Important Reasons

Details

Shifting Financial Base of East India Company (from Trade to Land Revenue)

• The province of Bengal was the first substantial area in the Asian mainland to pass under direct control of the English Company. Until now, the Company’s primary source of income was trade, which soon began to face multifarious challenges.
• By 1770s, Bengal had been milked dry and its economy was in shambles. This not only affected
  Company’s profits but also jeopardised its extremely lucrative trade with China, as the Chinese at that time sold their goods only in exchange for silver which had been mostly provided from Bengal treasury.
• Further, the industrial revolution in England had gained strength and the industrial interests were demanding an end to the Company’s trade monopoly in the East. The Company itself was getting involved in costly military conflicts in India with the country powers. In this context, with declining income from trade and increasing expenditure on armed conflict, the Company’s financial base began to shift from trade and commerce to land revenue, from business of trade to business of government. This naturally pushed the Company to go ahead with continuous territorial expansion.

Need to Obtain Spices from South-East Asia for Trade

• For several years, the Company had been carrying out profitable trade with China, especially in silks, nankeens (yellowish cotton cloth) and tea. But the Chinese traded mostly in exchange for silver, which had been provided by the Bengal treasury since 1757.
• With the depletion of Bengal’s wealth, the Company sought to pay for Chinas trade, first, by replacing the silver with opium from Malwa region of Central India, and second, by obtaining costly spices (like clove and nutmeg) from South-East Asia for sale in China and Europe. This impelled the Company to expand itself into South-East Asia.

Need for New Markets and Supplies

• The English Company’s interest in expansion outside India was also fuelled by the need to find new markets for goods procured in India and also to procure supplies either for cross trade or for use by the Company’s military forces.

Need to Safeguard Indian Empire

• The Company also needed to safeguard its Indian empire and the trade routes to China and India. Hence, the Company’s expansion outside India was also strategically driven.