The subsidiary alliance system was started by Lord Wellesley in 1798 A.D. He wanted to expand the British Empire in India and to make the company very powerful. It was possible only if all the native rulers and Nawabs were made powerless. He took advantage of the subsidiary alliance system and brought many native rulers under the British control.

Terms of the Subsidiary Alliance: Subsidiary Alliances were made between the company and the native rulers. The company promised to give military help to the rulers who entered into subsidiary alliances with it in case of any internal or external trouble.

In lieu of it, the local rulers had to accept the following terms :

• He had to accept the supremacy of the company. He was not allowed to make war or any treaty with any other ruler without the permission of the company.
• He had to keep a battalion of the English army in his state for his safety and he had to pay its expenses to the British.
• He had to keep an English Resident at his court.