Period of Industrial Capital:

• The period of Industrial capital was from 1813 to 1858. During this period, India had become a market for British textiles.
• India’s raw materials were exported to England at low price and imported finished textile commodities to India at high price. In this way, Indians were exploited. India’s traditional handicrafts were thrown out of gear.

Period of Finance Capital:

• The third phase was the period of finance capital starting from the closing years of the 19th century and continuing till independence. During this period, finance imperialism began to entrench itself through the managing agency firms, export – import firms, exchange banks and some export of capital.
• Britain decided to make massive investments in various fields (rail, road, postal system irrigation, European banking system, and a limited field of education etc.) in India by plundering Indian capital.
• Railway construction policy of the British led to unimaginable as well as uneconomic. The poor Indian taxpayers had been compelled to finance for the construction of railways.
• The political power was handed over to the British Government by the East India Company in 1858.

Decline of Indian Handicrafts:

• The Indian handicrafts products had a worldwide market. Indian exports consisted chiefly of hand weaved cotton and silk fabrics, calicoes, artistic wares, wood carving etc.
• Through discriminatory tariff policy, the British Government purposefully destroyed the handicrafts.
• With the disappearance of nawabs and kings, there was no one to protect Indian handicrafts. Indian handicraft products could not compete with machine-made products. The introduction of railways in India increased the domestic market for the British goods.

Process of Industrial Transition and Colonial Capitalism:

This process of industrial transition in India during the British period can be broadly classified into two as given below:

1. Industrial growth during the 19^th century

• During the 19th century, British investors started to pioneer industrial enterprises in India as they had experiences of running industries at home. British enterprises also received maximum state support.
• Although the Britishers initiated industrialisation process in the 19th century, they were primarily interested in making profit and not in accelerating the economic growth in India.
• At the end of 19th century, there were about 36 jute mills, 194 cotton mills and a good number of plantation industries. The production of coal had risen to over 6 million tonnes per annum.

1. Industrial progress during the 20^th century

• During the first part of 20th century, Swadeshi movement stimulated the industrialisation process in India. The existing industries and new industries had maintained a slow but steady growth till the outbreak of the First World War in 1914.
• By this time more than 70 cotton mills and 30 jute mills were set up. Coal production was doubled. The foundation of iron and steel industry was laid. Railway network was extended.
• During the period 1924-39, various major industries like iron and steel, cotton textiles, jute, matches, sugar, paper and pulp industry etc. were brought under protection scheme. This led to rapid expansion of protected industries in India. These protected industries captured the entire Indian market and eliminated foreign competition totally.
• Thus, in the early part, British rule tried to transform the Indian economy as the producer of industrial raw materials and tried to capture Indian market for their industrial finished goods and thus started exploiting Indian economy in a different way.
• Later on, British capitalists gradually developed various industries like, jute, tea, coffee, cotton and textiles, paper and paper pulp, sugar etc., in India for locational advantages and exploited Indian labourers extensively.

Problems of British Rule:

• The British rule stunted the growth of Indian enterprise.
• The economic policies of British checked and retarded capital formation in India. The drain of wealth financed capital development in Britain.
• Indian agricultural sector became stagnant and deteriorated even when a large section of Indian population was dependent on agriculture for subsistence.
• The British rule in India led the collapse of handicraft industries without making any significant contribution to development of any modern industrial base.
• Some efforts by the colonial British regime in developing the plantations, mines, jute mills, banking and shipping mainly promoted a system of capitalist firms that were managed by foreigners. These profit motives led to further drain of resources from India.