NCERT Class 8 History Chapter 2 ¨From Trade to Territory The Company Establishes Power Notes¨ (Free PDF)

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Class 8 History Chapter 2 - “From Trade to Territory The Company Establishes Rule”

In the CBSE NCERT Class 8 History notes for Chapter 2 – ¨From Trade to Territory The Company Establishes Power¨ we learn how the British East India Company changed from a trading group to a ruler in India. The notes show us how the powerful Mughal Empire weakened, allowing the Company to expand. Battles like Plassey and policies like the Doctrine of Lapse were key in this process. Further, we will also see how the Company took control of regions like Bengal and Mysore. This chapter helps us understand how colonialism shaped India’s history.

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Introduction to NCERT Class 8 History Chapter 2 Notes From Trade to Territory The Company Establishes Power

In this chapter, we delve into the transformative journey of the British East India Company from a buying and selling entity to a territorial colonial strength in India. We discover pivotal activities, inclusive of the Battle of Plassey, the implementation of the Doctrine of Lapse, and the upward push of formidable figures like Tipu Sultan. 

Additionally, we take a look at the company’s initiation of alternatives in Bengal, marking the start of its sizable impact on the region. As we navigate through these historic milestones, we unravel the complicated dynamics of power, diplomacy, and war that formed the direction of British colonialism inside the Indian subcontinent. 

Through this exploration, we benefit from insights into the miscellaneous techniques of territorial growth, administrative reforms, and socio-financial changes that defined the Company’s rule in India.

Also Read: NCERT Notes and Solutions Class 8 Civics

Overview of Trade To Territory

When Aurangzeb, the last powerful Mughal ruler passed away in the year 1707, the once-powerful Mughal Empire started to weaken, leading to the emergence of powerful regional kingdoms. During this change, the British, a small trading company, began to get a stronger influence in India. How did a small trading venture transform into a dominant imperial force? 

Let us explore the journey and the rise of the British East India Company to power in India.

1. Aurangzeb was the last powerful Mughal ruler who controlled a large part of India.

2. After Aurangzeb’s death in 1707, many Mughal governors and big zamindars started asserting authority and establishing regional kingdoms.

3. The emergence of powerful regional kingdoms led to Delhi losing its effectiveness as a centre of authority.

4. By the second half of the eighteenth century, the British emerged as a new political power.

5. The British initially arrived as a small trading company and were hesitant to acquire territories.

6. Despite their initial reluctance, the British eventually became masters of a vast empire.

7. This chapter explores how the British transformed from a trading company to rulers of India.

East India Company Comes First

In 1600, the East India Company received a special permission called a charter from Queen Elizabeth I of England. This charter granted the Company the exclusive right to trade with the East. 

Let us explore how this charter helped shape the journey of the Company into the world of trade.

1. In 1600, the East India Company obtained a charter from Queen Elizabeth I of England, granting it exclusive trading rights in the East.

2. The charter allowed the Company to seek out new lands for trade, purchase goods at low prices, and sell them in Europe for higher profits, without competition from other English trading groups.

3. Mercantile trading companies profited by eliminating competition and exploiting price differentials.

4. Despite the royal charter, other European powers, like the Portuguese, Dutch, and French, were already active in the Eastern markets.

5. Competition among European companies for goods like cotton, silk, pepper, cloves, cardamom, and cinnamon drove up prices and reduced profits.

6. Rivalry among trading companies led to fierce battles, including ship sinkings, blockades, and armed conflicts.

7. Trade routes were protected through fortifications and armed forces.

8. Conflict with local rulers arose as the Company sought to fortify settlements and expand trade.

9. The Company struggled to separate trade from politics due to its efforts to secure markets and protect trading posts.
NCERT Class 8 History

Also Read: NCERT Notes and Solutions Class 8 Geography

East India Company Begins Trade in Bengal

In 1651, the East India Company established its first English factory on the banks of the river Hugli, marking the beginning of its presence in India. 

Let’s explore how this factory evolved into a significant trading settlement and the company’s interactions with local authorities.

1. The first English factory was established on the banks of the river Hugli in 1651.

2. Initially, the Company’s traders, called “factors,” operated from this factory.

3. The factory served as a base for trade, with a warehouse for storing goods and offices for Company officials.

4. As trade expanded, the Company encouraged merchants and traders to settle near the factory.

5. By 1696, the Company began constructing a fort around the settlement for protection.

6. Two years later, the Company acquired zamindari rights over three villages, including Kalikata, which later became Calcutta (Kolkata).

7. The Company also obtained a farman from Mughal emperor Aurangzeb, granting it the right to trade duty-free.

8. The East India Company consistently sought additional concessions and exploited existing privileges.

9. Aurangzeb’s farman granted the Company exclusive duty-free trading rights, but Company officials engaged in private trade were supposed to pay duties.

10. Company officials, however, refused to pay duties on their private trade, resulting in significant revenue loss for Bengal.

How Trade Led to Battles

During the early 18th century, tensions among the East India Company and the Nawabs of Bengal escalated as the Nawabs asserted their energy and autonomy following the demise of Aurangzeb. 

Let’s discover how this conflict opened up beneath the guidelines of outstanding nawabs such as Murshid Quli Khan, Alivardi Khan, and Sirajuddaulah.

1. Conflict between the East India Company and the nawabs of Bengal intensified during the early eighteenth century.

2. After Aurangzeb’s death, Bengal nawabs asserted their power and autonomy, following the trend of other regional powers.

3. Successive nawabs like Murshid Quli Khan, Alivardi Khan, and Sirajuddaulah were strong rulers who refused to grant concessions to the Company.

4. Nawabs demanded large tributes for the Company’s trading rights, denied its coin-minting privileges, and restricted fortifications.

5. Accusations against the Company included deceit, revenue deprivation, and undermining Nawab’s authority.

6. The Company countered by claiming unjust demands hindered trade and argued for duty removal to expand trade.

7. The company believed in enlarging settlements, purchasing villages, and fortification reconstruction to expand trade.

8. Conflict escalated to confrontations and ultimately led to the Battle of Plassey.

The Battle of Plassey 

Following the death of Alivardi Khan in 1756, Sirajuddaulah ascended to the position of nawab of Bengal, sparking concerns within the East India Company about his power and intentions. 

This apprehension led to a series of confrontations as Sirajuddaulah sought to assert his authority and the Company attempted to safeguard its interests.

1. Sirajuddaulah became Nawab of Bengal after Alivardi Khan died in 1756.

2. The Company desired a puppet ruler who would grant trade concessions and privileges.

3. Attempts to support Sirajuddaulah’s rival Nawab failed, infuriating Sirajuddaulah.

4. Sirajuddaulah demanded an end to the Company meddling, a fortification halt, and payment of revenues.

5. Negotiations failed, leading to Sirajuddaulah’s attack on the English factory at Kasimbazar and then Calcutta.

6. Robert Clive led Company forces to counter Sirajuddaulah’s attack.

7. Mir Jafar, one of Sirajuddaulah’s commanders, betrayed him during the Battle of Plassey, ensuring Company victory.

8. Plassey marked the Company’s first major victory in India.

9. Sirajuddaulah was assassinated, and Mir Jafar was made Nawab.

10. The company’s objective remained trade expansion, but puppet nawabs weren’t always cooperative.

11. Mir Jafar was later deposed in favour of Mir Qasim, but the conflict continued.

12. The company faced financial challenges and desired more territories and revenue.

13. In 1765, the Mughal emperor appointed the Company as Diwan of Bengal, granting control over revenue resources.

14. Diwani’s appointment allowed the Company to finance expenses using Indian revenues, reducing reliance on gold and silver imports from Britain.
NCERT Class 8 History

Company officials become “nabobs”

The assumption of power by the East India Company in Bengal not only elevated its authority but also sparked a metamorphosis in the aspirations and lives of its servants. The acquisition of wealth and standing led to many.

Company officers check themselves as nawabs,” living lavish lifestyles akin to those of Indian rulers. 

However, this newfound wealth and effect additionally added scrutiny and criticism, as exemplified by the case of Robert Clive and the broader belief of Company officials as ‘nabobs’ in British society.

1. Becoming nawabs meant gaining power and authority for the East India Company.

2. Additionally, it meant Company servants aspiring to live like nawabs.

3. After the Battle of Plassey, actual nawabs of Bengal were compelled to give land and vast sums of money as gifts to Company officials.

4. Robert Clive, a prominent Company official, amassed a significant fortune in India.

5. Clive’s wealth raised suspicion in the British Parliament, leading to his cross-examination in 1772.

6. Despite being acquitted, he later committed suicide in 1774.

7. Not all Company officials achieved wealth like Clive; many faced early death in India due to disease and war.

8. Many officials aimed to earn enough in India to lead a comfortable life back in Britain.

9. Those who returned with wealth were referred to as “nabobs,” an anglicized version of the Indian word nawab.

10. Nabobs often flaunted their riches and led extravagant lives, but they were sometimes viewed as upstarts and social climbers in British society, subject to ridicule in plays and cartoons.

Company Rule Expands

The annexation of Indian states by the East India Company between 1757 and 1857 was characterized by a strategic approach that utilized political, economic, and diplomatic methods to extend Company influence. 

Rather than direct military conquests, the Company employed a variety of tactics, including the appointment of residents in Indian states, to interfere in internal affairs and further its interests.

1. East India Company employed political, economic, and diplomatic methods rather than direct military attacks for annexing Indian states from 1757 to 1857.

2. After the Battle of Buxar in 1764, Company appointed Residents in Indian states to further its interests.

3. Residents interfered in internal affairs, deciding succession and administrative appointments.

4. Company enforced “subsidiary alliances,” prohibiting Indian rulers from maintaining independent armed forces.

5. Terms of subsidiary alliances required rulers to pay for Company-maintained “subsidiary forces.”

6. Failure to pay resulted in territorial penalties; for instance, Nawab of Awadh lost over half of his territory to the Company in 1801 under Richard Wellesley’s governorship.

7. Hyderabad also ceded territories due to similar reasons.

Tipu Sultan – The ¨Tiger of Mysore¨

The southern Indian state of Mysore has become a focal point of conflict between the East India Company and its effective rulers, especially Haidar Ali and his son Tipu Sultan. 

Mysore’s strategic location and monetary power posed a risk to Company hobbies, mainly direct military confrontations and, in the long run, the imposition of a subsidiary alliance.

1. The East India Company employed direct military confrontation when its political or economic interests were threatened, as seen in the case of Mysore.

2. Mysore, under rulers like Haidar Ali and Tipu Sultan, grew in strength and controlled profitable trade on the Malabar coast.In 1785, Tipu Sultan halted the export of sandalwood, pepper, and cardamom to the Company and established close ties with the French, modernizing his army with their assistance.

3. The British perceived Haidar and Tipu as ambitious and dangerous, leading to four wars with Mysore (1767-69, 1780-84, 1790-92, and 1799).

4. The Battle of Seringapatam in 1799 resulted in the Company’s victory, with Tipu Sultan killed defending his capital.

5. Mysore was placed under the former ruling dynasty of the Wodeyars, and a subsidiary alliance was imposed on the state.
NCERT Class 8 History

War with the Marathas

From the 18th century onwards, the East India Company launched a marketing campaign to diminish and sooner or later dismantle Maratha’s strength in India. Following their defeat in the Third Battle of Panipat in 1761, the Marathas were fragmented into various states under one-of-a-kind chiefs, with the Peshwa serving as the confederacy’s army and administrative head. 

Over time, the Company waged a chain of wars against the Marathas, culminating in their eventual subjugation and the Company’s consolidation of manipulation over territories south of the Vindhyas.

1. East India Company aimed to weaken and eventually eliminate Maratha power in the late 18th century.

2. Maratha’s power suffered a blow after their defeat in the Third Battle of Panipat in 1761, ending their ambition to rule from Delhi.

3. Marathas fragmented into different states under chiefs (sardars) from dynasties like Sindhia, Holkar, Gaikwad, and Bhonsle, led by a Peshwa in Pune.

4. Mahadji Sindhia and Nana Phadnis were notable Maratha leaders of the late 18th century.

5. Series of wars subdued Marathas: Treaty of Salbai (1782), Second Anglo-Maratha War (1803-1805), and Third Anglo-Maratha War (1817-1819).

6. Treaty of Salbai (1782) had no clear victor; Second Anglo-Maratha War resulted in the British gaining Orissa and territories north of Yamuna river.

7. Third Anglo-Maratha War crushed Maratha power, leading to removal of Peshwa and Company’s complete control over territories south of Vindhyas.

The Claim to Paramountcy

From the early 19th century, the East India Company pursued an aggressive policy of territorial expansion, marked by the initiation of the “paramountcy” doctrine under Lord Hastings. 

This policy asserted the Company’s supreme authority over Indian states, justifying annexation or threats of annexation to protect its interests. 

However, this expansionist agenda faced resistance, exemplified by the anti-British movements led by figures like Rani Channamma and Rayanna. 

Additionally, geopolitical concerns, particularly regarding Russian expansionism, drove the Company to secure control over the north-western regions, leading to conflicts with Afghanistan, Sind, and ultimately Punjab.

1. The early 19th century saw the East India Company adopt an aggressive policy of territorial expansion.

2. Under Lord Hastings (Governor-General from 1813 to 1823), a policy of “paramountcy” was introduced, asserting Company’s authority as supreme over Indian states.

3. Company claimed justification for annexing or threatening to annex any Indian kingdom to protect its interests.

4. This perspective continued to influence later British policies as well.

5. Challenges to Company’s expansion were not uncommon; for instance, Rani Channamma led an anti-British resistance movement when the Company attempted to annex the small state of Kittur in Karnataka.

6. Rani Channamma was arrested in 1824 and died in prison in 1829, but resistance continued with Rayanna, a chowkidar of Sangoli in Kittur.

7. Rayanna, with popular support, destroyed many British camps and records but was eventually caught and hanged by the British in 1830.

8. In the late 1830s, East India Company grew concerned about potential Russian expansion into India from the northwest.

9. The British aimed to secure control over the northwest region to prevent Russian influence.

10. Prolonged war with Afghanistan occurred between 1838 and 1842, resulting in indirect Company rule established there.

11. Sind was annexed by the Company in 1843.

12. Maharaja Ranjit Singh’s presence in Punjab delayed Company’s annexation efforts.

13. After Ranjit Singh died in 1839, two prolonged wars were fought with the Sikh kingdom.

14. Punjab was ultimately annexed by the Company in 1849.

The Doctrine of Lapse

During Lord Dalhousie’s tenure as Governor-General from 1848 to 1856, the East India Company implemented the Doctrine of Lapse, a policy devised to annex Indian kingdoms within the absence of a male inheritor. 

This coverage led to a final wave of annexations, including Satara, Sambalpur, Udaipur, Nagpur, Jhansi, and Awadh. 

The annexation of Awadh in 1856, justified via claims of " misgovernment,” performed an extensive role in inciting the human beings of Awadh to join the uprising of 1857 against British rule.

1. Under Lord Dalhousie’s governorship (1848-1856), a wave of annexations occurred in India.

2. Dalhousie introduced the Doctrine of Lapse, declaring that if an Indian ruler died without a male heir, his kingdom would become Company territory.

3. Several kingdoms were annexed using this doctrine: Satara (1848), Sambalpur (1850), Udaipur (1852), Nagpur (1853), and Jhansi (1854).

4. Additionally, Awadh was annexed in 1856, with the British justifying their action as a duty to free the people from the misgovernment of the Nawab.

5. The annexation of Awadh, particularly the humiliating manner in which the Nawab was deposed, contributed to the anger of the people, leading to their participation in the revolt of 1857.

Setting up a New Administration

Warren Hastings, serving as Governor-General of India from 1773 to 1785, performed a pivotal position in expanding Company energy and introducing administrative reforms. 

Under his management, the British East India Company’s impact extended past Bengal to embody Bombay and Madras, each governed as separate administrative units referred to as Presidencies. 

Hastings applied sizable reforms, especially within the sphere of justice, including the status quo of district-stage courts and the creation of a new machine of justice.

1. Warren Hastings served as Governor-General from 1773 to 1785, contributing significantly to the expansion of Company power.

2. By Hastings’ time, the Company had gained control not only in Bengal but also in Bombay and Madras, with territories divided into administrative units known as Presidencies: Bengal, Madras, and Bombay.

3. Each Presidency was governed by a Governor, with the Governor-General serving as the supreme head of the administration.

4. Hastings introduced administrative reforms, particularly in the realm of justice, starting in 1772.
5. The new justice system established two courts in each district: a criminal court (faujdari adalat) and a civil court (diwani adalat).

6. Maulvis and Hindu pandits interpreted Indian laws for European district collectors who presided over civil courts, while criminal courts remained under the supervision of a qazi and a mufti, overseen by collectors.

7. Brahman pandits’ differing interpretations of local laws posed a challenge, leading to the compilation of a digest of Hindu laws in 1775 and a code of Muslim laws by 1778 for the benefit of European judges.

8. The Regulating Act of 1773 established a new Supreme Court and a court of appeal, the Sadar Nizamat Adalat, in Calcutta.

9. In Indian districts, the principal figure was the Collector, responsible for revenue collection, tax collection, and maintaining law and order with the assistance of judges, police officers, and darogas.

10. The Collector’s office, known as the Collectorate, emerged as the new centre of power and patronage, gradually replacing previous holders of authority.

The Company army

Colonial rule in India brought new administrative principles and reforms, however its authority was mainly upheld via army prowess. 

Unlike the Mughal military, which relied heavily on cavalry, colonial powers delivered great changes, together with the recruitment of peasants as expert squaddies and the establishment of a sepoy military by the East India Company.

1. Colonial rule in India introduced new administrative and reform ideas, but its power was largely based on military strength.

2. The Mughal army mainly consisted of cavalry (sawars) and infantry (paidal soldiers), trained in archery and swordsmanship.

3. The dominance of cavalry in the Mughal army reduced the emphasis on a large professionally trained infantry force.

4. In the eighteenth century, Mughal successor states like Awadh and Benaras began recruiting peasants into their armies, training them as professional soldiers. The East India Company followed suit, recruiting peasants into its army, known as the sepoy army, derived from the Indian word “sipahi” meaning soldier.

5. With changing warfare technology in the 1820s, the cavalry requirements of the Company’s army declined, leading to increased importance of infantry regiments.

6. In the early nineteenth century, the British developed a uniform military culture, subjecting soldiers to European-style training, drill, and discipline.

7. This led to challenges as caste and community sentiments were often disregarded in building a force of professional soldiers.


In NCERT Class 8 History Chapter 2, The East India Company evolved from trade to colonial power, aided by steam technology, which reduced travel time to India. By 1857, it directly ruled 63 percent of Indian territory and 78 percent of its population.

1. The East India Company transitioned from a trading company to a territorial colonial power.

2. The introduction of steam technology in the early 19th century facilitated this transformation, significantly reducing travel time to India by sea from six to eight months to three weeks.

3. The shortened journey time attracted more Britishers and their families to India.

4. By 1857, the Company directly ruled approximately 63% of the Indian subcontinent’s territory and 78% of its population.

5. The Company’s indirect influence extended over the remaining territory and population, effectively placing the whole of India under its control.

NCERT Class 8 History Chapter 2 From Trade to Territory List of Important Events and Dates

Find the list of important incidents in the history of the establishment of the Company and its power: 

Dates of EventsName of Events
1600East India Company receives a charter
1498Portuguese established a presence in India
Early 17th CenturyDutch exploration of the Indian Ocean begins
Early 17th CenturyFrench traders arrive in Indian Ocean
1651English factory established in Bengal
1696Construction of fort around factory begins
Late 17th CenturyFarman granting trading rights to the Company
1773Warren Hastings becomes Governor-General
1773Establishment of Supreme Court and Sadar Nizamat Adalat
1757Appointment of Mir Jafar as Nawab after Plassey
After Battle of Buxar (1764)British-appointed Residents in Indian states
Late 18th CenturyIntroduction of “subsidiary alliance”
1775-1782First Anglo-Maratha War
1803-1805Second Anglo-Maratha War
1817-1819Third Anglo-Maratha War
1775Compilation of digest of Hindu laws
1778Code of Muslim laws compiled
Early 19th CenturyBritish army adopts a uniform military culture
1848Appointment of Lord Dalhousie as Governor-General
1848Introduction of Doctrine of Lapse
1849Annexation of Punjab
1856Annexation of Awadh under Doctrine of Lapse
1857The Revolt of 1857
1765Appointment of Company as Diwan of Bengal
Early 19th CenturyIntroduction of steam technology
63 percent Percentage of Indian territory under direct Company rule
78 percent Percentage of Indian population under direct Company rule

10 Important Events from NCERT Class 8 History Chapter 2 From Trade To Territory 

Here are the descriptions of the important events From Trade To Territory: 

Name of EventsDescription of the Events
Battle of PlasseyThe British East India Company defeated the Nawab of Bengal in 1757, establishing its power in Bengal.
Doctrine of LapsePolicy where Indian states without a male heir would be annexed by the British East India Company.
East India Company begins trade in BengalIn 1651, the East India Company started trading in Bengal by establishing its first factory on the banks of the river Hugli.
Rise of Tipu SultanTipu Sultan, also known as the “Tiger of Mysore,” resisted British expansion in South India during the late 18th century.
Expansion of Company rule in IndiaThe East India Company gradually extended its control over various regions of India through diplomacy, warfare, and alliances.
Establishment of PresidenciesBritish territories in India were divided into administrative units known as Presidencies: Bengal, Madras, and Bombay.
Introduction of DiwaniThe Mughal emperor granted the East India Company the right to collect land revenue, known as Diwani, in Bengal in 1765.
Subsidiary Alliance SystemIndian rulers were forced to accept British protection, pay for maintaining British troops, and follow British advice in return for maintaining control over their states.
Impact of British Conquests on IndiaBritish conquests led to significant changes in Indian society, economy, and governance, laying the foundation for British colonial rule.
End of the Mughal EmpireThe decline of the Mughal Empire accelerated due to conflicts with the British East India Company, leading to its eventual demise.

Checkout notes of Class 8 History textbook here:


Q.1. How did the Company establish power from trade to territory?

Ans: Below are the steps that the East India Company took to establish trade in the territory:

The East India Company started by trading with local rulers, by getting permission to set up trading posts. They built forts around these ports for protection, which also gave them a strong foothold in the area. Over time, they got enough to influence local politics such as playing politics against the rulers. 

Q.2. What is the name of Chapter 2 class 8 History chapter?

Ans: The name of chapter 2 of the class 8 History chapter is ¨From Trade to Territory The Company Establishes Power. 

Q.3. How did the new rulers gain power? 

Ans: The new rulers gained power in various ways, depending on the situation such as:

– They might have defeated the existing rulers in battle and taken over by force.
– They could have made alliances with other powerful groups and used their combined strength to take control.
– Sometimes power was simply passed down as inheritance.

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