• British government did away with the monopoly of the company in trade with India and hence, finally succeeded in 1813 in abolishing its monopoly over trade with the Charter Act of 1813.
• This marked the beginning of a new phase in Britain’s economic relations with India, with the government now following the policy of free trade or unrestricted entry of British goods into the Indian market.

Deindustrialization:-Ruin of Artisans and Handicraftsmen:

• Cheap machine-made goods flooded the Indian markets and the Indian goods found it more and more difficult to penetrate the European markets.
• The loss of traditional means of livelihood was not accompanied by a process of industrialization.
• This happened at a time when artisans were already feeling the crunch due to loss of patronage by princes and nobility, who now developed western tastes.

Ruralisation of India:

• De-industrialisation led to decline of many cities and hence, ruralisation of India with many artisans returning back to villages and taking up agriculture.
• Overburdening of agriculture and impoverishment of peasantry: The peasants already suffering under landlord-moneylender nexus, saw increased pressure on land with ruralisation and de-industrialisation. India became a net importer.

Commercialization of Agriculture:

• So far, agriculture was a way of life but now it began to be influenced by commercial considerations.
• Certain specialised crops began to be grown not for the purpose of consumption but for sale in national and international markets as raw material for industries.

Development of Industry

• In the second half of the 19th century modern machine based industries were set up in India. This period also saw a rush of foreign capital into India.
• The industrial development was characterized by a lopsided pattern when core and heavy industries were ignored and some regions were favored more than the others.

Rise of Indian bourgeoisie:

• Indian traders, moneylenders and bankers amassed some wealth as junior partners of British capitalists in India.
• These further provided loans to Indian agriculturists and aided British revenue collection.

Economic Drain:

A portion of national product of India was not available for consumption of Indian people but was being drained away to Britain for political reasons and India was not getting returns for it.