationalist historians to always blame the British for all the ills in India. A retrospective analysis was not honestly done. There were some internal weaknesses too, responsible for the ruin of Indian industries.

Firstly, the Indian manufacturers failed to find new markets. The Indian traders did not explore other countries and continents. The element of the 'adventurous trader' was missing in India. Most of the Indian goods were handled by European companies.

Secondly, no Indian rulers, except Tipu, ever made any effort to formulate any trade policy or to implement it. They did literally nothing to improve trade and commerce, internally or externally. In their official meetings, they hardly discussed trade and commerce. For most of them, land revenue remained the 'primary' and the 'only' source of income.

Thirdly, the Indian rulers never gave priority to making a powerful navy. The Mughals were based in north India, so the navy, sea, or commercial ships never became important for them. Though the Marathas and Mysore had ships, their ships could not match the European ships. The Indian coastal trade was monopolised by the Europeans i.e., the English, Portuguese, Dutch, and French in the eighteenth century. Once 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 bring their manufactured items to India.

Impact of De-industrialisation

1. The unique oriental balance between manufacturing industries and agriculture was greatly disturbed. During the Mughal era, the peasants were also engaged in manufacturing activities, whole or part-time. Even for the state, manufacturing units were a good source of revenue, apart from land revenue. But the ruin of industries made India primarily an agricultural economy, one that supplied agricultural raw materials to England.

2. Pressure on agriculture and the ruralisation of the economy increased. The craftsmen and artisans who lost their employment had to rush towards agricultural fields. They were 'unwelcome', '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, which became a major area of concern for independent Indian planners. An abundance of labour created unhealthy competition, which led to undercutting each other's wages.

3. It also brought the loss of traditional Indian art and craftsmanship. Indeed, it was a great cultural loss for India.

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