FROM EMPIRE TO EQUILIBRIUM: A TRADE PACT REDEFINES TIES

Under colonial rule 1850 to around 1930-50, India was transformed into a supplier of raw materials and a market for British manufactured goods.

- 

The May 2025 signing of the Free Trade Agreement (FTA) between India and the United Kingdom marks a critical milestone in the evolution of their economic relations.

Heralded as a pact that will increase bilateral trade by an estimated 15% annually through 2030, the FTA is not merely a modern diplomatic accord but also a symbolic and structural break from the colonial economic patterns that shaped India-UK ties for nearly two centuries. To appreciate its historical significance, this article contextualizes the agreement within the continuum of India-UK trade relations, exploring the transition from colonial extraction to post-independence realignment and finally to contemporary partnership.

COLONIAL FOUNDATIONS OF TRADE

India's economic relationship with Britain began in the early 17th century with the establishment of the East India Company. What started as mercantile trade in spices, textiles, and indigo soon gave way to political domination, culminating in the formal establishment of British rule after 1858. Under colonial rule, India was transformed into a supplier of raw materials and a market for British-manufactured goods.

The colonial economy was designed to serve British industrial interests. Policies such as the deindustrialization of Indian handicrafts and the imposition of tariffs on Indian goods disrupted local industries. The export of raw cotton and the import of machine-made textiles from Manchester exemplified the asymmetrical trade relationship. Famines and economic stagnation during British rule have been linked by many historians, including Dadabhai Naoroji and R.C. Dutt, to the drain of wealth from India to Britain.

By the early 20th century, India had become deeply integrated into the British imperial economy but in a subservient role. Trade was not about mutual growth but about resource extraction and the suppression of indigenous enterprise.