During the British rule, there were more or less five hundred sixty five (565) princely states covering an area of 7,15,964 square miles and according to 1941 census, inhabited by 93,182,233 people. These princely states were the bulwark of the British power. But none of them enjoyed the attributes of independent sovereignty. After the independence, there were two alternatives left before them either to join India or Pakistan or to maintain their own independent status like before, Sardar Vallabhbhai Patel now headed the new States Department which was created on July 5, 1947. Naturally he was empowered to have talks with the rulers of those native states. 

After a long discussion, by August 15, 1947, all the native states except Jammu and Kashmir, Junagarh and Hyderabad had signed the Instrument of Accession to become a part of Indian Union. Most of the princess surrendered the Defence, Communications and External Affairs which they had never enjoyed in reality. The Instrument of Accession thus, brought no change in the internal structure of those native states. 

The most ambitious prince, the Nizam of Hyderabad, declared to remain independent from the date of transfer of power. The Hindus of Hyderabad also revolted against the Nizam. The adamant attitude of the Nizam compelled the Government of India to interfere and apply force. The Indian Army was directed to take action and within five days the Indian army took complete control of Hyderabd. In 1948, Hyderabad became a part of the Indian Union. 

The Nawab of Junagarh expressed his desire to join Pakistan though a large number of Hindus lived there. They strongly opposed the decision of the Nawab and set up a temporary independent government there. The Nawab fled to Pakistan in 1948 and on the request of the people, the administration of Junagarh was taken over by the Government of India.