Industrialization in Britain has had a significant influence on the Indian economy. In India, the mechanism began quietly in the middle of the eighteenth century (when England launched the industrial revolution).
The basic ideas that contribute to the industrialization process of the West include the emergence of the factory from the craft industry. It had lead to the growth of the market economy, the differentiation of the peasantry, and the transition in legal and social frameworks.
India followed the same path in the eighteenth century because of the impact of British industrialization and accelerated this path in the nineteenth century. The experience of the industrial revolution in Britain led them to make India's transition more effective.
Being one of the British colonies that created more "yield," the British bestowed India with some of the most advanced technology. These factors contributed to a very successful first phase of industrialization in India, which saw tremendous growth in the textile and steel industries (Chandavarkar, 1985).
Industrialization of Britain and the Indian Cotton/Jute Textile Industry
From the mid 18th century, the process of industrialization in Britain led to a process of deindustrialization in the British colonies, including India. In India, the cotton textile industry was the one that had suffered most from the onslaught of deindustrialization. After agriculture, it was the largest employment generator, and before the 1800s, India's cotton products were the best in the world. The industrial revolution in Britain, however, led to enormous exports of machine-made cheap cotton textiles from Great Britain in 1750. In the Indian cotton industry, this drastic increase in the imports of cotton to India created havoc. It has generated widespread unemployment and an unprecedented decline in wages among spinners and weavers. This is one of the main reasons why it is said that Britain “inundated the very mother country of cotton with cottons”, thereby eclipsing one of the most important traditional handicraft industries of India during that period. (Sharma P, n.d.)
Jute industry is considered the second most important industry in India next to cotton among the earliest manufacturing industries. A startling resemblance between the two industries is that both the modern industries began in the 1850s. Although the cotton industry was predominantly Indian and was funded by Indian raised money, the jute industry was owned and funded by international, mainly Scottish.
In colonial India, the jute industry is a fascinating case study that illuminates the connection between colonialism and industrialization. Jute, mainly developed in Bengal, was known to India since ancient times as "golden fibre." (Jute was one of the old cottage industries of India. In old texts, including the Manusanhita and the Mahabharata, the word pat (jute) appears. See S. K. Chatterjea, The Jute Industry: A Resume (Calcutta, 1988), p. 1.)
Following the developments in transport and communication technology in the mid-19th century, the tremendous expansion of foreign trade led to an immense rise in the demand for jute bags and gunny sacks. During 1850-185, Calcutta exported a total of 9,035,713 hand-made gunny sacks to several countries, including the UK, even after the mechanized production of jute had started in the Dundee mills. 2,290,427 of them went to North America, the single largest amount. [D R. Wallace, The Romance of Jute (London, 1928), table on p. 4]
The jute handloom industry of the 1830s was rapidly declining in Bengal. The growth of India's demand for the Dundee mill was motivated by the Crimean War (1853-1856), which shut down the British industry from Russian hemp and flax supplies, two strong jute competitors.
The jute industry in India was founded only 17 years after its formation in Dundee when the conditions of worldwide growth were very favorable and the Dundee jute industries fell behind their Indian counterpart in output at the turn of the 19th century. Jute was India's monopoly. The major profits in the 1870s led to the establishment of a substantial number of factories, with 20,000 workers rising by 1882. During 1895-1900, the industry developed less rapidly because of the plague and famine. Trade data reveals the thriving trend of the industry. Between 1875 and 1914, the weight of raw jute exported from India rose by 195 p.c., but the export of gunny bags rose by 19 times and that of jute cloth by 272 times. In effect, Indian jute mills became the world's largest exporters and killed the British American market.
In the Indian jute industry, the cheap labour, proximity to raw material, and a low tax level demonstrated its dominance over foreign competitors. World War I gave a strong but temporary impetus to the overall industrial expansion and the jute industry was no exception. The jute mill industry benefited not only from war-time demand for sandbags, grain bags, gunny cloth, and a variety of other products on the part of the British Government but also from prohibiting the export of raw jute. In addition, prohibitive freights, and the difficulty of obtaining supplies of machinery and stores prevented the incoming of new competitors in this field.
Thus, the World War I enabled the jute industry to steal a march over its foreign competitors and amass huge profits. It was calculated that the ratio of net profits to paid-up capital rose as high as 75 p.c. in 1916. Despite the unprecedented prosperity of the industry, capacity of the mills did not expand during the war years, because of the difficulties of obtaining supplies of machinery and stores during the war period. A large part of capital of the jute mills was captured by Indian entrepreneurs during the War.
Immediately after the termination of hostilities, demand for jute products was kept buoyant by the heavy movement of food-grains to the war-ravaged countries of Europe. As a result, boom conditions in the industry continued unabated in the post-war years. However, recession gripped the industry in 1921-22 when the value of exports dramatically declined by around 44 p.c. Still it was not enough to halt the progress of the industry. Recovery began in 1922-23. Once again, the expansion in the volume of world trade enabled the industry to overcome the problem of temporary recession.
As a result, the number of jute mills rose from 81 in 1921-22 to 98 in 1929-30, the loom age from 43,025 to 53,900, the spindlage from 9,08,359 to 11,40,435, the number of workers from 2.88 lakhs to 3.43 lakhs. The world depression that came around September 1929 hit the Indian Jute Industry when it was riding on a high tide. Coincident with the worldwide depression, demand for raw jute and jute manufacture sagged rather dramatically.
With the recovery of world trade from 1933 onwards, the jute industry also showed signs of improvement as far as paid up capital, installed capacity, and exports were concerned. From 1935 onwards, price of raw jute showed upturn.
Unfortunately, world recession put this industry in a disadvantageous position in 1938. Fortunately, such conditions were short-lived and the World War II helped the industry to lift out of the morass of depression. The War revived overseas demand for all sorts of jute goods and the industry, as a result, earned handsome profits. Between 1939 and 1945, the number of spindles showed a marginal increase while the number of looms actually declined. Though the volume of exports of gunny bags and gunny cloth fell substantially the value of exports of gunny cloth rose remarkably. Prosperity, though it continued in the immediate post-War period, came to an end with the partition of the country when the bulk of the raw jute supply went to East Pakistan (81 p.c.) and the jute mills remained in India.
MEME CORNER
Industrialization in Britain can be called synonymous to deindustrialization in India. In the beginning of the 18th century, India was considered one of the richest countries in the world. It was also said that the Europeans were envious of the riches in India. To reduce consumption of Indian goods and to promote British goods, Britain had enacted laws which taxed Indian goods heavily. As Britain won the Battle of Plassey, in the year 1757, and the Industrial revolution took off, the Indian industries that were driven by manual labor suffered at the hands of the mechanized British industries. The establishment of European Agency Houses had driven Indian bankers out of business which led to the further decline of Indian industries.
With the beginning of the 19th century, the policy of free trade was up and coming in Europe. As a result, Europe had thrown the Indian market open to the European market. Post 1848, we saw that European countries were investing in the Indian railways, thereby promoting industrial growth in India. Foreign capital had also entered the plantation industries. While some plantations like the cotton industry and the indigo industry had declined with time, plantations like tea, rubber and coffee were seen to grow under the British rule.
The first modern industry set up in India that was set up by an Indian was in the field of iron and steel, which took place in the beginning of the 20th century. Therefore, it is safe to conclude that the initial impact of British industrialization was negative, but there were some benefits that arose from the same. (Bansal and Bansal, 1984)
The pre-colonial India had little scope of turning into a capitalist or industrial economy. There was meagre investment in agriculture, and traders lacked liberty, municipal rights, police and political backing; improper usage of capital, low literacy, institutional constraints, restrictive to changes, disorganized societies etc. which showed little signs of industrialization.
In contrast, Britain had high literacy, commercially minded aristocracy, protection of assets assured by the rule of law, availability of cheap raw materials from its colonies, and innovation that led to industrialization. Colonial India, despite being a hub for raw materials and market for finished goods along with the British policy to curb the process of industrialization some industries (large scale) like cotton, jute, paper, steel and some small-scale industries flourished. Britain built roads, railways, laid telegraph, telephone lines, set up schools and colleges, hospitals etc. which was decent infrastructure in India, and an impetus to the process of industrialization. Therefore, Industrial revolution during the pre-British period in India remained a distant dream. (Gupta, 1980, p. 473)
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