The Dutch entered the East mainly for commercial profit. Cornelis de Houtman was the first Dutchman to reach Sumatra and Bantam in 1596. In 1602, the States-General of the Netherlands merged several trading companies into the Dutch East India Company. This company was given wide powers: it could wage war, conclude treaties, occupy territories, and build forts. Thus, the Dutch company was not merely a trading body but also a political-military organization.
After coming to India, the Dutch established their first factory at Masulipatnam in 1605. They gradually set up trading centres in several regions and emerged as a serious challenge to the Portuguese. They captured Nagapatam from the Portuguese and made it their main stronghold in South India.The Dutch established factories on the Coromandel Coast, in Gujarat, Uttar Pradesh, Bengal, and Bihar. Their important factories included Pulicat (1609), Surat (1616), Bimlipatam (1641), Karaikal (1645), Chinsura (1653), Baranagar, Kasimbazar, Balasore, Patna, Nagapatam (1658), and Cochin (1663).Their trade was largely part of the redistributive or carrying trade. From India, they exported indigo from the Yamuna valley and Central India, textiles and silk from Bengal, Gujarat, and Coromandel, saltpetre from Bihar, and opium and rice from the Ganga valley.
The rise of the English in eastern trade became a major threat to Dutch commercial interests. This rivalry soon turned into violent conflict. The worst incident occurred at Amboyna in 1623, where the Dutch massacred ten Englishmen and nine Japanese, greatly intensifying hostility between the two companies.After long conflict, a compromise was reached in 1667. Under this arrangement, the English withdrew their claims over Indonesia, and the Dutch withdrew from India to focus on the more profitable spice trade in Indonesia. The Dutch thus concentrated on black pepper and spices, while in India their major traded goods remained silk, cotton, indigo, rice, and opium.
The Dutch decline in India was caused by several factors. Their attention became increasingly fixed on the Malay Archipelago, where profits were much higher. During the Third Anglo-Dutch War (1672–74), communications between Surat and Bombay were disrupted, and Dutch forces captured English ships in the Bay of Bengal. English retaliation culminated in the Battle of Hooghly (November 1759), where the Dutch suffered a crushing defeat.The Dutch were never seriously interested in empire-building in India. Their main objective was trade, especially in the Spice Islands of Indonesia, from where they derived huge profits. Therefore, their political role in India remained limited.
The English entry into eastern trade was encouraged by Francis Drake’s voyage around the world (1580) and the defeat of the Spanish Armada (1588), which created a new spirit of maritime enterprise in England. Seeing the high profits made by the Portuguese in eastern trade, English merchants sought a share.In 1599, a group of merchants known as the Merchant Adventurers formed a company. On 31 December 1600, Queen Elizabeth I granted a charter to the Governor and Company of Merchants of London trading into the East Indies, giving it exclusive trading rights. Initially, the monopoly was for 15 years, but in 1609 it was renewed indefinitely. Since the Dutch were more interested in the East Indies, the English increasingly turned towards India, mainly for textiles and other valuable commodities.
Captain Hawkins reached the court of Jahangir in 1609, but his attempt to secure a factory at Surat failed because of Portuguese opposition. He left Agra in 1611. Meanwhile, the English had already begun trading at Masulipatnam in 1611, and later established a factory there in 1616.A major breakthrough came in 1612, when Captain Thomas Best defeated the Portuguese at sea near Surat. Impressed by this naval success, Jahangir gave permission in 1613 to establish an English factory at Surat under Thomas Aldworth.In 1615, Sir Thomas Roe arrived at Jahangir’s court as the ambassador of James I. Though he could not secure a formal commercial treaty, he succeeded in obtaining important privileges, including permission to establish factories at Agra, Ahmedabad, and Broach.The English position improved further with the Golden Farman of 1632 issued by the Sultan of Golconda, which allowed them to trade freely in Golconda ports on payment of 500 pagodas annually. In 1639, Francis Day obtained permission from the ruler of Chandragiri to build a fortified factory at Madras, which became Fort St. George and later replaced Masulipatnam as the headquarters of English settlements in South India. The English also established factories at Hariharpur and Balasore in 1633.
Bengal was one of the richest and most commercially advanced provinces of India, making it highly attractive to the English. In 1651, Shah Shuja, the subahdar of Bengal, allowed the English to trade in Bengal in return for an annual payment of Rs 3,000 in place of duties. Factories were established at Hooghly, Kasimbazar, Patna, and Rajmahal.However, the Company still faced obstruction from customs officials, who demanded tolls. The Company therefore wanted a fortified settlement at Hooghly. In 1682, William Hedges appealed to Shaista Khan for redress, but nothing resulted. Hostilities followed, and in October 1686, Hooghly was sacked by the Mughals.The English retaliated by attacking Thana, Hijli, and Balasore, but were ultimately forced to leave Hooghly. Later, Job Charnock negotiated with the Mughals and returned to Sutanuti. In February 1691, an imperial farman allowed the English to continue trade in Bengal on payment of Rs 3,000 annually. In 1696, the English used the rebellion of Sobha Singh as a pretext to fortify Sutanuti. In 1698, they obtained the zamindari of Sutanuti, Gobindapur, and Kalikata for Rs 1,200. The fortified settlement was named Fort William in 1700, and it became the seat of the Eastern Presidency (Calcutta).
In 1715, an English mission led by John Surman went to the Mughal court and secured the famous Farmans of Farrukhsiyar in 1717. These are regarded as the Magna Carta of the Company because they granted extensive trading privileges.The main provisions were:
These privileges greatly strengthened the Company’s position in India.
A major turning point came when Bombay was given to Charles II by Portugal in 1662 as dowry on his marriage to Catherine of Braganza. In 1668, Bombay was handed over to the East India Company for an annual rent of ten pounds only. In 1687, the Western Presidency was shifted from Surat to Bombay.By this time, the English had also achieved a compromise with the Dutch, who agreed not to interfere in English trade in India. Thus, the English were gradually freed from their two major rivals in India—the Portuguese and the Dutch.
After the English Revolution of 1688, opposition arose against the monopoly of the old East India Company. A rival company was formed and sent Sir William Norris to Aurangzeb’s court between 1701 and 1702 to obtain privileges. However, this rival company failed. Under pressure from the Crown and Parliament, the two companies were merged in 1708 under the title “United Company of Merchants of England Trading to the East Indies.” This united East India Company was the body that later established British political power in India.
| Year | Event |
|---|---|
| 1600 | East India Company established |
| 1609 | William Hawkins reaches Jahangir’s court |
| 1611 | Permission sought for Surat trade; English begin trade at Masulipatnam |
| 1613 | Permanent factory established at Surat |
| 1615 | Sir Thomas Roe arrives at Jahangir’s court |
| 1616 | First southern factory at Masulipatnam |
| 1632 | Golden Farman from Golconda |
| 1633 | Factories at Hariharpur and Balasore |
| 1639 | Lease of Madras obtained |
| 1651 | Permission to trade at Hooghly |
| 1662 | Bombay received by Charles II as dowry |
| 1667 | Aurangzeb grants farman for Bengal trade |
| 1691 | Farman for continuing trade in Bengal on Rs 3,000 annual payment |
| 1717 | Farrukhsiyar’s Farman – Magna Carta of the Company |
| 1708 | Two English companies merged |
The Dutch focused mainly on trade and spices, eventually withdrawing from India for Indonesia, while the English steadily built a network of factories, forts, and farmans, removed rivals, and laid the foundation of British political dominance in India.