Question

How did the assumption of Diwani benefit the East India Company?

Answer 1

• The conflicts between the Nawabs of Bengal and the Company intensified through the early eighteenth century.
• The East India Company manipulated the existing privileges and sought more concessions.
• To gain the right to duty free trade, the British forced the Mughal emperor Aurangazeb to issue a farman.
• The farman issued by Aurangazeb only gave them the right to duty free trade, but officials who were involved in the private trade had to pay duty.
• There was an enormous loss in revenues for Bengal as they refused to pay.
• The Bengal Nawabs asserted their autonomy and power after the death of Aurangazeb.
• These Nawabs stopped the fortifications of the East India company, stopped the rights to mint coins, demanded the East India company to pay tributes, and refused to grant concessions to the company.
• They said the Nawab authority was undermined as Bengal lost revenues due to the manipulations of the East India Company.
• The East India Company tried to humiliate the officials of the Nawabs, wrote disrespectful letters, and refused to pay taxes to the Nawab.
• The East India Company claimed that trade could only flourish if the duties were abolished, and they claimed that due to unfair demands of the local officials the trade was badly affected.
• The East India Company claimed that if the trade had to be expanded then it had to rebuild the forts, buy up the villages, and increase the size of its settlements.
• After the Battle of Plassey in 1757, the British power started increasing in India.
• The East India Company was appointed as the Diwan of the provinces in Bengal in 1765 by the Mughal emperor.
• As a result, vast resources of Bengal were utilised by the Company.
• From the early 18th century, the East India Company trade with India started expanding.
• Britain did not have goods to sell in India, hence most of the goods had to be purchased from India using silver and gold imported from Britain.
• Once British East India company took the power of Diwani after the Battle of Plassey, the outflow of silver and gold from Britain slowed down.
• Now the East India company started meeting its expenses from the revenues it earned from India.
• The assumption of Diwani helped the East India company to maintain its offices, forts, buildings, company troops, and were able to purchase silk textiles and cotton in India.