From Trade to Territory - The company establishes power Class 8 History

From Trade to Territory – The company establishes power Class 8 History Chapter 2, Explanation, Question Answers

From Trade to Territory – The company establishes power CBSE Class 8 History Chapter with a detailed explanation of the chapter ‘The company establishes power‘ along with question answers. Given here is the complete explanation of the chapter and all the exercises, Question and Answers given at the back of the chapter.

Class 8 Chapter-2

From Trade to Territory – The company establishes power


In this chapter, we will discuss that how East India company that entered into India for trading became a ruler of our country. But before we start with our chapter, we should know that Indian history is divided broadly into three categories which are as follows:

From Trade to Territory – The company establishes power Class 8 Video Explanation

1. Ancient History– It started in 4000 B.C. and continued up to 200 B.C.

In ancient history we talk mainly about the following-

a) Indus valley civilization-When and where these sites were discovered. What religion did the people of that time follow, what was their lifestyle.

b) Vedas- Here we discuss about Vedic literature their composition period and their contents.

c) Famous dynasties- Here we discuss about some of the famous dynasties of that time such as Mauryans, Guptas, Pallavas, etc.

2. Medieval History– It started with the coming of Muslims in 700 A.D.

In beginning, they entered as invaders but later on, settled in India and started ruling in our country. Some of the famous dynasties were Slave dynasty which started with Qutubuddin Aibak in 1206 A.D and ended up with the last Mughal ruler Bahadur shah II in 1857.

Modern History- It deals with the coming of Britishers in India and the freedom struggle by Indians.

Our chapter lies somewhere between Medieval history and modern history. So, Aurangzeb one of the famous ruler of medieval history was the last powerful Mughal ruler. His successors such as Bahadur Shah, Jahandar Shah, etc. were the weak rulers. So, we can say that Aurangzeb was the last powerful Mughal ruler who established his control over a very large part of India but after his death in 1707 many Mughal governors who were then known as subedars and the big zamindars established their own small kingdoms. Thus, Delhi lost its position of an effective center.                        

So, now we know what exactly was going on in the eighteenth century by that time slowly but gradually a new power known as the British started emerging in India. Now the question arises-

Why Britishers came to India? How east India company a small trading company become ruler of India?

We will try to understand this in our chapter.

east india companyEast India Company comes east

In 1600, the east India Company acquired a charter (written grant) from Queen Elizabeth I granting it the sole right to trade in east. With this charter the company had no fear of competition as no other company of England could trade in east except the east India Company. With this charter company could venture across new oceans, looking new lands for goods at a cheaper rate such as spices, silk and cotton clothes and sell them at higher price in Europe.

But was it easy for east India Company to trade in east?

When it entered India, it found some competitors who were already trading.

Who were they?

They were the Portuguese who entered India in the year 1498 when Vasco Da Gama discovered the sea route to India and reached Calicut. Even the Dutch arrived in Pulicat in 1595 then came the French in Pondicherry in year 1664. This created a huge problem as the goods became more expensive resulting into less earnings for the East India company.

What did company do then?

In order to safeguard its interests, each and every trading company entered into a trade war. So, they started sinking ships of their rivals, blocked routes and fortified their trading posts. This also led to conflict with the local rulers.

East India company begins trade in Bengal

So now we know that East India Company came to India for trading. The first English factory was setup on the banks of river Hugli in 1651. The company made its warehouses (a place where goods are stored) and by 1696 it began building a fort around the settlements. It also got diwani of three villages in 1698 with the help of some corrupt officers. One of the village was kalicutta which is now known as Kolkata. Meanwhile the company also persuaded Emperor Aurangzeb for Farman (similar to charter this is also a written grant or order by the monarch). This Farman granted the company the right to trade “duty free”. The officers started using Farman of duty free trade for their own side businesses too which resulted in huge losses of revenue to the Nawab of Bengal.

Murshid Quli khan (1717-1727) was Nawab of Bengal and was a strong ruler who started protesting against this. Murshid Quli khan was the first nawab of Bengal, then came Alivardi khan (1740-56) and his successor was his grandson Sirajuddaulah. The new nawab of Bengal refused to grant any concession to the Britishers and also demanded large tributes (here it refers to taxes) from the company. He also accused company of deceit by not paying revenue and trying to humiliate nawab by writing disrespectful letters to him and his officials. He also stopped fortifications by the company. The rival between the company and nawab intensifies as company declared that unjust demand of officials as could ruin its trade and enlarging its settlements was necessary to enhance its trade. This led to the Battle of Plassey (got its name from palash tree).

The Battle of Plassey

In 1756, Sirajuddaulah became nawab of Bengal after the death of his grandfather Alivardi khan. He at once ordered Britishers to pay revenue and stop fortification. Also with the help of his 30,000 soldiers, he captured the officials of the English factory at Kasimbazar and also established his control over Calcutta’s fort.

All these incidents resulted into battle of Plassey in which Robert Clive, an army officer in East India company defeated Sirajuddaulah. The main reason behind his defeat was that army led by commander Mir Jafar never took part in the battle because Jafar was promised to be the next nawab of Bengal by Robert Clive.

What happened after the battle of Plassey?

Mir jafar became nawab of Bengal. The company was granted an undisputed right to free trade in Bengal. But after some time, when nawab refused further rights, he was dethroned by the Britishers and now the next nawab was Mir Qasim. After some time, he also started complaining of the misuse of the powers given to the company. This led to battle of buxar(1764).

So, once again Mir jafar came to the throne as nawab of Bengal, this time he was asked to pay Rs 5,00,000 per month to the company but this was insufficient as  it wanted more money to finance its wars. When Mir jafar died in 1765 the company decided of becoming nawab itself, so, in year 1765 the Mughal emperor declared company as the diwan of Bengal province. The revenue it received through diwani was of a great help, as they could now be used for buying cotton and silk and also building forts. This income was also important because after the battle of Plassey the income inflow from Britain had slowed down.

Company officials become Nabobs

As the company acquired more power and authority the company officials began to imagine themselves as nabobs or nawabs. They wanted to lead a luxurious life like nawabs of India. Many of them were given huge lands and money by the local rulers in order to avoid any conflict with the company. Robert Clive before becoming governor of Bengal in 1764 had become very rich in India because of this he was cross-examined by the British parliament in 1772 because the parliament was suspicious of his vast wealth. Finally, he was acquitted from all the charges laid against him but he committed suicide in 1774.

Company rule expands

East India Company had a different way of expanding its rule in India. It rarely launched direct military attack on any Indian territory. It used a variety of political and economic methods to extend its influence. For instance it appointed residents in Indian states after battle of buxar (1764).

Now, the question arises who were these residents?

Residents were the political agents of the Britishers who served the interests of the company. Through them, the company started interfering in the internal affairs of Indian states. One such interference was ‘subsidiary alliance’. According to this, Indian rulers were not allowed to have their independent armed forces. They had to keep company’s army and pay their maintenance. If they failed to do so, the part of their territory was taken away as penalty by the Britishers. In 1801, Lord Wellesley forced Nawab of Awadh to give over half of his territory due to nonpayment of maintenance to the British army. Same happened with Hyderabad also.

The company started facing threats both politically and economically from Mysore.

Mysore had grown into a strong state under King Haider Ali (1761-82). Tipu sultan (1782-99), son of king Haider Ali was a very strong ruler in southern Indian state of Mysore. He was known as “tiger of Mysore” as there was an interesting story in this regard. It goes on like this that once Tipu fought with a tiger, unarmed and killed the tiger. Due to which he got this title.

In 1785, Tipu controlled the trade of Malabar coast and stopped the export of pepper, sandalwood and cardamom form his ports. He also stopped local merchants to deal with Britishers. To modernize his army, he employed French to his army.

Britishers became furious and tried to suppress the power of Mysore. For this, four wars were fought between Britishers and Mysore (1767-69, 1780-84, 1789-92 and 1799) all are known as Anglo Mysore war. Tipu was killed in the war of 1799 at Srirangapatnam. Now Wodeyars became king of Mysore with the condition of subsidiary alliance. After the problem of Mysore was sorted off a new problem arose- the Marathas. So now you can see that there were several issues for East India company in different parts of India which were affecting its trade.

War with Marathas

In the late eighteenth century, the company started facing problems from the Marathas who were aiming to rule over India through Delhi which was taken as the seat of power in India. Marathas were divided into many states under different chiefs belonging to dynasties such a Scindias, Holkars and Gaikward. They were held in an alliance under the Peshwa or the Principal minister. Mahadaji Scindia and Nana Phadnis were two famous soldiers and statesmen of that period.  Here the company had to indulge in a war with Marathas to curb down their increasing power. So, there were a number of wars fought between the both. For instance, the second Anglo Maratha war (1803-05) resulted into the British gaining control over Orissa, north of Yamuna including Agra and Delhi. The third Anglo – Maratha war totally crushed the Maratha power and Britishers got complete control over territories, south of the Vindhyas. So we can say that the company had pursued aggressively in territorial expansion and now they wanted something more and that was “supremacy” on whole India.

British the Paramount power

ranjit singhEast India company, under the leadership of Lord Hastings, (Governor General 1813-1823) initiated a policy of paramountcy (supreme power). Here please make it clear that lord Hastings and Warren Hastings were two different persons so don’t get confused. So, in order to become a paramount power they started annexation of different territories of India. During this process of annexation they also faced some resistance at some places like Rani Chinnamma, the Queen of Kitoor (Karnataka) led an anti British resistance movement though she was finally arrested in 1824. In late 1830s, the company became worried about Russia who it thought could give a tough competition to the company. For this, it tried to secure the North-West frontier of India by fighting a prolonged war with Afghanistan between 1838-1842 and established an indirect rule there. It also took over Sind in 1843, even Punjab which Britishers were not able to annex during the reign of Maharaja Ranjit singh was finally won over by Britishers in 1849. Now we know that most of the India was under control of Britishers because of their vigorous policy of annexation. They also used political methods of annexation so next in line was the policy of ‘Doctrine of lapse’.

Doctrine of Lapse

lord dalhousieDo we have any idea about this concept? Let me tell you, this type of annexation took place under the governorship of Lord Dalhousie (1842-56). Under this doctrine, any Indian king who doesn’t had a natural male heir had to give away his territory to the Britishers. With this policy the company took control over Satara (1848), Sambalpur (1850), Udaipur (1852) and Jhansi (1854). Jhansi as you all know is famous for its brave Queen Rani Lakshmibai. She was the widow of Raja Gangadhar Rao. Jhansi was also annexed by the Britishers. Such incidents led to the revolt of 1857. As the company had gained control over almost whole of the India and had become master of the Indian land so now there arises the need of administering of the acquired territories.

Setting up a new administration

Before we start with this let me ask you one question. The first Governor-General of Bengal was Warren Hastings (1773-1785). An interesting fact about him is that he wrote the introduction to the first English translation of ‘The Gita’ by Charles Wilkins. Hastings divided the administration into three Presidencies namely Bombay, Madras and Bengal. He also codified laws with the help of Hindu pundits and Muslim Muftis (jurist) in order to do justice as per the prevailing laws in India. He also established courts such as criminal court (faujdari) and civil court (Diwani) and also appointed collectors to collect revenue and maintain law and order. The Britishers were done with both annexation and administration of the Indian territories. Now they felt the need of an army.

The company army

The new British administration brought some new ideas of administration but like any other administration the power of Britishers was also dependent on a strong army. So they started recruiting Indian peasants and workers to their own army. Just like the Mughal army that composed of sawars (soldiers on horseback) and paidal (foot soldiers), British army also had cavalry consisting of both sawars and paidals who were trained in archery and sword fighting. But with the passage of time, new warfare techniques were introduced such as muskets (heavy guns) and match locks (guns ignited by a match) there arose a need of developing new techniques among  Indian soldiers with uniformity and discipline which sometimes was against the community feelings of the Indian sepoys. This created a discontent among Indian soldiers which in 1857 became one of the reasons of revolt against Britishers which we will read in next chapter.


Thus, after going through the content of this chapter we come to a conclusion that it is right to say that a company known as East India company that entered India in order to trade, finally gained power over the territories of India and became a ruler of our country.

NCERT Book Solutions

Match the following

1. Diwani
Tipu Sultan
2. Tiger of Mysore   
Right to collect land revenue
3. Faujdari Adalat   
4. Rani Chinnama
criminal court
5. Sipahi
Led an anti british movement in kitoor


1. Diwani
Right to collect land revenue
2. Tiger of Mysore   
Tipu Sultan
3. Faujdari Adalat   
criminal court
4. Rani Chinnama
Led an anti british movement in kitoor
5. Sipahi


  Fill in the blanks

a. The British conquest of Bengal began with the Battle of __________

b. Haider Ali and Tipu Sultan were the rulers of _________

c. Dalhousie implemented the Doctrine of _________

d. Maratha kingdoms were located mainly in the _______ part of India.


a. The British conquest of Bengal began with the Battle of Plassey

b. Haider Ali and Tipu Sultan were the rulers of Mysore

c. Dalhousie implemented the Doctrine of Lapse.

d. Maratha kingdoms were located mainly in the southwestern part of India.

State whether true or false

  1. Mughal Empire became stronger in the eighteenth century.
  2. The English east India Company was the only European company that traded with India.
  3. Maharaja Ranjit Singh was the ruler of Punjab.
  4. The British did not introduce administrative changes in the territories they conquered.


  1. F
  2. F
  3. T
  4. F

Question Answers

Q1 what attracted European trading companies to India?

A. The European countries were attracted towards India due to the availability of pepper, sandalwood, silk and cotton clothes at cheaper rates which had a huge demand in European countries.

Q2 what were the areas of conflict between Bengal nawabs and the East India company?

A. Following are the areas of conflict between East India company and the nawabs-

  1. The nawab of Bengal refused any concession to the company.
  2. The nawab also demanded large tributes from the company.
  3. He denied the company any right to mint coins.
  4. Accused company of deceit which result into huge loss to Bengal government.
  5. Tried to humiliate nawab by writing disrespectful letters and not paying taxes.

Q3 Explain the system of subsidiary alliance?

A. Subsidiary alliance was a political method used by Britishers to get control over Indian territories. According to this, Indian rulers had to keep company’s army for protection and make their payments, otherwise part of their territory was taken away as penalty. Territories of Awadh and Hyderabad were taken away on this basis.

Q4 In what way was the administration of the company different from that of Indian rulers?

A. Company rule

  1. Divided administrative units called presidencies. There were three presidencies namely Bombay, Madras and Bengal.
  2. Head of administration was Governor General.
  3. Presidency was ruled by governor.
  4. Each district had civil court and criminal court.

Indian rulers

  1. Districts were the main administrative units.
  2. Head of administration was Nawab or king.
  3. Districts were ruled by zamindars.
  4. No such courts were there at district level.

Q5 Describe the changes that occurred in the composition of the company’s army?

A. During eighteenth century the company began recruiting its own army in order to protect itself from rivals. Its army composed of cavalry and infantry regiments just like Mughal army. But, with the change in warfare technology and the introduction of muskets and matchlocks the infantry regiment became important.