De-industrialisation of India
The economic de-industrialisation of India refers to a period of studied reduction in industrial based activities within the Indian economy from 1757 to 1947.
By the 19th century, the British empire had replaced the Indian economy as the world's largest textile manufacturer.
Amiya Bagchi claimed, [1] that the de-industrialisation processes observed in India were a product of colonial rule intentionally aimed at benefiting the British economy.
The Industrial Revolution in Europe was dependent on a significant rebalancing of the artisan and manufacturing activities in several European colonies in Asia including India.
During the period of mercantilism, the link between European markets and Indian subcontinent became more direct and trade became easier.
The rising import of Indian cotton into Europe created significant competition for and a decline in the British wool industry.
The major products exported to Europe included indigo, cotton textiles, spices, silks and peppers.
The British cotton mill industries began to lobby their government for an import tax to India.
Protectionist policies were set up by the British empire to restrict the sale of Indian good and services overseas although raw materials used in textile manufacturing such as cotton were imported to Britain factories and worked.
During the same time period, the influence of the British empire increased in the eastern hemisphere as did their control over the Indian sub-continent.
The prices of the British cotton industry were reduced to significantly increase its dominance in India, and heavy taxes were imposed on local producers.
[clarification needed][9] The causes of de-industrialisation are region or country specific as in the case of India in the 19th and 20th century.
The colonial rule under the British led to the decline of textile and handicrafts industries through their policies and introduction of machine made goods in to the Indian market.
[22] Large amounts of investments by the private and public British investors contributed to a revamped railway system in India, mainly being used for economic growth and military use.
In 1837, the first train used on the railway system for freight transport ran from Red Hills to Chintadripet bridge in Madras.
[24] In 1853, the railway began to be used for passenger travel services from Bombay to Thane, eventually expanding throughout most of the Indian subcontinent.
[24] During the Great Depression, the Indian economy was not significantly impacted and the government was mainly focused on the shipping of gold to Britain.
Furthermore, declining prices of jute and other food crops severely impacted large scale farmers in India.
The production capacity of the Indian cotton industry started to decline due to the prevailing wage rate.
[27] India became one of the major markets for the British made cotton yarns and cloths and became one of the large suppliers of Grain.
[27] The fall in prices of cotton significantly reduced the production of Indian hand spinning industry which is considered to be the most important specimen of de-industrialisation in India.
Spinning and weaving functioned as subsidiary industries in the old economy resulted in differences to the interior equilibrium of the rural market.
Consequently, the de-industrialisation process increased the unemployment of artisan and employees of indigenous cotton industry of India.
Furthermore, in response to deindustrialisation, liberalisation included reductions in import tariffs and taxes, as well as ending many Public Monopolies.
[32] Majority of the changes were implemented as a condition for a $500 million loan by the IMF and World Bank to bail out India's government in December 1991.
