What we know about Indian long-distance exchange before the Common Era began is perhaps not enough to offer systematic conclusions about trade and merchants. We do know that a few regional nodes of commerce emerged and that the sites where these nodes appeared possessed both unique and shared geographical characteristics. Trading zones did not appear randomly along the extensive coastline, but formed in the deltas of major rivers, with the river providing access to towns and villages inland. Although little can be said about commercial organization beyond the existence of guilds, we do know that the merchants who traversed these zones were major benefactors of religious institutions. Indeed, religion was one of the enduring cultural exports of these times.

The capitals of the major states were located inland; the mainstay of the states was land, not trade. Formally, statecraft recognized the kingly duty to protect merchants, but not enough is known about how that principle was practiced. Commercial law received legitimacy from its links with both the state and religion. Some of these political, spatial, and cultural markers of commercial activity in the subcontinent were to prove remarkably long lasting.

This chapter considers what we can reasonably infer about the broad patterns of long-distance economic exchanges in the first millennium of the Common Era.

A decade into the economic reforms, India had earned the right to be called an “emerging economy.” “Emergence” is a comparative term with explicit reference to trade and competitiveness in the world market. But it raises more questions than it answers. From the perspective of world history, when did India’s emergence really begin? And what depths of stagnation and obscurity did Indian business emerge from? Did emergence begin with the rise of the modern knowledge economy in the 2000s? Did an offbeat industrialization in the nineteenth century mark the moment of emergence? Did it happen in the seventeenth and eighteenth centuries when Indian textile artisans sold cloth all over the world? Or should we push back the beginning of emergence even earlier, in Indo-Roman trade of the first century CE perhaps?

Equally vexing is “underdevelopment,” as well as the theories that once sought to discover the historical origins of poverty in the long-term pattern of trade and investment. When and where should the roots of poverty and underdevelopment be found – the feudalism of late antiquity? the deindustrialization of the nineteenth century? the British Empire? or, the insular and statist development paradigm of the 1960s and the 1970s? Arguments can be found to show that each one of these moments of transition was the real break, and arguments can be found to show that it was a break for the better or for the worse.

The consolidation of empires in North and South India entailed serious attempts to integrate the ports in the Deccan and Bengal with the land-based empires and revived channels of communication with Central Asia along which commodities and skills moved more freely than before. The movement of armies on the long-distance routes secured the major arteries of goods traffic and even created a few new ones. The Mughal Empire took these integrative tendencies to new heights. The consolidation of the empires led to urbanization in the two great riparian plains. The cities along the Ganges and the Indus were home to garrisons, courts, traders, artisans, intellectuals, and artists, and maintained commercial links with cities in West and Central Asia. The relationship between trade and the state was mediated by the consumption of traded goods by the elite rather than by income earned from customs duties. The main income of the states came, as before, from land tax. Urbanization and increased consumption needs, therefore, necessitated expansion in cultivation. In the words of Kosambi, “The inevitable counterpart of the caravan merchant . . . was the new armed feudal landlord who squeezed a greater surplus from the land by force.” The consequence of the extension of the political and agrarian frontiers was far-reaching for Bengal, Deccan, and Gujarat.

These attempts to integrate the ports with the inland cities produced limited results on the coasts. The empires did not have a well-designed maritime policy, and the conquest of the ports was usually driven by military and political concerns rather than by commercial ones. In Bengal, for example, the joint expansion of Islam and the new states focused on agrarian settlements. The coasts and the ports continued to have a relatively autonomous character; they were populated by migrant merchants and were only loosely governed by a regional state. As urban centers they were small when compared to the capital cities of the interior.

Although dependent on the taxation of landed wealth like any other regime in the past had been, the British Empire was especially interested in overseas trade. India was beginning to play a major role in Britain’s own engagement with the world economy, as a market for its manufactures, chiefly textiles, machinery, and metals; as a source of food, unskilled labor, and industrial raw materials; and as a destination for capital going into the railways, tea, jute, and banking. Britain, likewise, was crucial to a vast range of new capitalistic enterprises run by the Indians, and for sustaining the consumption of cheap cotton cloth.

A new land and sea frontier for Britain had opened up in Burma after the conclusion of the Anglo-Burma wars (1823–26). The conquest yielded the British control of the Tenasserim isthmus and the Arakan state, and allowed the British to become entrenched in Rangoon and Pegu. The direct value of these territories for private commerce was not great, but the conquest made the prospect of overland transactions between India and China brighter than before. In the 1820s, the attempt to grow tea in India led enterprising Europeans to take an interest in the Burmese trade with Yunnan. The immediate economic possibility, however, was located in Burma itself. Lower Burma was beginning to become a commercial hub, not least because of the diversion of Burma’s cotton exports from the overland China route to overseas trade. The protection of these newly developed commercial interests fueled further rounds of colonization in Burma, continuing up to 1885.

Global historians remind us that the cross-cultural exchange of goods and ideas by means of trade, conquest, migration, and investment forms an important part of human history. Almost all significant examples of change in the conduct of material life contain elements of borrowing. Equally, the desire for goods and services acts as a strong motivation behind attempts to establish new channels of transaction, sometimes by force.

The Indian subcontinent has long enjoyed a pivotal place within overlapping webs of cross-cultural exchange. A coastline thousands of miles long; convenient access from West Asia, Central Asia, Africa, and East and Southeast Asia; the presence of skilled artisans; a robust mercantile tradition; states created by warlords and nobles of foreign origin; and kings who sponsored and protected merchants all secured the strategic position of the world economy in Indian life and of India in the world economy. Classics of Indian literature are replete with the heroic undertakings of the itinerant trader. Sanskrit and Persian works on statecraft set out kingly duties toward the merchant. Medieval ballads recorded how fortunes were made, and lost, in a business environment that posed great risks and yet promised huge returns for those intrepid enough to take the risks.

Indo-European trade laid the foundation for a new economic order in Asia and in Europe. Asian goods created new consumer markets in Europe. Asian trade had a formative effect on the world’s money markets. In the eighteenth century, the European desire to maintain the supply of Asian goods contributed to the motivation to colonize. Indo-European trade was also the medium of transmission of new technological knowledge in both directions. There was so much two-way traffic that it would be hard to characterize the effects in terms of a model of European influence on India or an Indian “incorporation” into a European world economy. In any case, the hybrid technological, institutional, and political order that followed had momentous consequences for India. This chapter explores the evolution of Indo-European trade. The discussion leads to larger questions about the meaning of the trade for Indian history.

The Indian Ocean world at 1500

Situated in the middle of the “great arc” of Asian trade, India is geographically well placed to trade with both sides of the Indian Ocean. It was not usual for any one merchant group to connect the extremities of the arc. Direct trade between West Asia and China was not unknown but, always rare, it declined after 1400. One consequence of that decline was the relative expansion of India’s ports as points where cargo could change ships and ships could be restocked with food and water. This development strengthened the segments within the Indian Ocean and brought the West Asian and African ports of Aden, Hormuz, and Kilwa into closer contact with Malacca in Southeast Asia; at the same time, the middleman position of India grew. The Indian ports were more than transit points, however. They were also markets themselves. The extent of India’s land and the diversity of its resources made the ports sources for a variety of textiles, including silk and muslin, and for raw products like rice, sugar, oil, cotton, and indigo. India imported for its own consumption gold and silver, specialized consumer goods, horses, and, for the reexport business, a variety of spices. The spices came from the Indonesian islands to Cambay, to be forwarded to West Asia, and then onward to Europe.