The British company decided to build their ‘factories’ in India. - History

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The British company decided to build their ‘factories’ in India.



The British established ‘East India Company’ on 31st December 1600. Queen Elizabeth granted permission to the company to trade in the eastern countries.

In the beginning, the East India Company’s operations were limited to sending their cargos to the eastern countries, to sell the British goods in those countries, to buy spices with the profits earned there and the cash carried from home, to sell the spices in England and to earn profits. The sailboats of those days needed to plan their forward and backward voyages in specific periods of the year. Therefore, carrying out trade transactions was more tedious. Under such circumstances, the British were in need of a permanent place to build warehouses to store the goods bought at low prices. The British boats used to sail from England during the months of December to April and used to return to England after a year in the month of January after completing trading transactions in India. This required that they to stay in India over a period of 9-13 months. Hence, the company decided to build their ‘factories’ (emporiums – a place where goods are bought, stored, and sold) in India. The staff of the factories was called ‘factors’. 

In 1623, the British Government, under civil and military law, granted the company the authority of adopting punitive measures for the erring staff. The company was also given the right of monopoly to trade in the eastern countries. Charles II, the king of England, issued a charter allowing the company to build forts in India, to maintain an army, and to make treaties with non-Christians.

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