PERIOD OF MERCANTILISM (1757 to 1813)

The first phase of the British rule can be termed as exploitation by merchant capital in the context of mercantilism. The main objective of the East India company was to buy as much Indian goods as possible at the cheapest possible price and sell there goods in Britain and other foreign countries so that substantial profits can be made. The reckless and anarchic attempts to increase the purchases adversely affected the traditional Indian export industry, particularly the cotton industry. The government forced the textile weavers to sell their products below market prices. Many strict regulations were passed which reduced the weavers to the status of indentured labourers and gave them a life of abject poverty. For example, under the 1789 regulation, they were forced to pay a penalty of 35 per cent on the advance (given forcibly) taken if they made any default in supplying goods.