His service in the East India Company was marked by his conflict with Lord Pigot, the governor of Madras; Stuart's arrest of the latter in 1776 resulted in his suspension as commander-in-chief, and he was not vindicated until 1780.

From Belle Île he went to the West Indies, and served in the expedition against Martinique, which was captured in February 1762, and on the death of Colonel Morgan took command of the regiment.

On this news reaching England, Stuart was suspended by the directors from the office of commander-in-chief of the Madras Army, to which he had succeeded, with the rank of brigadier-general, on the death of Sir Robert Fletcher in December 1776.

He returned to Madras in 1781, and, under Sir Eyre Coote, took part in the battle of Porto Novo on 1 July, and distinguished himself by his able handling of the second line of the British force.

Lord Macartney, the governor, however, would not allow him that freedom of action which Eyre Coote had enjoyed, and on the death of Hyder Ali on 7 December he urged him immediately to attack the Mysore army.