With a five thousand mile coastline, India was historically a vigorous trading power and in some periods commanded as much as twenty five per cent share of world trade, according to Angus Maddison. If you had stood at the famous port of Muziris in Kerala two thousand years ago, you would see a ship arriving laden with gold and silver. Every day a ship from the Roman Empire landed in a South Indian port where it picked up fine Indian cottons, spices, and luxuries.
But Indians did not care for what the Romans brought, and since accounts had to be settled, they were settled with gold and silver. Back home, Roman senators grumbled that their women used too many Indian luxuries, spices and fine cottons and two-thirds of Rome’s bullion was being lost to India. Pliny, the Elder, in 77 CE called India a ‘sink of the world’s precious metal’ in his encyclopaedic work “Naturalis Historia”. One South Indian king even sent an embassy to Rome to discuss the empire’s balance of payments problems.
Fifteen hundred years later, after the Europeans rediscovered India, the Portuguese had the same complaint: their gold and silver from South America was being drained in the trade with India. The British Parliament echoed this refrain in the 17th century. Indian textiles and spices changed culinary tastes and clothing habits around the world. Europeans began to wear underwear only in the 17th century, when they discovered soft and affordable Indian cloth brought by the East India Company.
The names of luxury textiles—calico, muslin, chintz, bandana—gradually entered into European languages. Bernier's compatriot Baron de Montesquieu summed up the situation in 1748 : 'Every nation, that ever traded with the Indies, has constantly carried bullion, and brought merchandises in return... they want, therefore, nothing but our bullion.’
India’s power has always been ‘soft’, not expressed through military conquest, but in the export of goods and ideas. The Sanskrit scholar, Sheldon Pollock, reminds us that between the fourth and twelfth centuries the influence of India spread across Southeast and Central Asia. Across the vast area, Sanskrit became the language of the courts, government and literature much like Latin in medieval Europe.
The elite in East spoke different languages, but used Sanskrit to communicate across the border. We are not sure exactly how Indian culture travelled but most likely it was through trade. Tamil literature describes seafaring merchants sailing to distant places like Java in search of gold. Their ships also carried Brahmin priests and Buddhist monks. Historian, Michael Wood, summed it up well: ‘History is full of Empires of the Sword, but India alone created an Empire of the Spirit.’
India generally had a positive balance of trade with the world until the Industrial Revolution in nineteenth century in England when the mills of Lancashire made handloom textiles technologically obsolete.
As India was the world’s leading exporter, Indian weavers suffered the most. Indian nationalists blamed their plight on trade, the East India Company and the British Raj. But the truth is that handmade textiles could not compete with machine made ones and handlooms died everywhere. After Independence in 1947, Indians forgot their great trading past, closed their borders in the name of a bogus idea called ‘import substitution’, and denied themselves the prosperity that emerged in the world after the Second World War.
At the same time, a socialist state emerged in India (as it did in much of the world). In India, it was largely thanks to Jawaharlal Nehru and the influence of Fabian socialism, but ironically socialism was out of character with the historical temper of the country. The socialist anomaly persisted for four long decades between 1950 and 1990 as India tried to industrialize through the agency of the state by placing the public sector at the ‘commanding heights’ while stifling private enterprise with the worst controls in the world that came to be called License Raj. Not surprisingly, it failed. The Indian state did not have the capacity to manage a command economy, nor was a centralized bureaucratic state in keeping with the country’s decentralized systems.