The advent of Colonialism in India produced major upheavals in the economy, causing disruptions in production, trade and agriculture. A well-known example is the demise of the handloom industry due to the flooding of the market with cheap manufactured textiles from England. In the colonial era, India began to be more fully linked to the world capitalist economy.

Before being colonised by the British, India was a major supplier of manufactured goods to the world market. After colonisation, India became a source of raw materials and agricultural products and a consumer of manufactured goods, both largely for the benefit of industrialising England. At the same time, new groups (especially the Europeans) entered into trade and business, sometimes in alliance with existing merchant communities and in some cases by forcing them out.

But rather than completely overturning existing economic institutions, the expansion of the market economy in India provided new opportunities to some merchant communities, which were able to improve their position by reorienting themselves to changing economic circumstances. In some cases, new communities emerged to take advantage of the economic opportunities provided by colonialism and continued to hold economic power even after Independence.

A good example of this process is provided by the Marwaris, probably the most widespread and best- known business community in India. Represented by leading industrial families such as the Birlas, Ambanis,Mittals etc., the Marwaris became a successful business community only during the colonial period, when they took advantage of new opportunities in colonial cities such as Calcutta, Bombay and settled throughout the country to carry out trade and money lending.

Like the Nakarattars, the success of the Marwaris rested on their extensive social networks, which created the relations of trust necessary to operate their banking system. Many Marwari families accumulated enough wealth to become moneylenders, and by acting as bankers also helped the commercial expansion of the British in India.