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Foreign Trade and Demographic Condition on the Eve of Independence

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Foreign trade refers to the exchange of goods & services between two or more nations or within boundaries. India has been one of the major trading countries from the time of independence and primarily exports goods like cotton, silk, jute, indigo, wool, etc. India is also an importer of finished products, like woollen clothes, silk, cotton & capital goods like light machinery made in Britain, etc. 

During the colonial period, Britain held a monopoly over India’s imports & exports. Hence, the major part of foreign trade was restricted to Britain only, while the rest was permitted to trade with nations like Ceylon(Sri Lanka), Persia(Iran), and China. India was a massive exporter during the colonial period. However, it did not affect the economy of the country. The scarcity of basic necessities like food grains, kerosene, clothes, etc., badly affected the country.

State of India’s Foreign Trade

1. Monopoly control of Britain over foreign trade

  • Britain exercises their monopoly rights and control over India’s imports & exports.
  • Half of India’s foreign trade was limited and authorized to Britain only.
  • The rest half of foreign trade was permitted to trade with countries like Ceylon(Sri Lanka), Persia(Iran) & China.
  • In the year 1869, the introduction of the Suez Canal resulted in increased British authority over India’s foreign trade.

2. Exporter of raw material & importer of finished goods

  • Exporter of raw materials: India became an exporter of raw materials such as silk, wool, sugar, cotton, jute, indigo, etc.
  • Importer of finished products: India also became an importer of finished products like silk, cotton and woollen clothes, and capital goods like machinery made in Britain.

3. The Indian wealth drained during the colonial period

  • Drain of wealth with respect to the Indian economy means the transfer of Indian wealth to England, for which the country did not even get the proportionate economic return. 
  • During the colonial period, India’s foreign trade generated surplus export due to excess exports.
  • However, this surplus export did not bring any gold or silver into India, rather this surplus export was used to make payments for the cost of setting up offices in Britain by the colonial government and for bearing the expenses of the wars fought by the Britain government.

During the colonial period, Suez Canal was the best option for trading purposes. 

Suez Canal

The Suez Canal is an artificial waterway that runs from Africa and Asia through the Isthmus of Suez in the North-Eastern part of Egypt. The Suez Canal is the shortest maritime route from Europe to Asia as it connects the Mediterranean Sea to the Red Sea. Since its completion in 1869, it has become the most heavily used shipping lane in the world.

The 193km Suez canal was developed in November 1869. Almost 12% of global trade passes through the Suez canal, representing 30% of all the global container traffic and goods worth over $1 trillion per annum. In 2020, around 19,000 ships used this route, which means 50 ships per day making the journey between Suez Port and Port Said, carrying cargo worth between USD 3-9 billion. As per Egypt’s Suez Canal Authority (SCA), the waterway carried over a cargo of 1 billion tonnes in 2019.

The Suez Canal is very important as it is the shortest maritime route from Europe to Asia. Before its construction, ships moving toward Asia had to undertake a difficult journey around the Cape of Good Hope at the southern tip of Africa. Due to its strategic location, the canal is both heavily used and protected.

Demographic Condition

The main reason behind colonization was to limit India to a feeder economy. Death, scarcity of food, and misery was common element of colonial India. The colonial government was not interested in conducting a census in India before 1881. In such a situation, this responsibility was taken up by some individuals like Findlay Shirras, Dadabhai Naoroji, V.K.R.V. Rao, and many others. Although the demographic data obtained was not reliable and consistent, the data provided by V.K.R.V. Rao was considered the best. The British rule was indicated by two centuries of exploitation. Most of the policies and rules were formed to fulfill British interests. Under their colonial masters, Indian citizens were treated as slaves and servants. They were deprived of even basic human facilities. Thus death and hunger became an element of colonial India, and coupled with the scarcity of food and the influenza epidemic proved to be disastrous. Besides, the life expectancy rate in India was the lowest during the colonial period.

Demographic Transition in India

  • The British Indian population was first counted with the help of a census in 1881.
  • The census of 1881 shows the unevenness in India’s population growth. India witnessed high birth & death rate during this period.
  • The year 1921 caused a great transition, as after 1921, India experienced a high birth rate and a fall in the death rate due to improvements in health facilities.

Major Indicators of Demographic Condition in India on the Eve of Independence

1. Literacy Rate

The overall literacy rate was less than 16%. Out of this, the female literacy rate was almost negligible, about 7%.

2. Health 

Public health facilities were either not accessible or, when accessible, were highly inadequate. Therefore, air and water-borne diseases were uncontrollable and took a huge charge on life.

3. Infant Mortality Rate​

The infant mortality rate was​ quite scary, about 218 per thousand in comparison to the current infant mortality rate of 40 per thousand.​ ​​​

4. ​Life Expectancy ​

The life expectancy rate was also very low, 44 years in comparison to the present 68 years.

There are no official records regarding poverty. However, it can be assumed that widespread poverty was the general problem. Therefore, the Indian population had to live in crawling poverty, with never-ending fear of diseases, death, and starvation. In a nutshell, the Indian demographic condition during the colonial period was horrible.


Last Updated : 06 Apr, 2023
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