Development of Modern Industries
An important development in the second half of the 19th century was the establishment of machine-based industries in India, especially in the cotton textile, jute and coal mining sectors during the 1850s. The first textile mill was started in Bombay by Cowasjee Nanabhoy in 1853, and the first jute mill in Rishra (Bengal) in 1855. By 1905, India had 206 cotton mills employing nearly. 196,000 persons and in 1901 there were over 36 jute mills employing nearly 115,000 persons. Other mechanical industries developed during the late 19th and early 20th centuries.
Most of the modern Indian industries were owned or controlled by the British capital. Foreign capitalists were attracted to Indian industry by the prospects of high profits. Labour was extremely cheap; raw materials were readily and cheaply available; and for many goods, India provided a ready market. For many Indian products, such as tea, jute, and manganese, there was a ready demand the world over.
Foreign capital easily overwhelmed Indian capital in many industries. Only in the cotton textile industry did the Indians have a large share from the beginning, and in the 1930s, the sugar industry was developed by the Indians. Indian capitalists had also to struggle from the beginning against the power of British agencies and banks. Indians found it difficult to get credit from banks, most of which were dominated by British financiers. Later, however, gradually Indians began to develop their own banks and insurance companies.
British enterprise in India also took advantage of its close connection with British suppliers of machinery and equipment, shipping, insurance companies, government officials, and political leaders to maintain its dominant position in Indian economic life. Moreover, the Government followed a conscious policy of favouring foreign capital as against Indian capital,
The railway policy of the Government also discriminated against Indian enterprise, railway freight rates favoured foreign imports rather than Indian manufacturers. It was more costly for Indian goods than to distribute imported goods.
Another serious weakness of the Indian industrial effort was the almost complete absence of heavy or capital goods industries, without which there can be no rapid and independent development of industries. India had no big plants to produce iron and steel or to manufacture machinery. The first steel in India was produced only in 1913. Thus India lacked such basic industries as steel, metallurgy, machine tools, chemicals, power and oil.
Apart from machine-based industries, the 19th century also witnessed the growth of plantation industries such as indigo, tea, and coffee. They were almost exclusively European in ownership. Indigo was used as a dye in textile manufacture. Indigo was introduced in India at the end of the 18th century and flourished in Bengal and Bihar. Indigo planters gained notoriety for their oppression over the peasants who were compelled to cultivate indigo which was vividly portrayed by the famous Bengali writer Dinbandhu Mitra in his play Neel Darpan in 1860. The invention of a synthetic dye gave a big blow to the indigo industry and it gradually declined. The tea industry developed in Assam, Bengal and in the hills of Southern India and Himachal Pradesh with the help of the Government which granted rent-free land and other facilities. The use of tea gradually spread all over India and also became an important item of export. Coffee plantations were developed during this period in South India.
On the whole, industrial progress in India was exceedingly slow and painful. It was mostly confined to cotton and jute industries and tea plantations in the 19th century, and to sugar and cement in the 1930s. In terms of production as well as employment, the modern development of India was paltry compared with the economic development of other countries.
Indian industries, still in a period of infancy, needed protection. All countries had protected their infant industries by imposing heavy customs duties on the imports of foreign manufactures, but India was a colony and its policies were determined in Britain and in the interests of British industrialists who forced a policy of Free Trade upon India. For the same reason, the Government of India refused to give any credit to the newly founded Indian industries and did not even make adequate arrangements for technical education which remained extremely backward and further contributed to industrial backwardness. In 1939 there were only 7 engineering colleges in the country.
Finally, in the 1920s and ’30s, under the pressure of the rising nationalist movement and the Indian capitalist class, the Government was forced to grant some tariff protection to Indian industries but, discriminated against them by denying or giving inadequate protection to cement, iron and steel, and glass industries which had dominant Indian ownership. On the other hand, foreign-dominated industries were given the protection they desired.
Another feature of Indian industrial development was that it was extremely lop-sided regionally. Industries were concentrated only in a few regions of the country and large parts of the country remained totally underdeveloped. This unequal regional economic development not only led to wide regional disparities but also affected the level of national integration and made the task of creating a unified Indian nation more difficult.
An important social consequence of the limited industrial development of the country was the birth and growth of two new social classes in Indian society – the capitalist class and the working class. Even though these classes formed a very small part of the Indian population, they represented a new system of economic organisation, new social relations, new ideas, and a new outlook. This phenomenon led to the usual growth in labour exploitation which, in turn, led to the growth of Trade Unionism for the first time in India.