The East India Company had equipped their first trading expeditions with a supply of bullion and a quantity of English goods consisting of woollens, iron, tin, lead and in addition a few articles intended as presents. The return cargoes consisted almost entirely of pepper and spices.
The profitable character of the spice trade at this time is suggested by the fact that the original cost of the cloves imported into England on the occasion of the third voyage was 2,948, while the selling price in England was 36,387.
Although the power of the Portuguese in Surat itself was represented only by a small body of merchants under the jurisdiction of the native governor, they nevertheless patrolled the waters outside with the object of regulating trade in their own interests.
Hawkins, who was in command of the Company’s third voyage, landed in Surat in 1607. The local governor appears to have allowed some of Hawkins’ men to remain there, but Hawkins himself, who went to Agra to obtain permission to trade from the Emperor, was unsuccessful in his mission as the result of the adverse Portuguese influence.
The servants of the Company first succeeded in opening trade with Surat in 1612, when they were well received by the native merchants and inhabitants, though opposed by the Portuguese. In a fight at sea off Swally the English succeeded in routing their opponents.
The year of this victory marks the institution of an English factory at Surat, the first English settlement in India. By an agreement with the local governor, the English were permitted liberty of trade in the port, with further liberty to settle factories at Ahmedabad, Cambay and Gogo, and all their merchandise was to be subject to a duty of 3 per cent.
The Portuguese power, however, was not finally vanquished, and the English trade in the Mughal Empire rested upon the slender authority of a local governor’s orders. In 1615 a more decisive victory secured by the English in a second engagement with the Portuguese fleet off Swally established the prestige of the English at the Mughal Court and the Emperor expressed his willingness to confirm their trading privileges.
In 1615 James I, anxious to obtain for the Company a recognised basis for its trade in India, sent Sir Thomas Koe as “Ambassador to the Great Mughal.” Roe appears to have drafted an agreement, or so-called treaty, by which the English would have secured liberty of trade and the right to settle factories in any part of the Mughal Empire from Surat to the coast of Bengal, also permission for the goods of the English merchants, on payment of the stipulated duty at the port of landing, to be forwarded free to any other English factory, and for goods purchased by the English in any part of the Mughals’ dominions to have free transit to the ports at which they were to be shipped. The rate of customs duties upon English imports was to be 3 per cent, upon goods and 2 per cent, upon bullion.
This draft treaty is said never to have been ratified at the Mughal Court. Roe was, however, successful in obtaining a farman, or imperial order, permitting the English to reside in Surat and to travel freely into the interior and to trade, subject to no other levies than the payment of the duties named.
With regard to the manner in which the privileges were actually enforced much depended upon the character of the Mughal administration in different parts of the kingdom. No doubt in the central and western parts of that kingdom the imperial order would have commanded general obedience, but even there it seems to have been necessary to make frequent presents to the chief local officials in order to keep things working smoothly.
Certainly the effect of the imperial order in Bengal appears to have been comparatively little, for when later on the servants of the Company opened up trade with that part of the country they found it necessary to enter into new trading agreements, the earlier farmans arranged from Surat evidently possessing little significance.
The tariff policy, if indeed it is. possible to speak of there being a policy at all, in force in the Mughal Empire in the 17th century consisted in levying a low general import duty upon goods entering the country, while further internal transit duties were charged upon goods carried from place to place.
It is not quite clear that this tax was really a customs duty so much as a tax upon a merchant’s stock-in-trade, but it is probable that the tax was levied in the form of duties upon imports or upon internal transit.
The system of transit duties seems to have been accepted and retained under the Mughal administration and continued indeed to be a part of the Indian tax system until the middle of the 19th century. These transit duties, even in well- administered parts of the country, must have been serious impediments and burdens upon trade while in those parts where the administration was lax they afforded an opportunity for innumerable acts of petty tyranny and plunder upon the part of customs officials.
It was therefore of the highest importance to the Company to obtain the imperial order releasing their goods from the liability to search and delay at the hands of the officials of the internal customs barriers.
The low range of import duties imposed by the Mughal Emperors proves that there was a general desire to encourage foreign trade. There was no question of an attempt to protect native manufactures or indeed to use the tariff in any way as a means to influence the character of trade except as regards the specially low duty upon imported precious metals. The export trade seems to have been approved as the recognised means for obtaining a supply of the precious metals and of articles of luxury consumed at the court. The tariff policy of the Muslim rulers of India differed in this respect from that of their co-religionists of the Ottoman Empire.
While the duties charged within the Mughal Empire were on the whole moderate, goods passing through the territories of the petty chiefs outside its bounds were frequently subjected to charges so exorbitant as to constitute little less than plunder.
Surat continued to be the chief centre of English trade in India for the first half of the 17th century.
The prestige of the English, as we have seen, depended very largely upon their power to secure the safety of the port of Surat and of the Mughal ships in the Indian Ocean. This was a responsibility which involved a considerable burden from time to time, but the place had great advantages as a trading centre. Western India appears at that time to have been the most advanced manufacturing part of the country and Surat was the natural port from which such manufactures were sent abroad.