Recollections and reflections

Reminiscences, Rafi Ahmad Kidwai

I first came in contact with Subhas Bose in 1923 at Delhi when the Congress was divided into two groups over the question of what was known as 'Council Entry.'...Subhas Babu, as the favourite lieutenant of Deshabandhu, was playing a prominent part in the controversy. more>>

The causes of this decline in the percentage share of the United Kingdom in India's foreign trade are not far to seek. The pre-eminence of that country in the earlier days was due to a number of peculiar facilities which she enjoyed in her relations with India.  She was politically supreme in this country. Our trade had to depend almost entirely on British shipping; most of the exporting and importing firms were British concerns; so were the exchange banks and insurance companies. The railways of India were mostly built up with British capital and conducted by British companies who furthered the interests of British commerce.  Many of the agricultural industries (some of them with British capital) were initiated and developed with a view to supplying the British market (e.g., tea, coffee).

The agricultural policy of the Government was also directed to the encouragement of the cultivation of such raw materials and foodgrains as jute, cotton, wheat and oilseeds with the object of stimulating their export to Britain. On the other hand, the United Kingdom was the foremost industrial country of the world, supplying most of the demands of India for manufactured goods, in some of which (e.g., cotton manufactures) the imports were directly encouraged by the tariff legislation of the Government of India, indirectly restricting the growth of those manufacturing industries in India that were likely to hinder the progress of our import trade with that country.

The preponderance of the United Kingdom in our foreign trade was, therefore, the outcome of a combination of two causes; the political and economic subordination of India to that country, and the industrial supremacy of Great Britain among the countries of the world.

Subsequently, direct trade connections came to be established with almost all the important countries of the world; and with the gradual progress of trade with them, Britain's share has steadily declined. This growth of Indian trade with non-British countries was no doubt made possible by the free trade policy pursued by the British Government in relation to the Indian market. The specific reasons will be found in the fact that while in the first half of the 19th century, the United Kingdom was the only great industrial country, the subsequent industrial developments in countries like Germany, U.S.A., and Japan have resulted in larger quantities of manufactured goods being imported from them, mostly at the expense of Great Britain.

On the other hand, these industrially developed countries have found in India a veritable storehouse of raw materials with which to foster their manufacturing industries. But the keen competition which they had to meet in capturing the Indian market from British hands for their own commodities was absent in the case ol the purchase of raw materials from India. For, while the progress in our imports from other countries was being fought against and restricted at every step by Britain, India could sell her raw produce to any country which offered her the best price. It was, therefore, comparatively easier for the non-British countries to show greater developments in consuming Indian goods than in replacing British imports by their own manufactures.

Hence, with the economic advancement of non-British countries and the establishment of commercial relations with them, our trade was diverted more and more towards these countries.