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Home / IAS Preparation / De Industrialisation UPSC Notes: Meaning, Causes, & Effects

De Industrialisation UPSC Notes: Meaning, Causes, & Effects

Last Updated on Dec 14, 2024
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Over the last 25 years, there has been a significant decline in the proportion of total employment attributed to manufacturing in the world's most advanced economies, commonly known as "deindustrialization." This trend, notably observed in the United States and Europe, is also evident in Japan and has more recently become apparent in the Four Tiger economies of East Asia (Hong Kong, China, Korea, Singapore, and Taiwan Province of China). Understandably, the phenomenon of deindustrialization has raised substantial concerns in the affected economies, sparking a lively debate about its causes and potential consequences. The dictionary definition of this term is "the reduction in size or destruction of an economy." The economy of India had a fall in industrial-based activities between 1757 and 1947. The "economic De Industrialisation of India" took place during this time.

In this article De Industrialisation UPSC, we will learn about De Industrialisation In India. This forms a significant part of the UPSC IAS exam. UPSC Prelims and UPSC Mains Paper I have many questions about this topic. It is also an important topic for UPSC History Optional and essential for the UGC NET History exam. Every year over 5-7 questions on India's economic history are in the question paper.

Meaning Of De Industrialisation

From 1757 until 1947, the Indian economy experienced a decline in industrial-based activities. This period is referred to as the "economic De Industrialisation of India." De Industrialisation is a process of economic transformation in which employment in the manufacturing sector decreases due to a variety of commercial or political factors.

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Causes Of De Industrialisation

There are various causes of De Industrialisation. Let us look at them.

  • However, since 1750, British machine-made textile products have greatly harmed this Indian industry. Following the industrial revolution in the cotton textile industry, British imports into India grew dramatically, and the dominance of British clothing on the Indian market wreaked havoc by leading to widespread unemployment as well as an unbelievable decline in wages for spinners and weavers.
  • One source of demand for the goods made by these trades dried away with the dissolution of the royal court. The shutters of artisans' Karkhanas were gradually taken down as the British administration was steadily extended and royal power declined throughout India. 
  • The emergence of British control had both direct and indirect effects on the existence of handicrafts. The industry looked for a fresh source of demand from European officials and visitors as well as from the "Baboos" and black Indian "sahibs," as demand for its products had all but disappeared after the demise of noble courts. Naturally, European officials preferred imported goods.
  • Indian handicrafts' aesthetic quality was undermined by European demand, which created new forms and patterns to suit their tastes but was beyond the knowledge of the artisans.
  • The introduction of British authority was also indirectly to blame for the decline in influence held by guilds and other organisations. This caused materials to be tampered with, which decreased their artistic and financial value. This led to the De Industrialisation of Indian society.

De Industrialisation In India

Let us have a look at the process of De Industrialisation in India.

One-Way Free Trade

After the Charter Act of 1813 permitted one-way free trade for British citizens, the Indian market was inundated with low-priced and machine-made imports. However, Indian products found it harder and harder to gain traction in the European markets. Tariffs of almost 80% were imposed on Indian textiles, rendering Indian clothing unaffordable. After 1820, Indian exports to Europe were essentially barred from those markets. Cheap British fabric was flooding the Indian market. European goods could now travel to even the most remote regions of the country thanks to the recently built rail network. India's net exports decreased while its net imports increased.

No Steps Towards Modern Industrialisation

In contrast to other fast industrialising nations at the time, India's loss of traditional livelihood was not followed by an industrialisation process. This led to India's De Industrialisation at a time when the Industrial Revolution was being rekindled in Europe. The loss of sponsorship from rulers and the nobility, who were now influenced by new Western tastes and ideals, came at a time when Indian artisans and handicraftsmen were already struggling.

Ruralisation Of Economy

Additional consequences of De Industrialisation included the decline of numerous cities and India's move towards ruralism. Many artisans quit their employment, moved to the countryside, and started working in agriculture as a result of diminishing profits and repressive restrictions (artisans in Bengal under the Company's control were paid paltry wages and obliged to sell their wares at low rates). As a result, there was increased pressure on the land. A major cause of poverty during British control was an overworked agriculture sector, which upset the village's economic framework.

Destruction Of Industry 

The destruction of Indian industry was constant. The De Industrialisation of India is well demonstrated by the country's annihilation of its textile industry. The British ceased paying for Indian textiles in pounds and instead decided to pay with Bengal income at extremely low rates, severely impoverishing the peasants.

  • An established shipbuilding industry was destroyed. The shipbuilding industries were well-known at Surat and Malabar on the western coast as well as Bengal and Masulipatnam on the eastern coast. Even the Indian merchant ships that plied the coast were forced to pay high taxes, while the Company's British ships were given a monopoly over trading routes. This led to the De Industrialisation of Indian society.
  • A British regulation passed in 1813 made it illegal for ships weighing less than 350 tonnes to go from India to Britain, essentially taking most Bengal-built ships off the Indo-British trade lines. Another regulation prohibiting Indian-built ships from being regarded as "British-registered vessels" that could conduct commerce with North America and the European Union was passed in 1814. As a result, the Indian shipping industry's demise was assured.
  • The Indian steel industry was not given room to expand by the British. Industries like the Tatas, which started producing steel after having a difficult time obtaining the necessary clearances, were constrained by having to create steel that was of a higher level for British usage.
  • The companies were excluded from the wider market that required the lower quality of steel because they were unable to produce the lower standard of steel at the same time. This steel could only be utilised in India due to British limitations on Indian steel imports. Of course, this hindered the industry's expansion. This led to the De Industrialisation of Indian society.
  • As junior partners of English merchant capitalists in India, Indian traders, moneylenders, and bankers had amassed some wealth. Their part was necessary for the British plan of colonial exploitation. The Indian moneylender helped poor farmers by lending them money, which made it easier for the government to collect taxes. The Indian trader assisted in the movement of Indian agricultural items intended for export as well as transported imported British goods to the farthest reaches. 
  • The local bankers assisted with both the distribution and collection processes. However, the colonial setting slowed the growth of a strong and independent industrial bourgeoisie, and its development was distinct from that of other independent nations like Germany and Japan.
  • Modern machine-based industries just began to emerge in India in the second half of the nineteenth century. Cowasjee Nanabhoy founded the first cotton textile factory in Bombay in 1853 and the first jute mill at Rishra, Bengal, in 1855. However, the majority of today's industries are foreign-owned and under the management of British managing agencies.
  • Due to the potential for high profits, the availability of cheap labour and raw materials, the ready market in India and its neighbours, the dwindling opportunities for domestic investment, the administration's willingness to offer all assistance, and the ready markets abroad for some Indian exports like tea, jute, and manganese, there was a rush of foreign capital into India at this time. This led to the De Industrialisation of Indian society.
  • Jute and cotton textiles were among the first industries to be held by Indians in the nineteenth century, while sugar, cement, etc., followed in the twentieth. Numerous disadvantages faced Indian-owned industries, including credit issues, a lack of government protection for tariffs, unfair competition from foreign firms, and adamant opposition from British capitalist interests, which were supported by a strong domestic financial and technological infrastructure.
  • A few structural and institutional modifications were also brought about by the colonial element. Regional imbalances resulted from the uneven pattern of industrial development, which neglected core and heavy industries and power generation while favouring some regions more than others.
  • The process of nation-building was impeded by these geographical differences. The industry lacks enough technical staff since technical education wasn't given the proper attention.
  • Socially, an important aspect of this stage was the ascent of a working class and an industrial capitalist class. This led to the De Industrialisation of Indian society.

Also, check out the Industrial Revolution in America here.

Impact Of De Industrialisation On the Indian Economy

The British put an end to the "blending of agriculture and handicrafts" by destroying the spinning wheel and shredding the Indian handloom. The village economy's internal balance was broken. 

  • The artisans were forced out of their usual jobs as a result. The artists turned to land as their only remaining source of support when they were out of options.
  • The effectiveness of agriculture was severely hampered by this congestion. British dominance is directly responsible for the current issues with land subdivision and fragmentation, over-cultivation or cultivation of poor and unproductive land, etc. 
  • The increasing percentage of the population that is dependent on agriculture must not be attributed to colonial overpopulation theory but rather to the slow destruction of the handicraft industry.
  • It gave rise to the myth of rural unemployment and underemployment. The lack of surplus produced by overburdened agriculture led to a paucity of capital resources needed for land improvements, and the strain on land encouraged cultivators to compete for leases at exorbitantly high and outrageously unproductive rates of rent.
  • Due to this De Industrialisation, there was an imbalance in the occupational structure that contributed to rural unemployment and underemployment. This can be further supported by taking into account additional information from Daniel and Alice Thorner's book, Land and Labour in India.

Check out Industrial Revolution in Russia here.

Conclusion

The main distinction between prior invaders and the British colonists in India was that none of the earlier conquerors altered the economic structure of India or syphoned off its wealth as tribute. The colonial economy that resulted from British control in India was one where the British economy's interests dictated how things were run and how the Indian economy was structured. 

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De Industrialisation UPSC FAQs

De-Industrialisation is mostly caused by the manufacturing sector's productivity growth outpacing that of the service sector.

De-industrialisation has an impact on communities and workers. Industrial cities' identities alter as factories and firms shut down, costing the city money and jobs in the process.

The systematic de-industrialisation of pre-independence India by the British was done for two reasons: to lessen India's status as a major exporter of raw materials and to transform India into a sizable market for finished goods.

The diminishing percentage of manufacturing jobs during de-industrialisation seems to reflect a decreasing percentage of manufacturing value added to GDP.

From 1757 until 1947, the Indian economy experienced a decline in industrial-based activities. This period is referred to as the "economic de-industrialisation of India."
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