The history of trade and commerce in medieval India, particularly during the Delhi Sultanate and Mughal periods, reflects a vibrant and dynamic economic system that shaped the subcontinent’s socio-economic landscape. This article explores the intricate facets of trade and commerce, delving into state policies, internal and external trade, European trade influences, trade centers and ports, transport and communication systems, financial instruments like hundis and insurance, state income and expenditure, currency and mint systems, and the challenges posed by famines and peasant revolts. By examining these elements, we gain insight into the economic vitality and challenges of medieval India.
Table of Contents
State Policies in Trade and Commerce
During the early years of the Delhi Sultanate, rulers were primarily focused on consolidating their political and military power, leaving trade and commerce as secondary concerns. However, significant strides were made by certain rulers to foster economic growth. Sultan Balban, for instance, took proactive measures to enhance trade by clearing dense forests and constructing secure roads, protecting traders from bandits. These efforts facilitated the movement of commercial caravans, boosting market connectivity.
Alauddin Khilji’s economic reforms were particularly noteworthy. His policies aimed at controlling prices brought them to remarkably low levels, though this was an artificial measure rather than a reflection of genuine prosperity. By offering advances to foreign traders, particularly from Persia, and subsidizing imports, Alauddin encouraged the influx of foreign goods, laying the groundwork for a more interconnected economy. However, it was under Muhammad Tughlaq that the economy saw significant recovery. The revenue of Delhi alone reached six crores, while the Doab region contributed 80 lakhs. Tughlaq’s encouragement of agriculture through irrigation projects, such as wells and canals, and his focus on gardening further enhanced economic prosperity.
In the Mughal period, state policies became more structured. The Zabti system, a hallmark of Mughal administration, required land revenue to be paid in cash, promoting a monetized economy. Even when crop-sharing was allowed, the state’s share was often sold through grain dealers, indicating a robust market system. Approximately 20% of rural produce was marketed, a high proportion for the time, which spurred the growth of small townships or qasbas.
The demand for luxury goods by Mughal nobles fueled handicraft production and urban expansion. Emperors like Sher Shah and Jahangir enacted laws to protect merchants’ property, ensuring that their wealth and effects were passed to heirs or used for public works like mosques, sarais, bridges, and wells. Despite occasional abuses by local officials, these policies fostered a favorable environment for trade.
Internal and External Trade
Medieval India’s trade was characterized by a well-organized network of internal and external commerce. Internally, trade was dominated by regional merchant communities such as the Marwaris, Gujaratis, and Muslim Bohras, many of whom were Jains. These merchants controlled coastal trade and the exchange between coastal ports and northern India. The overland trade with Central and West Asia was primarily managed by Multanis (mostly Hindus) and Khurasanis (Afghans and Iranians), many of whom settled in Delhi. These merchants, particularly the Gujaratis and Marwaris, amassed considerable wealth, enabling lavish lifestyles and significant investments in infrastructure like temples.
The Mughal period saw further professionalization of trade. Merchants were divided into categories: seths, bohras, and modis handled long-distance trade, while beoparis or baniks focused on local retail. Baniks employed agents in villages and qasbas to procure food grains and cash crops. A unique group, the banjaras, specialized in transporting bulk goods like grains, pulses, and ghee, often using thousands of oxen. Expensive goods like textiles and silks were transported via camels, mules, or carts, while river transport was preferred for bulk goods due to its cost-effectiveness.
Externally, India’s trade expanded significantly between the 16th and 18th centuries, driven by European involvement. Before the arrival of Europeans, India’s sea-borne trade was dominated by Arabs, who controlled the Indian Ocean and Red Sea, supplying Indian goods to Venetian and Genoese merchants. The Portuguese, led by Vasco da Gama’s discovery of the Cape of Good Hope route, disrupted this monopoly, establishing direct trade with India. They were followed by other European powers, including the Dutch, English, and French, who monopolized India’s coastal and maritime trade. Unlike earlier merchants, these Europeans had political and military backing from their governments, which eventually led to territorial ambitions.
European Trade
The arrival of European traders marked a transformative phase in India’s commerce. The Portuguese, arriving in the late 15th century, broke the Arab-Venetian monopoly by establishing direct trade routes. Their success was followed by the Dutch, English, and French, who formed powerful trading companies like the East India Company. These companies were not merely commercial entities but extensions of their governments, using naval power to secure trade routes. By the 17th century, India’s coastal trade was largely under European control, with ports like Surat, Calicut, and Goa becoming hubs of activity.
European traders focused on high-value goods like spices, textiles, and indigo, which were in demand in Europe. Their presence stimulated India’s export market but also introduced new dynamics, such as fortified trading posts and competition among European powers. Over time, their commercial interests evolved into political dominance, laying the groundwork for colonial rule.
Trade Centres and Ports
Medieval India boasted numerous trade centers and ports that facilitated both internal and external commerce. Cambay (modern-day Khambhat) was a prominent city, home to wealthy merchants living in luxurious stone-and-mortar houses surrounded by orchards and tanks. Delhi, too, was a major trade hub, where Hindu and Muslim merchants lived opulently, celebrating festivals with grandeur. Coastal ports like Surat, Calicut, and Goa were critical for maritime trade, serving as gateways for goods entering and leaving India.
During the Mughal period, the growth of qasbas and larger urban centers like Agra, Lahore, and Ahmedabad further boosted trade. These centers were not only commercial hubs but also cultural and administrative capitals, attracting artisans, merchants, and traders. Ports were well-equipped to handle large volumes of goods, with infrastructure like warehouses and customs houses supporting trade activities.
Transport and Communication
Transport and communication were vital to the success of trade in medieval India. During the Sultanate period, travel was risky due to bandits and marauding tribes, but rulers like Balban and Muhammad Tughlaq improved infrastructure. Balban’s road-clearing initiatives and Tughlaq’s construction of a road to Daulatabad enhanced connectivity. The royal road from Peshawar to Sonargaon was a major artery, dotted with sarais (rest houses) for travelers’ safety and comfort. Tughlaq also introduced an efficient postal system using relays of horses and runners, who operated from towers every few kilometers. This system was so effective that fresh fruits from Khurasan and Ganga water from Delhi reached Tughlaq in Daulatabad, a 40-day journey, with remarkable speed.
In the Mughal period, transport infrastructure was further refined. Roads were maintained, and sarais were established every five kos (approximately 15 kilometers) along major highways, comparable to European standards of the time. A uniform tax was levied on goods entering the empire, and road cesses (rahdari) were declared illegal, though some local rajas continued to collect them. River transport remained a cost-effective option for bulk goods, while insurance was available to mitigate risks associated with road travel.
Hundi (Bills of Exchange) and Insurance
Hundis were a cornerstone of medieval Indian finance, functioning as negotiable instruments for trade, credit, and remittances. Derived from the Sanskrit word “hund” (to collect), hundis were informal bills of exchange written in vernacular languages, unregulated by the Negotiable Instruments Act of 1881 but recognized under local customs. They served multiple purposes: transferring funds, facilitating credit, and enabling trade transactions. The drawer of a hundi was called a shroff or nanavati, the payee a rakhya dhani, and a canceled hundi was termed khoka.
Types of Hundis
- Darshni Hundi: Payable on sight, freely transferable by endorsement, and subject to market-driven pricing (sold at a premium or discount).
- Muddati (Miadi) Hundi: Payable after a specified period, used for loans with interest deducted in advance by shroffs.
- Shah Jog Hundi: Payable only to a respectable person (shah), requiring no endorsement and transferable by delivery. Payment to a non-shah was invalid.
- Nam Jog Hundi: Payable to a named individual, similar to a bill of exchange.
- Dhani Jog (Dekhandar) Hundi: Payable to the bearer, negotiable by delivery.
- Firman Jog Hundi: Payable to order, negotiable like other order-based instruments.
- Jawabee Hundi: Used for money transfers, requiring the recipient to confirm receipt.
- Jokhami Hundi: Drawn on shipped goods, payable only upon safe delivery, combining features of a bill of exchange and an insurance policy. The drawer received funds immediately, while the insurer bore the risk of loss during transit.
Jokhami hundis were particularly innovative, merging trade and insurance. For example, if a merchant sold goods worth Rs. 500 and drew a jokhami hundi, the buyer would pay only upon safe delivery. A third-party insurer would discount the hundi, paying the merchant after deducting risk-based charges. If the goods were lost, the insurer bore the loss; if delivered, the insurer recovered the amount from the buyer.
Insurance was also available for road transport, covering risks posed by bandits and other hazards. This system provided merchants with security, encouraging trade over long distances.
State Income and Expenditure
The state’s income in medieval India primarily came from land revenue, which was a significant portion of agricultural produce. Under Alauddin Khilji, the state claimed 50% of the produce in the Doab, yet farmers found it economically viable to cultivate due to high productivity. Muhammad Tughlaq’s attempt to increase land revenue, driven by the prosperity of farmers, led to mixed outcomes, as excessive taxation sometimes caused unrest.
In the Mughal period, the Zabti system streamlined revenue collection in cash, ensuring a steady income for the state. Salaries for the standing army and administrative personnel (excluding nobles) were paid in cash, reflecting the monetization of the economy. The state’s expenditure included maintaining the army, infrastructure (roads, sarais, canals), and public works like mosques and wells. However, the lavish lifestyles of nobles and the cost of military campaigns often strained state finances.
Currency and Mint System
The currency system in medieval India was sophisticated, with coins made of gold, silver, and copper. The Delhi Sultanate and Mughal Empire maintained mints to produce standardized coins, ensuring trust in the currency. Silver tankas and copper dams were widely used during the Sultanate, while the Mughals introduced the silver rupee as a standard coin. The mint system was tightly controlled to prevent counterfeiting, with mints located in major cities like Delhi, Agra, and Lahore. The quality and weight of coins were strictly regulated, reflecting the state’s commitment to a stable economy.
Famines and Peasant Revolts
Famines were a recurring challenge in medieval India, often triggered by droughts, floods, or excessive taxation. Muhammad Tughlaq’s reign, for instance, saw famines due to his ambitious but poorly executed policies, such as the forced migration to Daulatabad and excessive taxation. These conditions sometimes led to peasant revolts, as farmers protested against high revenue demands and economic distress.
During the Mughal period, famines continued to pose challenges, particularly in regions dependent on monsoon agriculture. Peasant revolts, such as those in the Doab, were often sparked by excessive taxation or exploitation by local officials. The state occasionally responded with relief measures, such as tax waivers or food distribution, but these were not always sufficient to prevent unrest.
Conclusion
Trade and commerce in medieval India were marked by a complex interplay of state policies, robust internal and external trade networks, and innovative financial systems like hundis. The Delhi Sultanate laid the foundation for economic growth through infrastructure development and agricultural reforms, while the Mughal period saw further professionalization and monetization of the economy. European traders introduced new dynamics, transforming India’s maritime trade and setting the stage for colonial influences. Despite challenges like famines and peasant revolts, the economic system remained resilient, supported by efficient transport, communication, and financial mechanisms. This vibrant economic landscape underscores the ingenuity and adaptability of medieval Indian society.
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