After the death of Mir Jafar, in 1765, the then Mughal Emperor Shah Alam II granted the Diwani rights of the provinces of Bengal to the Company. This was a major breakthrough for the Company because Diwani allowed it to use the vast revenue resources of Bengal.
From the early eighteenth century, the Company had buy most of the goods in India by paying in gold and silver which were imported from Britain. This was putting a huge drain on the treasury in Britain.
After the Battle of Plassey, the outflow of gold from Britain slowed down. This outflow completely stopped after the Company got the Diwani of Bengal.
The Company rarely launched a direct military attack on an unknown territory. It preferred various political, economic and diplomatic methods to increase its influence before annexing an Indian kingdom.
The Company appointed Residents in Indian states. Their job was to serve and further the interests of the Company. The Residents interfered in the internal affairs of Indian states. They influenced the decisions regarding successor to the throne and appointment at key administrative posts.
According to this alliance, Indian rulers were not allowed to have their independent armed forces. The Company army was to protect the Indian state but the ruler had to pay for the “subsidiary forces”. If an Indian ruler failed to make the payment, then part of his territory was taken away as penalty. For example; Awadh and Hyderabad were forced to cede territories on this ground.
Mysore had become powerful under the leadership of powerful rulers like Haider Ali (1761-1782) and Tipu Sultan (1782-1799). Mysore controlled the profitable trade of the Malabar Coast. Tipu Sultan stopped the export of sandalwood, pepper and cardamom through the ports of his kingdom in 1785. Moreover, he disallowed the merchants from trading with Company. Tipu Sultan maintained a close relationship with the French in India. He modernized his army with the help from the French.
Anglo Mysore War: The Company wanted to crush the rulers of Mysore. Four wars were fought with Mysore (1767-69, 1780-84, 1790-92 and 1799). The Company could finally get victory in the fourth Anglo-Mysore War; also known as the Battle of Seringapatam. Tipu Sultan was killed and the former ruling dynasty of the Wodeyars was given the charge of Mysore. It was kept under subsidiary alliance.
During the late eighteenth century, the Marathas were divided into many states under different chief (sardars). These chiefs belonged to different dynasties such as Sindhia, Holkar, Gaikwad and Bhonsle. These chiefs were held together in a confederacy under a Peshwa. The Peshwa was the effective military and administrative head of the confederacy and was base at Poona.
A series of wars was fought with the Marathas. There was no clear victor in the first war which ended in 1782 with the Treaty of Salbai. The Second Anglo-Maratha War (1803-05) was fought on several fronts. The British gained Orissa and the territories north of the Yamuna river in this war. The Third Anglo-Maratha War (1817-19) crushed the Maratha power. The Peshwa was removed and sent away to Bithur near Kanpur with a pension.
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