From Traders to Rulers: The East India Company

The British East India Company, chartered in 1600, began as a trading business competing with Dutch, Portuguese and French rivals for spices, textiles and tea. As the Mughal Empire weakened in the 18th century, regional rulers fought for power, and the Company used its private army, made up largely of Indian soldiers called sepoys, to take sides. Its victory at Plassey in 1757 gave it control of Bengal's government, and in 1765 the Mughal emperor granted it the diwani, the right to collect revenue in Bengal, Bihar and Orissa.

A trading company had become a territorial power. Britain's Parliament grew uneasy and began regulating the Company with the Regulating Act of 1773 and later laws. By the 1850s the Company ruled most of the subcontinent directly or through alliances with Indian princes. This lesson sets the background for the New Imperialism era, when Company rule ended and the British Crown took over.