Colonial Rule and Its Effects on India's Rural Economy

The Indian Valley civilization spun cotton fabrics since 3000 B.C. Herodotus the Greek historian mentions Indian cotton in 400 A.D as wool exceeding in beauty and goodness that of sheep. Strabo and Arrian mentioned the vividness of Indian fabrics and Indo-Arabian trade in cotton fabrics. The Muslim entry into Europe (via Spain) expanded European cotton trade and the sale and transportation of cotton fabrics had become very profitable. The secrets of hand-woven cotton cloth from India were carefully guarded by the weavers but some weavers converted to Christianity and revealed the secrets to a French priest, Father Coeurdoux who revealed the process of creating colorful patterns in fabrics with frames and this enabled the European textile industry to bloom.

The versatile cotton became the favorite for clothes since it could be printed easily and combined with linen. With the advent of the Industrial Age, new inventions like the spinning jenny, the water frame and steam power, made Britain a major manufacturing center of cotton textiles (Lancashire/Midlands). British restrictions on Indian textile imports and removal of the import duty in India on British mill manufactured cloth, destroyed Indian handloom textiles in export markets. Instead, instead raw cotton was being sourced from India.

In 1764, India exported 10,000 bales of cotton to England and the British took every conceivable means to aid and encourage and even to undertake the cultivation in India of more and better quality cotton and exported this cotton to England. These efforts reduced India from riches to rags in less than half a century and transformed the age-old producer of the finest cotton muslin in the world to a decayed colonial vestige, supplying raw cotton to the English textile mills.

The American Civil War cut off supply of American cotton to Britain (1861–1865) causing a cotton famine. Indian raw cotton imports which accounted for 31% of British cotton imports in 1861 rose to 90% in 1862 and reduced to 67% in 1864. The destruction of the Indian cloth industry was complete and now India was reduced to supplying raw cotton to Britain (Dutt, 1990).