Company Rule, the Raj, and Settler Colonies

The English East India Company arrived in the 1600s to trade cotton cloth and spices from posts at Bombay, Madras, and Calcutta. It had no mandate to govern anyone. But Mughal authority was crumbling, and regional rulers fought each other for power. The company raised its own army of sepoys, Indian soldiers under British officers, and offered itself as muscle to one ruler against another. Victory brought land and tax revenue. That revenue paid for a bigger army, which won more land, which brought more revenue. By 1850 the company ruled most of the subcontinent directly or through puppet princes, without ever intending to become a government.

Settler colonies and extractive colonies wanted different things from land, so they treated it differently. A settler colony, like Britain's holdings in Australia or parts of southern Africa, brought in permanent European populations who displaced or pushed aside existing inhabitants to farm or ranch the land themselves. An extractive colony like India kept the existing population in place and in place as laborers, because the goal was pulling out raw materials and crops, not resettling Europeans on the soil.

Britain's economic interest in India itself flipped as British industry grew. Early on, the company bought Indian-made cotton cloth, prized across Europe, and shipped it home to sell. Once British factories could mass-produce cloth more cheaply, India stopped being a seller of finished goods and became a captive buyer of them, while also supplying raw cotton to feed those same factories. That shift gutted Indian hand-weaving and set the stage for the 1857 rebellion, when resentment among sepoy soldiers exploded into a revolt across northern India. Britain crushed it, abolished the company, and ruled India directly as the Raj.