The Mughal Empire was one of the greatest empires to rule over India. Many Muslim and Hindu kingdoms were split throughout India until the founders of the Mughal Empire arrived in the subcontinent. From 1556 to 1707, during the zenith of its fabulous wealth and glory, the Mughal Empire was quite an efficient and centralized organization, with a vast complex of personnel, money, and information that was dedicated to serving the emperor and his nobility.
For a long time, historians have believed that India underwent an overall economic decline during the 18th century, after the collapse of the Mughal authority. In the early 18th century India was a major player in the world export market for textiles. However, by the middle of the 19th century, she had lost all of its export market and much of its domestic market. As a consequence, India underwent secular deindustrialization.
Deindustrialization is a process that involves a decrease within the relative size and importance of the industrial sector in an economy. It may entail a decrease within the absolute size of the industry in an economy. It can also mean that the industry takes a smaller share of GDP and employs a minority of the workforce. In other words, the term de-industrialization means a general reduction within the industrial capacity.
By the early 18th century, Mughal Indian manufacturing sectors were some of the most profitable economic sectors across South and Southeast Asia. The Bengal province was the center of both production and trade. While the manufacturing sector was mostly dependent on the traditional system of labor-intensive production, techniques continued to improve significantly due to the lucrative position of Bengal in the Indian Ocean as a trading hegemony.
However, after the British had taken over Bengal in the Battle of Plassey, they began to favour the technologically advanced manufacturing industry in Europe over the archaic Indian ones as the dominant industrial sector. This meant that profits now came in only for the British and induced legal trading reforms favourable for the British only.
This further contributed towards the oncoming deindustrialization phase of India which would continue even after the fall of the Mughal empire, signifying its far-reaching effects. The paramount reason for this was the great desire for machine-made goods over handmade goods, which increased the profits for the British, who consequently cemented a monopoly in the power struggle for Bengal.
The purpose for the capture of Bengal was the establishment of British trading centres in the region. The loss of Bengal contributed immensely to the failing economy of the Mughal Empire, which fell in 1857.
The dissolution of Mughal hegemony could have affected manufacturing through several channels. The first is a reduction in overall agricultural productivity consequential to an increased rent burden, shifting of settlement owing to insecurity, and warfare. Reduced agricultural productivity would be reflected in a rise in the price of grain, the key non-tradable, and therefore in the relative price of non-tradables to tradables .
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A decline in agricultural productivity in 18th-century India would suggest that even before the factory-driven technologies made an appearance between 1780 and 1820, Britain was beginning to wrest away from India its dominant grip on the world export market for textiles. An imperial regime powerful enough to extract 40 percent of the economic surplus from distant provinces must have also had to the means to ensure peace and security, which in turn would have favored agricultural investment and productivity.
The dissolution of the Mughal empire into a constellation of small successor states was followed by the initial phase of the reintegration of these states under the East India Company after a few years.
The process of deindustrialization in India was in many ways tied to the weakening control of the Mughal empire in certain parts of the Indian subcontinent. The process further hastened the shift of bargaining power to the British and cemented their dominant position in the Indian socio-political and economic spheres.
The effects and consequences of deindustrialization on the workforce of the nation have been extremely far-reaching and continued to have an impact even after India gained independence. It became one of the greatest economic challenges were faced by the policymakers of the newly independent nation.
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