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QUES. Why was it essential for India to industrialize? Discuss the process of industrialization in India between 1850- 1947. Do you agree that industrialization in India under colonial rule was stunted?


In 1900 , the majority of Indias manufacturing workers were employed in small scale industries which do use machinery or large factories. Over two- thirds of population was labour intensive that were located in the smaller firms. These firms had their roots in the traditional industry which were based on the skills. They had training systems, recruitment systems and production relations. These firms flourish in large population areas and low wages are not surprising. During the colonial period, employment was shrinking in small scale industries. Some historians have read this as a sign of the decline of artisans in competition with machinery. These declines were also derived as competition with in small- scale industry sector between different types of firms, factories and households. By these adaptations, small- scale industries contributed to the industrialization. This process is known as labour- intensive industrialization as it involved the creative and efficient use of manual labour, instead of substitution of labour by capital. Industry means production and the production took place in factories. For factories, we need production on a large scale, large labour force, raw materials, machines as they are the essential part of the factory, capital, power, technology and expertise, structure of the factory and profit. Industrialization is important because it is an important characteristic of modernization. It helps in generating employment, using of capital. It contributes to GDP. It helps in providing better standard of living. According to Adam Smith, wealth of nation= production. Production requires capital= profit based on production. Industrialization has three phases: 1) 1850- 1914- 1st phase 2) 1914- 1939- 2nd phase 3) 1939 -3rd phase Lots of change started coming in 1850. Capital was central thing for industries. Charter was issued to British East India Company which gave

them monopoly over trade in India. Other people were deprived of trading with India. The Britishers were taking opium to china. China was not willing to allow them. Trade in cotton also resulted in accumulation of wealth. There was limited market for Indian cotton because it was not of a very fine quality. At this time, America was growing very good quality cotton and was a major producer of cotton. During Civil war the cotton from America was not coming. It was a good opportunity for India. They produced more and more cotton as there was no competition. Tea boom was the important aspect of British rule. Tea was bring in from China. Government started occupying lots of land all over the country and they were looking for land for several plantations. These led to the accumulation of wealth in hands of few people. As a result, industrialization started in India in 1850. Jute and cotton mills were opened in Bombay and Calcutta. India became large producer of Jute. Third group of industries came up in food processing in the 19th century. They did not grow beyond this. Significant change came in the beginning of the first world war (1914-1939). There was a huge demands for various commodities. But they cannot supply. Both India and Britain realized this huge problem. A lot of import and export cannot happen. Britain realized that India has the potential of exporting many commodities. During WWI they realized Indias resources can be used for their own benefit.

Munition Board (1918)- after war British realized that their global position is weakened. They set up two commissions: 1) Industrial Commission- 1916-18 2) Fiscal Commission- 1921-22 They said that they will not interfere in economy but nationalists said that by saying this they are indirectly interfering. They provided Tariff protection to the industries. Fifty one industries wanted Tariff protection. Out of fifty one industries only fourteen were provided this protection. Those industries are salt, magnesium, iron- steel, cotton- textile, sugar, paper, matches. During early 1920s and late 1930s the industries which grew rapidly ar e sugar, iron- steel, cement, matches, paper and wool. During the time of Great Depression(1929- 1933) they created huge infrastructure and the demand was not according to it. It affected their economy globally. The Indian rupee was overvalued. During this time, the export become expensive, and import become cheaper. Slow note noted in case of Jute industries. It came as a shock to it. During World War II there was a huge food scarcity. India also witnessed famine. During this period labour intensive industries saw slw note because labourers were demanding higher wages and they were not in the position to pay it. But other industries grew during this time. The people who became industrialists came from trading communities like Khatris, Bhatia- they came from Punjab. Some came from many prosperous regions. Most of them were from the vaishya class. There were trading communities from Gujrat. Some of them were Hindu traders, Jain traders. They traded with the west Asia. There were Muslim traders- Khojas and Parchas.

Gujrati traders traded with Africa, South East Asia. Traders of South India- Kamatis, they are Telugu speaking, Chettia- they are Tamil speaking class. They traded with Malaysia, South East Asia, and Burma. Some of them were responsible for the spread of Islam in South East Asia as some of them were the Muslim traders. They were also engaged in the money lending and banking. Some of them were more in banking than the trade and currency exchange. Some rich Bengali traders like jagatseths were very powerful. They used Hundi systems. Even some of the traders used hundis. The most important trading group was the Parsis. They migrated to India long back. They were the people who were also interested in land. They were small time traders and craftsmen which later on become powerful capitalists or industrialist. They had protestant ethics. According to Amaya Bagachi- these Parsis who became marginalized after coming of Britishers. They do not have political power. They started controlling the trade of Bengal, Calcutta. Calcutta was connected with the Gangetic valley. Bombay was isolated untilit was connected with railway. The Britishers needed other people who can play as connection. At this time Parsis came into scene. Later on they developed interest in trade. After 1800, opium and cotton trade with China. Through this they made huge money and they emerged as a powerful class. Amaya bagachi rejected religion related argument. According to him, Hindus, Jains advanced from the changes. If religion had to do something with it then Hindus and Jain were not have emerged as important traders.

The people who invested in industries are Petits, Wadiyas, and tata. They belong to the Parsi community. Currimbhoys, Khojas- they are the Muslim traders mainly from Gujrat. Sassons were the Jews, they came to India from Bagdad. Khaitans, Gokuldas, Thakerseths- they are Bhatiyas from Kutch of Gujrat. Marvadis from Rajasthan. They also worked as small time traders. Some of them cooperated with Britishers. In 1920s Birla invested in the trade of raw cotton to Europe. Later on they invested in industries. They established all sorts of industries. They had 1015 Surat factories. They also had factories in U.P, Bihar, Calcutta. Bengalis did not invest so much in industries. According to them land was a better investment. Bengalis were interested in money landing and land revenue ventures. Parsis and Marwaris cooperated with each other but Bengalis were divided into caste system. So they were never able to dominate like Parsis and Marwaris. Factories came up because of push and pull factor. Push factor because of poverty they seek occupation in other fields. They were not attracted because of wage in industries but because they had no other option. Pull factor because of attraction towards higher wages. Industrialization in India in the 19th century have led to the better living conditions of the people. According to Tirthankar Roy push factor was there. People were moving out of rural economy to industrial economy is diversifying the portfolio. The economy is working at the same level, he is working to contribute more to it.

The family income of rural area is same, now the member who moved out to join the industrial force is adding more to it.