Industrial Revolution in England and the economic policy of the East India Company jointly closed the markets for Indian handicrafts. In England machines went for large scale productions and those machine products were cheap and colorful. Not only markets but also the British Government as well as manufacturers encouraged the supply of their machine products to European markets.

As a result, the British machine-products entered into unfair competition with Indian products. Handicrafts of India could not sustain the pressure of the competition with cheaper machine goods. Thus, those were driven out of European markets. Further, the British trade policy proved extremely fatal for Indian handicrafts. In 1813, trade monopoly was abolished and one way free trade policy was imposed on India. By this policy the British machine products were imported to India freely and the export of Indian goods to England was discouraged by imposition of heavy duties on those products.

The Industrial Revolution closed foreign markets for Indian goods and British trade policy closed domestic market for Indian products. Once the markets were closed demand for Indian products declined suddenly and production stopped. It resulted in making the artisans and craftsman jobless and handicraft industries were closed down.