European trade in India:

From time immemorial, India had trade relations with countries in the WestThis European trade was carried out by Arab merchants who bought things in India and sold these to European countries.

European merchants were trying to find out a route to India so that they could trade directly with the country.

This indirect trade came to an end with the discovery of a sea- route between Europe and India. Vasco da Gama of Portugal reached Calicut in 1498.

The Portuguese Trade:

The Portuguese established their headquarters in Goa, Daman and Diu on the western coast of India and established their monopoly over trade with India. The success of the Portuguese traders prompted other European countries to set up trading companies for trade with India and other parts of Asia and Africa. Thus, Holland, England, France and Denmark set up trading companies. With the arrival of other European companies, the Portuguese lost their predominance over Indian trade.

The Dutch East India Company:

The Dutch East India Company was more interested in the profitable spice trade with the islands of the East Indies. They were soon pushed out by the other European companies.

The English East India Company:In 1600, a company popularly known as the English East India Company was established by a small group of English merchants. Queen Elizabeth, by a charter, granted them the exclusive right to trade with the East. The East India Company set up its first factory at Surat. A factory, in those days, was not a place where goods were manu­factured. It consisted of a warehouse, an office and residential quarters. They were so named as the Company officials, also called ‘factors’, resided there.

Madras became an important British trading settlement. In 1688, Bombay was transferred to the Company by King Charles II, who had received it as a dowry from the Portuguese at an annual rent of 10 pounds. The company also established trading centre at Fort William in Calcutta. By 1700 the East India Company had established three important factories in Madras, Bombay and Calcutta.

The French East India Company:

The French East India Company, which was formed in 1664, established trade centres at Surat, Pondicherry near Madras, Chandernagar in Bengal and Mahe near Mysore. The French East India Company was founded by the French government and its factories depended on government support.