A company, not a country
India was not conquered by the British government. It was conquered by a private trading company.
This is the strangest fact in modern Indian history, and it is worth stopping on. The East India Company was a business. It had shareholders, profits and account books. Yet this business ended up with an army, courts, and the power to collect tax from millions of people. For a hundred years, the ruler of India was a company answerable to its investors in London.
This page explains how that company began, how it worked, how it grew, and how it ended.
The founding — 31 December 1600
On the last day of the year 1600, Queen Elizabeth I signed a royal charter — an official permission letter — for a group of London merchants. The charter created a company with a long formal name, remembered simply as the East India Company.
The charter gave the Company two powerful things. First, a monopoly — meaning no other English trader was allowed to trade east of Africa. All English trade with India belonged to this one company. Second, and more dangerous, the charter gave it the right to wage war in the lands where it traded. A trading company with permission to fight — the seed of everything that followed.
The Company raised money by selling shares — small pieces of ownership — to ordinary investors. Each investor shared the profit and the risk. This idea was new at the time, and it mattered: because many people funded the Company, it always had money, and it did not depend on the king or the government. This is one big reason it outlasted its French rival, which depended on the French government for funds.
The Company's first formal name was the Governor and Company of Merchants of London Trading into the East Indies. After 1708 it became the United Company of Merchants of England Trading to the East Indies. Exams sometimes ask the founding name.
The first factories
A factory in those days did not mean a place where things are made. It meant a trading post — a warehouse with offices, where the Company's agents (called factors) bought Indian goods, stored them, and loaded them onto ships.
To set up a factory on Indian soil, the Company needed the permission of the Mughal Emperor, who ruled most of India. In 1613, Emperor Jahangir permitted the first English factory at Surat, in Gujarat. In 1615 the English king sent Sir Thomas Roe as ambassador to Jahangir's court, and Roe won wider trading rights.
| Year | Factory / base | Note |
|---|---|---|
| 1613 | Surat | The first English factory in India, permitted by Jahangir |
| 1616 | Masulipatnam | First factory on the eastern coast |
| 1639 | Madras | Land leased from a local ruler; Fort St George built here |
| 1668 | Bombay | Given to the English Crown by Portugal as dowry, then leased to the Company for 10 pounds a year |
| 1690 | Calcutta | Founded by Job Charnock; Fort William built here |
Madras, Bombay and Calcutta grew from small trading posts into the Company's three great centres, called Presidencies. Each had a fort, a port and a growing city around it. These three cities anchored British power in India for the next two centuries — and they are still three of India's biggest cities today (Chennai, Mumbai, Kolkata).
Bombay came to the English as a wedding gift. When the Portuguese princess Catherine of Braganza married King Charles II in 1661, Bombay was part of her dowry. The Crown then rented it to the Company for 10 pounds a year.
Where and when was the first English factory in India set up, and who permitted it?
At Surat in Gujarat, in 1613, with the permission of the Mughal Emperor Jahangir.
What the Company traded
The Company's ships carried Indian goods to Europe and sold them at high profit. The main goods changed over time.
- Spices — the original attraction, especially pepper
- Cotton textiles — fine Indian cloth became the biggest export; Europe could not match its quality
- Silk, indigo and saltpetre — indigo for dye, saltpetre for gunpowder
- Tea — from China, paid for with Indian goods; tea later became the Company's biggest business
It was the Company's tea that American colonists threw into the sea at the Boston Tea Party in 1773 — the protest that helped start the American Revolution. The same company connects the histories of India and America.
From trader to ruler
For its first 150 years the Company mostly traded. Then, in a few decades, everything changed. The Mughal Empire weakened after 1707, leaving India divided among smaller powers. The Company had forts, disciplined troops, and money. Step by step it stopped asking for permission and started taking territory.
The Company defeated the Nawab of Bengal. It became the real power in the richest province of India.
The Mughal Emperor granted the Company the right to collect the revenue of Bengal, Bihar and Orissa. A trading company was now a tax collector for millions of people.
With the last major Indian power defeated, the Company ruled or controlled the whole subcontinent.
The full story of this conquest — the battles, the alliances, the annexations — is on the British Expansion in India page.
How Parliament tightened its grip
As the Company grew from trader into ruler, the British Parliament grew uneasy. A private business now governed millions of people, and governed them badly — the Bengal Famine of 1770 shocked even London. So Parliament began to control the Company through a series of laws.
| Act | What it did |
|---|---|
| Regulating Act, 1773 | The first government control over the Company. Created the post of Governor-General of Bengal |
| Pitt's India Act, 1784 | Set up a Board of Control in London to supervise the Company's political affairs |
| Charter Act, 1813 | Ended the Company's monopoly over trade with India — other British traders could now enter |
| Charter Act, 1833 | Ended the Company's trade entirely; it became purely an administrative body |
| Charter Act, 1853 | The last charter. Renewed the Company's rule but with no fixed period — a sign the end was near |
Each renewal of the Company's charter — 1793, 1813, 1833, 1853 — took something away from it. First its trade monopoly with India (1813), then all its trade (1833), then its security of tenure (1853). Parliament was slowly winding the Company down long before 1857 finished it.
The end of the Company
The Revolt of 1857 was the final blow. The uprising convinced the British government that a private company could no longer be trusted to rule India.
By the Government of India Act, 1858, the Crown took over. India would now be ruled directly by the British government, through a Secretary of State in London and a Viceroy in India. The Company lost all its powers. It lingered as an empty shell until it was formally dissolved in 1874.
Two end dates, and exams use both: 1858 — the Company lost its rule over India to the Crown. 1874 — the Company itself was formally dissolved. Rule ended in 1858; the Company died in 1874.
Four anchor years: 1600 born, 1757 Plassey, 1858 loses India, 1874 dies. If you remember nothing else about the Company, remember these four.
Everything on one look
The founding, the factories, the charter acts and the end.
- 31 December 1600 — royal charter from Elizabeth I
- 1613 — first factory at Surat, permitted by Jahangir
- 1639 — Madras; 1668 — Bombay; 1690 — Calcutta
- 1757 — Battle of Plassey
- 1765 — Diwani of Bengal, Bihar and Orissa
- 1858 — Crown takes over after the Revolt
- 1874 — Company formally dissolved
- It was a joint-stock company — funded by many private investors
- The charter gave it a trade monopoly and the right to wage war
- A factory meant a trading post, not a place of manufacture
- Sir Thomas Roe won trading rights at Jahangir's court
- Job Charnock founded Calcutta in 1690
- Charter Acts of 1813 and 1833 stripped away its trade
- The Revolt of 1857 ended its rule
- The Company was founded in 1600 by royal charter, not by the British government
- A factory was a trading post — the word did not mean manufacturing
- The first factory was at Surat in 1613, not at Madras or Calcutta
- Jahangir, not Akbar or Aurangzeb, permitted the first factory
- Bombay came from Portugal as a royal dowry, then was leased to the Company
- Job Charnock is associated with the founding of Calcutta
- The Charter Act of 1813 ended the India trade monopoly; the 1833 Act ended all its trade
- Company rule ended in 1858, but the Company was dissolved only in 1874
- After 1858 India was ruled by the Crown through a Viceroy, not by the Company
- The Company's charter included the right to wage war from the very beginning
- The East India Company was founded on 31 December 1600 by royal charter
- Queen Elizabeth I granted the charter to a group of London merchants
- The charter gave the Company a monopoly on English trade east of Africa
- The charter also gave the Company the right to wage war
- The Company was a joint-stock company, funded by many private investors
- A factory in Company times meant a trading post, not a manufacturing unit
- The first English factory in India was set up at Surat in 1613
- Mughal Emperor Jahangir permitted the first factory
- Sir Thomas Roe came as ambassador to Jahangir's court in 1615
- Madras was acquired in 1639 and Fort St George was built there
- Bombay came to the English Crown in 1661 as part of a Portuguese dowry
- The Crown leased Bombay to the Company for ten pounds a year
- Job Charnock founded Calcutta in 1690 and Fort William was built there
- Madras, Bombay and Calcutta became the three Presidency towns
- The Company traded in spices, cotton textiles, silk, indigo, saltpetre and tea
- The Boston Tea Party of 1773 involved the Company's tea
- The Regulating Act of 1773 brought the first government control over the Company
- The Charter Act of 1813 ended the Company's monopoly over trade with India
- The Charter Act of 1833 ended the Company's trade entirely
- The Revolt of 1857 ended Company rule, and the Crown took over in 1858
- The Company was formally dissolved in 1874