Nitish Sachdeva, Panjab University Chandigarh
Economic & Political History Review. Vol. I, No. I, 15 August 2025
Abstract
Industrialization in India was a complex process shaped by a multitude of factors such as geographic, political, social, and economic. The case of Ludhiana, a city in present-day Punjab, offers an interesting lens through which to examine the broader patterns of industrialization during the colonial period. Known today as the “Manchester of India” for its thriving hosiery and woolen goods industries, Ludhiana’s industrial development began under British colonial rule in the 19th and early 20th centuries. The central question this essay explores is: Was the industrialization of Ludhiana the result of imperial design, or was it a more locally-driven phenomenon influenced by indigenous enterprise and regional conditions? To answer this, the essay will analyze the imperial policies in Punjab, role of local agency in industrial development, infrastructural investments by the British, and the role of the Great Wars. Ultimately, it argues that while British colonial policies provided the scaffolding, the industrialization of Ludhiana was not a direct or deliberate outcome of imperial design. Rather, it evolved through a combination of local entrepreneurship, global economic shifts, and unintended consequences of colonial policy.
Historical Background
At the outset of the nineteenth century, cities such as Lahore, Amritsar, and Multan used to be the prominent trading centres in Punjab. During that period, Ludhiana was a small town. It was primarily known for the flesh or slave trade, in which girls (considered fair and beautiful from the hilly areas of Punjab and Kashmir, were forced into slavery in the Sikh-controlled areas of Punjab and British India.[i] In Punjab, Ludhiana and Lahore were the two main centres of the flesh or slave trade in women, where girls of Watal- a community of low castes- were primarily sold.[ii] The Hosiery Industry began in the 1830s when, after a devastating famine in Kashmir, some distressed families left their homes and settled in different parts of Punjab. A number of these emigrants reached the outskirts of Ludhiana. Their women knew several arts, including the knitting of socks on wooden or steel rods, and they laid the foundation of a craft that, from a useful pastime for ladies, had now developed into an important industry.[iii] Until the end of the nineteenth century, this industry was limited to handloom machines and cottage-level industries.
Position of Local Capitalist
During the nineteenth century, the capitalists or industrialists of Ludhiana were not as powerful as the big local capitalists or industrialists of Bombay, Calcutta, or Madras. They were big bankers. In Ludhiana, they were limited to small-scale entrepreneurship. If the policies adopted by the British government used to be the root cause of any hindrance created in the development of industries, then such policies were not strongly opposed or boycotted by the Local traders or even capitalists. If we talk about big enterprises like Joint-Stock Companies, they started in India in 1850 C.E., then from 1851 to 1881, their number was very less in Punjab. During this period, while there were 370 companies in Bombay, 380 in Bengal and 215 in Madras, only 20 companies were operating in Punjab.[i] None of these companies were from Ludhiana. During 1899-1900, only 52 companies operated in Punjab.[ii] Of these, there were eight cotton and one woollen mills, none of which were in Ludhiana.[iii] Most of these companies were owned and run by the British. There could be many reasons for the low numbers of these companies. First was Financial illiteracy; however, such a tendency to invest capital through the market and partnership for starting a business was less common among Indians at that time. Indians did business only with their capital. The other major fact was that the cost of capital in India was very high. Interest rates in contemporary India were double as in the major financial centres in Europe.[iv] Due to these major factors, there was no encouragement to establish such joint-stock bodies in Punjab. The progress of any industry depends on the amount of exports, which are facilitated through transportation. However, the main markets of India for exporting goods were located in Bombay, Calcutta, and Madras, which were far from Punjab. As a result, the freight charges for goods by railways and other means of transport were also very high. The British government imposed heavy taxes on the export of industrial products manufactured by Indian-owned companies, while providing tax benefits to companies owned by the British. Additionally, the import duty on clothes from England was low, which hindered the growth of local textile or woollen industries. The British government also failed to protect the weaving industry from foreign competition. For these reasons, the hosiery industry in Ludhiana remained mainly a cottage industry throughout the nineteenth century.
Skilled Labour: Role of Local Agency or State
At the beginning of the twentieth century, the machines used in the factories of Ludhiana were mostly operated manually. Secondly, there was also a shortage of skilled workers at this time. During the colonial period, India was dependent on Imports for modern electric machines, and these were imported from abroad. It was not easy to operate them, so technicians were called from abroad to operate them. They taught the local workers how to operate machines. This task was not easy. In case of any technical fault in the machines, it was necessary to call a technician from outside for its repair. There was no provision for training at the local level, and such modern machines were not manufactured in India.
To overcome this difficulty, the British Government took a lot of efforts. The missionary group, named The Salvation Army*, established a school at Ludhiana in November 1908. This school was also known as Sir Louis Dane Weaving School (Sir Louis Dane was a Lieutenant Governor of Punjab at that time).[i] This school was started with the purpose of being not merely a school of instruction or a factory for the production of cloth, but also a central heart and head for the promotion of the Handloom weaving Industry of the Punjab. This school was situated on the premises of the Old Ludhiana fort. In 1910, this school gave free instructions to the Punjab weavers.[ii] During this time, several District Boards sent weavers for training in the Sir Louis Dane Weaving School, and paid their travelling expenses too.[iii]
To improve the condition of weavers and to teach them methods of weaving, the Government of Punjab gave a grant of Rs. 300 per menses to the Salvation Army Weaving School of Ludhiana from 1908 to 1911.[iv] For the establishment of this School in Ludhiana, the Government of Punjab also passed a loan of Rs. 5000 at 6.25 per cent interest and also provided adequate accommodation to this institution.[v] In 1912, the Punjab Government approved an additional grant of Rs. 100 per menses to this institution for the scholarship of weavers from outside Ludhiana who were taking training in this institution.[vi] In 1915, this school manufactured more than 800 improved looms and sent them out through ‘The Salvation Army’ to various places not only in India and Ceylon but also to British East Africa.[vii]
The work of the institution and the British government was commendable, but this School could not succeed in bringing revolutionary changes in the Ludhiana Industry. The reason was the unpopularity of this institution. Those weavers who were from this school realized that they could not work with the Salvation Army Loom profitably in their villages, and so they did not recommend this school to their fellow villagers. Rather, they did the contrary. There were some reasons why the local weavers felt they could not make much profit from the Salvation Army Looms. Firstly, the Salvation Army frame loom worked faster than an ordinary fly-shuttle, but it was far more expensive. Secondly, the weavers believed their market was already full of goods, and when these Salvation Army looms produced goods faster, it would be difficult to sell them. Apart from this, the weavers who came from outside Ludhiana to learn here were given benefits by the Government and the Institution. But being locals, the weavers of Ludhiana did not get any benefit for the fact that they were locals. Secondly, the weavers remained engaged in agricultural work to increase their income, due to which they could not come to this institution regularly.[viii]
For the improvement in the Hosiery Industry, the British Government established technical and vocational educational institutions for the residents of Ludhiana. The British opened a Government Institute of Dyeing and Calico Printing in 1923 and a Government Hosiery Institute in 1926. Both of these institutes were located on the premises of the old fort of Ludhiana.[ix] The Government Hosiery Institute had two classes- A and B. Class A admitted matriculates and was intended to produce foremen or factory managers. This course lasted for two years and it enabled the students to gain a general understanding of the operation of all types of machines in the first year, and then specialize intensively in one of four groups of machines in the second year. Class B was designed for artisans. It offered a one-year course. The third option was the Master class in which the top students of Class B would be selected. They would undergo a course of advanced and intensive training. It focused on the preparation of designs as well as repair and fitting of machines, which it was hoped would make them efficient supervisors in factories.[x] The British government was compelled by circumstances to close this institution in September 1933 in order to reorganize it to meet the needs of the industry and to engage more competent staff.[xi] Later, this institute was reopened in the middle of September 1934, on the arrival of Mr. Ashby in Ludhiana. He was a first-class demonstrator who was adept at Hosiery mechanisms. He was recruited from England. Local and outside manufacturers had already begun to refer to their difficulties to the hosiery expert for a solution.[xii] Thus, the aim of the British Government was to start these institutes and providing them assistance was to enable the people there to learn advance methods of weaving and to learn to operate new modern machines. No such efforts were made by local institutions or capitalists to make the workers skilled for the industries.
War time growth of Industry: Local agency or State Intervention
In the twentieth century, during both World Wars, due to changing international conditions, the demand of Ludhiana Hosiery products increased rapidly. To meet this demand, factories were established quickly. For investment in this industry, local joint-stock banks were created and provided loans and investments in the hosiery sector. While there were no Joint-Stock Companies in Ludhiana in the nineteenth century, their number increased after the First World War. During 1938-39, loans worth Rs 40 Lakhs were passed by these Joint-stock banks and out of this, more than half amount was given to the finance industries. In addition to the Joint-stock banks, the indigenous money-lenders popularly called Shahukars were also among the ones who were one of the most important agencies for financing industry and trade of Ludhiana. According to the Punjab Registration of Money-Lenders Act of 1938, it was mandatory for a money-lenders to get their names registered and obtain a license from the office of the Deputy Commissioner. In 1939, there were approximately 310 money-lenders who got themselves registered in Ludhiana. Of these, 195 were in rural areas while 115 were in urban areas. The total amount advanced by the registered rural money-lenders to financing industries was Rs. 10.74 Lakhs. The urban money-lenders advanced Rs. 18.69 Lakhs to the industries. Rs. 10 Lakhs were invested in the Hosiery industry. The rate of interest that was charged varied between 9 to 16 percent per annum. The moneylenders used to charge higher interest than joint-stock banks.[i] In the year 1938-39, there were 19 Industrial Co-operative societies in Ludhiana, out of which 12 belonged to weavers. These societies usually charged a 12.50 % interest rate.[ii] Though the Joint-stock banks, indigenous moneylenders, and Cooperative societies provided help to the industries of Ludhiana, yet they could not bring about any revolutionary changes. International events were also somehow responsible for all this. During the two World Wars, the demand for products of Ludhiana’s hosiery industry increased, and as such, the new factories left no stone unturned to increase their production. This also helped the joint stock banks and cooperative societies to grow tremendously. These industries got a further boost when the British government changed its tariff policies in their favor.
After World War I, the British Government changed its import policies to safeguard the Indian cotton textile and hosiery industry from Japanese competition. In the light of this, during the year 1922, the Indian Fiscal Commission recommended protection for Indian industries. In 1923, the Indian Government accepted this recommendation, and as a result, a Tariff Board was established to implement it. Eleven industries had received protection from the tariff board before the outbreak of World War II. In 1930, import duties on British piece goods were increased to 15%, with duties on foreign piece goods rising to 20%. In March 1931, these duties were again raised to 20% for British goods and 25% for non-British goods. On 30 September, they were further increased to 25% for British goods and 31.25% for non-British goods. On 30 August 1932, the Indian duty on all non-British cotton was increased from 31.25% to 50%. This significantly benefited the hosiery and other industries of Ludhiana.[iii] By the year 1939, there were 47 Registered Hosiery factories in the Ludhiana District. Besides these registered factories, there were also 286 small-scale unregistered Hosiery factories in the District.[iv] Following data gives a peep into the registered factories in Ludhiana district.
The following table shows that the changes in tariff policies by the British Government provided great help to the Hosiery Industry of Ludhiana. The hosiery industry of Ludhiana developed s lot during these ten years shown in the table.
Dependency and problems of the local industry and the response of the colonial Government
The hosiery industry of Ludhiana was dependent on imports of many things. Factories were set by local businessmen to make hosiery machines for the hosiery industry, but these factories were dependent on imports from Germany and Japan for Needles. During the war, the supply from Germany stopped, and tariff policies adopted by the Government imposed heavy taxes on imports.[i] The cotton yarn was mainly imported from Ahmedabad, Nagpur, Bombay, and Indore. For the Woolen yarn, this industry mostly depended for its supply on Japan and for superior quality yarn, it relied on England and France. Further, the supply depended mostly on International Political conditions as well as the policies of the British Government.[ii] To overcome this difficulty, the yarns and needles were supplied by the British Government purchasing agency of Defense equipment.[iii] In this way, the local industries here could not take full advantage. Here it should be kept in mind that at that time India was under the British rule. Its industrial progress depended on the policies of the British Government. Of course these were imported goods on which the hosiery industry of Ludhiana depended, its supply was done by the agencies of the British Government, due to which these industries were not able to take advantage of it to their full potential, but it is also true that this supply continued to provide benefits to these industries in some way or the other and indirectly these industries kept benefiting from it.
Conclusion
The case of Ludhiana demonstrates that its industrial growth during the colonial period was neither the inevitable result of British imperial planning nor the sole triumph of indigenous enterprise. British policies such as the establishment of technical institutes, tariff protections in the interwar years, and wartime supply arrangements which created an enabling framework, but often unintentionally and with limitations shaped by imperial priorities. Local agency proved decisive in exploiting these openings: migrant artisans from Kashmir laid the foundation of the hosiery craft, local financiers and cooperative societies sustained investment, and entrepreneurs responded quickly to surges in wartime demand. However, persistent dependencies on imported machinery, raw materials, and foreign markets underscored the structural constraints of colonial economic rule. Ludhiana’s industrialization was thus an adaptive process, emerging from the interplay of imperial policy, local initiative, and global economic shifts. This growth achieved within, and sometimes in spite of, the colonial framework.
[i] Ibid, p. 45.
[ii] Ibid, p. 46.
[iii] Kaur, P (2016), Urbanization in the Punjab: A Case Study of Ludhiana City (1947-2001), Unpublished thesis, Chandigarh: Panjab University, p. 118.
[i] Government of Punjab (1942) Report on the Industrial Survey of Ludhiana District, Lahore: Superintendent Government Printing, pp. 14-15.
[ii] Ibid, p. 16.
[iii] Arthi, V & et. al (2020) The Impact of Interwar Protection: Evidence from India, Cambridge: National Bureau of Economic Research, Working Paper- 27178, pp. 5-7. https://www.nber.org/system/files/working_papers/w27178/revisions/w27178.rev0.pdf
[iv] Government of Punjab (1942) Report on the Industrial Survey of Ludhiana District, p. 41.
* The Salvation Army was founded by William Booth in 1865 at London. This is a Protestant Christian Church and Charitable organisation operated on a military pattern.
[i] Latifi, A. (1911) The Industrial Punjab: A Survey of Facts, Conditions and Possibilities, Calcutta: Longman, Green & Co, p. 17; Indian Industries and Power: Incorporating Indian Motor News, Vol. VII, September 1909- August 1910, n.p, p. 112.
[ii] Government of Punjab (1910) Report on Public Instruction in the Punjab and its Dependencies for 1909-10, Lahore: Civil and Military Gazette Press, p. 17.
[iii] Latifi, A, Op. cit, p. 14.
[iv] Punjab State Archive (1910) Proceedings of Commerce & Industry, Bundle No: 05, File No- 58, 09 November 1910, Nos. 22-24, Chandigarh: Punjab State Archives.
[v] Punjab State Archive (1908) Proceedings of Commerce & Industry, Bundle No: 03, File No- 34, 07 September 1908, Nos. 13-15, Chandigarh: Punjab State Archives.
[vi] Punjab State Archive (1912) Proceedings of Commerce & Industry, Bundle No: 10, File No- 196, 28 November 1912, Nos. 273-274, Chandigarh: Punjab State Archives.
[vii] Baker, Hendry. D. (1915) British India with Notes on Ceylon, Afghanistan and Tibet, Washington: Government Printing Office, p. 248.
[viii] Punjab State Archive (1914) Proceedings of Commerce & Industry, Bundle No: 23, File No- 89, 21 April 1914, Nos. 30-31, Chandigarh: Punjab State Archives; also cited in Latifi, A, The Industrial Punjab: A Survey of Facts, Conditions and Possibilities, p. 22.
[ix] Ibid, p. 554.
[x] Government of Punjab (1934) Report on the Progress of Education in the Punjab from the Year 1932-33, Lahore: Superintendent Government Printing, pp. 58-59.
[xi] Government of Punjab (1935) Report on the Progress of Education in the Punjab from the Year 1933-34, Lahore: Superintendent Government Printing, p. 83.
[xii] Report on the Progress of Education in the Punjab from the Year 1934-35, p. 70.
[i] Rungta, R.S. (1970) The Rise of Business Corporation in India 1851-1900, Cambridge: Cambridge University Press, p. 112; Government of Punjab (1882) Report on the Administration of the Punjab and its Dependencies for the year 1881-82, Lahore: Punjab Government Civil Secretariat Press, p. 114.
[ii] Government of India (1904) Financial and Commercial Statistics of British India, 11th Issue, Calcutta: Superintendent of Government Printing, p. 390.
[iii] Ibid, pp. 349-366.
[iv] Roy, T. (2018) A Business History of India: Enterprise and the Emergence of Capitalism from 1700, New Delhi: Cambridge University Press, pp. 9-10.
[i] Dalrymple, W. (2014) Return of a King: An Indian Army in Afghanistan, New Delhi: Bloomsbury, 2014, p. 38.
[ii] Sharma, D. & Rana, A. (2015) Social Evils among Women in Jammu and Kashmir during Dogra Period and Colonialism and Reforms (1846-1925), Journal of Humanities and Social Science, Vol. 20, Issue. 3, Ver. VIII, March, 2015, p. 13. https://www.iosrjournals.org/iosr-jhss/papers/Vol20-issue3/Version-8/D020380820.pdf.
[iii] Government of Punjab (1942) Report on the Industrial Survey of Ludhiana District, Lahore: Superintendent Government Printing, p. 39.