The English East Company had very humble beginnings in India. Surat was the center of its trade till 1687.
By 1623, English East India Company had established factories at Surat, Broach, Ahmedabad, Agra, and Masulipatam.
From the very beginning, the English trading company tried to combine trade and diplomacy with war and control of the territory where their factories were situated.
In 1625, the East India Company's authorities at Surat made an attempt to fortify their factory, but the chiefs of the English factory were immediately imprisoned and put in irons by the local authorities of the Mughal Empire.
The Company's English rivals made piratical attacks on Mughal shipping, the Mughal authorities imprisoned the President of the Company in retaliation at Surat and members of his Council and released them only on payment of £18,000.
Conditions in the South India were more favorable to the English, as they did not have to face a strong Indian Government there.
The English opened their first factory in the South at Masulipatam in 1611. But they soon shifted the center of their activity to Madras the lease of which was granted to them by the local king in 1639.
The English built a small fort around their factory called Fort St. George in Madras (shown in the image given below).
By the end of the 17th century, the English Company was claiming full sovereignty over Madras and was ready to fight in, defence of the claim. Interestingly enough, from the very beginning, English Company of profit seeking merchants was also determined to make Indians pay for the conquest of their own country.
In Eastern India, the English Company had opened its first factories in Orissa in 1633.
English Company was given permission to trade at Hugli in Bengal. It soon opened factories at Patna, Balasore, Dacca, and other places in Bengal and Bihar.
Englishmen’s easy success in trade and in establishing independent and fortified settlements at Madras and at Bombay, and the preoccupation of Aurangzeb with the anti-Maratha campaigns led the English to abandon the role of humble petitioners.
English Company now dreamt of establishing political power in India, which would enable them to compel the Mughals to allow them a free hand in trade, to force Indians to sell cheap and buy costly goods.
Hostilities between the English and the Mughal Emperor broke out in 1686, after the former had sacked Hugli and declared war on the Emperor. But the English had seriously miscalculated the situation and underestimated Mughal strength.
The Mughal Empire under Aurangzeb was even now more than a match for the petty forces of the East India Company. The war proved disastrous to the English.
The English were driven out of their factories in Bengal and compelled to seek protection in a fever-stricken island at the mouth of the Ganga.
Their factories at Surat, Masulipatam, and Vishikhapatam were seized and their fort at Bombay besieged.
Having discovered that they were not yet strong enough to fight with the Mughal power, the English once again became humble petitioners and submitted "that the ill crimes they have done may be pardoned."
Once again they relied on flattery and humble entreaties to get trading concessions from the Mughal Emperor. The Mughal authorities readily pardoned the English folly as they had no means of knowing that these harmless-looking foreign traders would one day pose a serious threat to the country.
English, though weak on land, were, because of their naval supremacy, capable of completely ruining Indian trade and shipping to Iran, West Asia, Northern and Eastern Africa, and East Asia.
Aurangzeb therefore permitted them to resume trade on payment of Rs. 150,000 as compensation.
In 1691, the Company was granted exemption from the payment of custom duties in Bengal in return for Rs. 3,000 a year.
In 1698, the Company acquired the zamindari of the three villages Sutanati, Kalikata, and Govindpur where the English built Fort William around its factory. These villages soon grew into a city, which came to be known as Calcutta (now Kolkata).
During the first half of the 18th century, Bengal was ruled by strong Nawabs namely Murshid Quli Khan and Alivardi Khan.
Nawabs of Bengal exercised strict control over the English traders and prevented them from misusing their privileges. Nor did they allow them to strengthen fortifications at Calcutta or to rule the city independently.
British settlements in Madras, Bombay, and Calcutta became the nuclei of flourishing cities. Large numbers of Indian merchants and bankers were attracted to these cities.
People attracted towards Madras, Bombay, and Calcutta partly due to the new commercial opportunities available in these cities and partly due to the unsettled condition and insecurity outside them, caused by the break-up of the Mughal Empire.
By the middle of the 18th century, the population of Madras had increased to 300,000, of Calcutta 200,000, and of Bombay to 70,000. It should also be noted that these three cities contained fortified English settlements; they also had immediate access to the sea where English naval power remained far superior to that of the Indians.
In case of conflict with any Indian authority, the English could always escape from these cities to the sea. And when a suitable opportunity arose for them to take advantage of the political disorders in the country, they could use these strategic cities as spring-boards for the conquest of India.