The Revolt of 1857 gave a severe jolt to the British administration in India and made its reorganization inevitable. The Government of India’s structure and policies underwent significant changes in the decades following the Revolt. But more important for changes in Indian economy and government was the inauguration of a new stage of colonialism in India.The second half of the nineteenth century witnessed the spread and intensification of the Industrial Revolution. Gradually, other countries of Europe, the USA and Japan underwent industrialisation, and the manufacturing and financial supremacy of Britain in world economy came to an end.

Intense world-wide competition for markets, sources of raw materials and outlets for capital investment now began. The competition for colonies and semi-colonies became increasingly intense and bitter as areas open to fresh colonial domination became scarce.

Facing a challenge to its dominant position in world capitalism from newcomers, Britain began a vigorous effort to consolidate its control over its existing empire and to extend it further.