Read this article to learn about the industrial policy of British in India !

To understand the British Industrial policy, pre-independence industrial development of India can be divided in three periods.

We are describing the accounts of these periods as follows:

Period I (1850-1914):

Industrial development was to a great extent a by-product of certain interrelated developments like improved transport and communications, growth of foreign trade and consequent accumulation of commercial fortunes.

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Railway building and maintenance had effects more far reaching than the open­ing up of the interior and exposing agriculture to the market economy. It released some of the latent potentialities for industrial development.

The major features of industrial development in India during this period were as follows:

(i) The decline traditional handicrafts paved the way for the transformation of the Indian economy. Despite many difficulties, a better state of affairs was discernible so far as industrial activities were concerned. Educated Indian was becoming more and more eager to take to technical education. Capital was overcoming its proverbial shyness. Steam was fast replacing manual power and serious attempts were made to start new industries.


(ii) The beginning of joint-stock enterprise was made but the progress was slow.

(iii) The development of towns contributed immensely to the growth of the leading industries of India. Railway construction was a powerful factor determining the growth of towns in India.

(iv) The progress of industrial enterprises in India was linked up with the political movements at home and abroad. The American Civil War, the Crimean War, the Swadeshi Movement, etc., all facili­tated the industrial development of the country. Not only was there no planned effort at industrialisation, but the British Government also adopted, by and large, a hostile attitude to industrial growth.

(v) The industrial development of the country was greatly stimulated by the opening up of the Suez Canal in 1869 and by the network of railways which opened up the interior to trade. The improve­ment of an oceanic transport system encouraged the development of industries in India by facili­tating the import of skill and machinery from abroad.


(vi) The development of Indian industries was lopsided in character in the sense that only some light and consumer goods industries were started and no attention was given to the machine-manufacturing and heavy engineering and heavy chemical industries and other basic and key industries.

(vii) From the beginning, industries grew up only in certain localities while other localities, although they had a high industrial potential, were not developed, Owing to the lack of proper planning, the location of industries in India was defective which let to an unbalanced regional growth.

Period II (1915-139):

During this period a number of events occurred that shaped and conditioned the pattern of indus­trial development in India. Among these the more important were: The First World War (1914-18), the post-war boom (1919-20), the fluctuating exchange rates (1921-27), the worldwide depression (1929- 33), the adoption of Congress ministries in many provinces.

It was also during this period that the Indian Industrial Commission (1916) with Sir Thomas Holland as Chairman, the Fiscal Commission with Sir Ibrahim Rahimatoola as Chairman, The royal (Whitley) Commission on Labour (1929), the Central Banking Enquiry Committee (1930), the External Capital Committee (1925), and the Taxation Enquiry Committee, were appointed to make a thorough enquiry into respective fields.

Up to the First World War, the opposition of the British Government to industrial development in India was open and unconcealed. But the First World War proved an eye-opener to them. First, when the war broke out impels from foreign countries had completely ceased and this brought home the need for developing India industrially,

Secondly, it was necessary for the British ruler to make certain political and economic concessions and promises of concessions to secure the co-operation of the Indian people during the war and in the disturbed period following the war. The economic concessions took the shape of a proclamation by the Government to the effect that in future industrialisation would be promaed by all means,

Thirdly, foreign competition had been affecting British import in India. It was felt that the growth of some industries within India was better than foreign competition displacing British Import. These considerations led to the appointment of the Industrial Commission and the Munitions Board.

The Munitions Board helped the progress of indigenous industries in various ways such as:

(i) a direct purchase of India-made articles and materials of all kinds needed for the army, the civil departments, and the railways;

(ii) the diversion of all orders from the United Kingdom and elsewhere to manufacturers in India; and

(iii) assistance to Indian firms in importing plants or technical experts from abroad.

In fact the Board gave considerable stimulus to certain established industries like cotton, jute, iron and steel, leather, etc. But once the war and the fear that the British Empire might be endangered were over, the conces­sions in favour of industries were withdrawn. By the middle of 1920, industries were again subjected to the full force of competition. The Fiscal Commission (1922) recommended a policy of discriminating protection to be administered through an expert body called the Tariff Board.

Altogether 13 industries received protection and this enabled a few of them to establish themselves on a sound footing. At the same time, large amounts of British capital were exported to India. For the Indian industries this was an extremely difficult situation. This difficulty was aggravated by the policy of devaluation adopted by the government.

The rupee exchange rate was fixed 1s. 6d. in place of the pre-war rate 1s. 4d. How damaging to the Indian industries these series of blows were can be realised from the fact that market value of the Rs. 100 share of the Tata Iron and Steel Company, an outstanding leader of the Indian capitalist class, tubbed down to Rs. 10, and it was compelled to go to the London market for a loan. Tariff policy which gave British products an advantage over non-empire products in the empire market now became the key-note of the tariff system.

However, there can be no doubt that in spite of the difficulties and obstacles which India had to face, there was a considerable progress in industrial development during this period. India was placed as one of the eight leading industrialised countries of the world.

The production of cotton piece-goods in the country increased two and a half times, that of steel ingots rose eight times, and of paper went up two and a half times. In the case of sugar, India became self sufficient within a period of four years, 1932-36. The cement industry produced about 95 per cent of the total requirements by 1935-36. Other industries like matches, glass, vanaspati, soap, and a number of engineering industries also witnessed increased production. A beginning in the manufacture of electrical equipment and goods was ‘ also made by 1938-39.

Period III (1940-1950):

The Second World War broke out in 1939. The war found India somewhat better prepared and equipped than during the First World War, but as compared with the level and variety of demands j imposed on the economy, the situation was not very different. Cotton, jute and steel remained the principal items of war procurement though large orders for ammunition shells gave engineering factories and railway workshops some useful experience of mass production.

The Second World War gave a considerable impetus to the development of industrial potential; its contribution to actual expansion was not equally great. After an initial setback caused by stoppage of trade and disruption of shipping, and upward trend was established this lasted till 1945 and then petered out the very next year.

Those industries which were already in existence worked to full capacity. New plants were added in several cases and a few basic industries were established. The index of industrial production rose from 102.7 in 1939 (1937 = 100) to 120 in 1945. The major increases were under steel chemicals, paper, and paints; while jute, matches, sugar and wheat flour remained depressed.

The production of major industries could not, on the whole, be said to have increased substantially though higher prices and profit margins did bring about unprecedented prosperity to industrial enterprises and managements. Capital equipment was exposed to considerable wear and tear; maintenance and replacement were neglected. Coal and transport bottlenecks remain a serious threat to output expansion through­out the war.

The immediate problem for industry after the war was to make up the damage caused by exces­sive wear and tear and lack of maintenance. A worldwide shortage of machinery and shipping, political t disturbances and blocking of sterling balance, made it difficult to launch any major industrial expansion after the war. The partition left India with nearly the entire industry of undivided India.

Major Modern Industries:

The industrial revolution brought forth the need for developing industries on modern lines. In order to develop British industries it was essential to transform Indian infrastructure too. As part of it changes were introduced in agriculture and railways were developed.

Railways were developed with the initiative of Lord Dalhousie in 1853. The Company laid the railway lines in the country to export from the interiors to ports and vice versa to reach out the imports to the markets in the remote regions of India. Railways helped in making possible production for a market and opening up the interior to large-scale opera­tions.

The encouragement to cash crops led to the growth of plantation economy wherein profitable crops were especially cultivated for marketing purposes. Among the industries that were made pos­sible by the railways was the cotton mill industry.

The first successful Indian cotton mill started in 1853 in Bombay. Later cotton mills were established at Sholapur. Ahmedabad and Madras. Likewise jute was cultivated was a cash crop and the first jute mill was set up in 1855 in Rishra in Bengal followed by many such mills.

The British also encouraged the infrastructure industries. They were aware that cheap labour was easily available in India and this was a potential they could exploit. Also the procurement of raw materials and mineral resources from India made it necessary to develop these industries in India too. The first iron and mill was set up in the Jharia coal mines area in 1873. Similarly other industries such as glass, paper, leather industry were set up by the British Government in India for serving their own purposes.

Labour & Trade Union Movements:

Towards the end of the 19th century, before the Indian nationalist intelligentsia began to associate itself with working class agitations towards the end of the 19th century, there were several agitations, including strike by workers in the textile mills of Bombay, Calcutta, Ahmadabad, Madras and so on, in the railways and in the plantations. However, they were mostly sporadic, spontaneous and unorganized revolts based on immediate economic grievances and had hardly any wider political implications.

1. In Bengal, Sasipada Banerjee, a Brahmo social reformer set up a Workingmen’s Club in 1870 and brought out a monthly journal called Bharat Sramjeebi (Indian Labour), with the primary idea of educating the workers.

2. In Bombay, N.M. Lokhanday brought out an Angio-Marathi weekly called Dina-Bandhu in 1880, and started the Bombay Mill and Millhands Association in 1890. He took the initiative in organising protests against working conditions obtained in factories.

3. The first organized strike by any section of the working class was the signaller’s strike in May 1899 in the Great Indian Peninsular (GIP) Railway and the demands related to wages, hours of work and other conditions of service. Nationalist newspapers such as Tilak’s Mahratta and Kesari cane out fully in support of the strike.

4. The Swadeshi upsurge of 1903-8 was a distinct landmark in the history of the labour movement. The number of strikes rose sharply and many Swadeshi leaders enthusiastically threw them­selves into the tasks of organizing stable trade unions, strikes, legal aid and fund collection drives. Four prominent names among the Swadeshi leaders who dedicated themselves to labour struggles were Aswinicoomar Bannerji, Prabhat Kumar Roy Chowdhuri, Premtosh Bose and Apurba Kumar Ghose.

5. The Madras Labour Union founded in 1918 by B.P Wadia was the first modern-trade union organisation in India.

6. The All-India Trade Union Congress (AITUC) was founded by nationalist leaders on 31 October 1920. The first session of the Congress organised at Bombay was presided over by Lala Lajpat Rai and Dewan Chaman Lal was its general secretary. The Gaya session of the Congress (1922) adopted a resolution enabling party workers to participate in trade union activities. In 1926, the Trade Union Act was enacted which gave legal status to the trade union and laid down condi­tions for registration and regulation of trade union activities.

7. With the growing communist influence in AITUC from 1925 onwards, the moderate groups under N.M. Joshi withdrew from the AITUC and formed the All India Trade Union Federation (AITUF) in 1929.

8. The Whitley Commission on Labour or the Royal Commission on labour under the chairmanship of Whitley, was set up in 1929 to inquire into the existing conditions of labour in industrial under­takings and plantations in India. The commission submitted its report in 1931.

9. M.N. Roy, the communist-turned-Radical Democratic leader seceded from the AITUC and formed a pro-Government union called the Indian Federation of Labour. In 1944, national leaders led by Sardar Vallabhai Patel organised the Indian National Trade Union Congress.

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