History of Trade and Commerce in Ancient India . p1 VIVA VVIT

for
PLUS ONE
Professor & Lawyer
Puttu Guru Prasad
Business Studies
VIVA - VVIT
History of Trade and
Commerce

CONTENTS
PART I FOUNDATIONS OF BUSINESS 1
CHAPTER 1 Nature and Purpose of Business 2
CHAPTER 2 Forms of Business Organisation 21
CHAPTER 3 Private, Public and Global
Enterprises 55
CHAPTER 4 Business Services 77
CHAPTER 5 Emerging Modes of Business 110
CHAPTER 6 Social Responsibilities of Business
and Business Ethics 140
PART II CORPORATE ORGANISATION,
FINANCE AND TRADE 159
CHAPTER 7 Formation of a Company 160
CHAPTER 8 Sources of Business Finance 181
CHAPTER 9 Small Business 207
CHAPTER 10 Internal Trade 225
CHAPTER 11 International Business - I 251
CHAPTER 12 International Business - II 27

Professor & Lawyer.
Puttu Guru Prasad,
B.Com., M.Com., M.Phil., M.B.A., PGDFTM., AP.SET.,
M.Phil., DRMS., L.L.B., ICFAI TMF., DIRM., L.L.M.,
Pre PhD (PhD)from JNTUK.,
“Diploma in Psychology from YALE
University”
MHRDI’s IIC Ambassador
NSS Certified Program Officer, (A.U)
Senior Faculty for M.S & M.E.F.A.,
BOS-Chairman, Management Studies,
Bhagavad Gita Program Coordinator,
S&H Department, VVIT, Nambur,
My Blog: puttuguru.blogspot.in
My Web Site: https://gurublogs.wixsite.com/guru

VIVAINTERNATIONAL SCHOOL
WelcomesyoutoXI
Business Studies -class

BUSINESS, TRADE AND
COMMERCE
History of Trade and Commerce
VIVA INTERNATIONAL
SCHOOL, GUNTUR

Chapter– 1
LEARNING OBJECTIVES
After studying this chapter, you should be able to:
i. Appreciate the development of trade and commerce in
historical past;
ii. Understand the role of indigenous banking system in
trade and commerce;
iii. Explain the concept and objectives of business;
iv. Discuss types of industries;
v. Explain the activities relating to commerce;
vi. Describe the nature of business risks and their causes;
and
vii. Discuss the basic factors to be considered while starting
a business.

Introduction
All human beings, wherever they may be, require different
types of goods and services to satisfy their needs. The
necessity of supplying goods and services has led to certain
activities being undertaken by people to produce and sell
what is needed by others.
Business is a major economic activity in all modern
societies concerned as it is concerned with the production
and sale of goods and services required by people. The
purpose behind most business activities is to earn money
by meeting people’s demands for goods and services.
Business is central to our lives.

History of Trade and Commerce
The economic and commercial evolution of any land depends upon its physical
environment. This stands true for the Indian subcontinent as a whole which has
Himalayas in the North bordered by water in the South. A network of roads merging into
the Silk Route helped in establishing commercial and political contacts with adjoining
foreign kingdoms and empires of Asia, in particular, and the world, in general.
The maritime routes linked the east and the west by sea and were used for the trade of
spices and known as ‘spice route’. Due to the flow of wealth through these routes, the
chief kingdoms, important trade centers and the industrial belt flourished, which in turn
further facilitated the progress of domestic and international trade in ancient India.
Trade and commerce have played a vital role in making India to evolve as a major actor in
the economic world in ancient times. Archaeological evidences have shown that trade
and commerce was the mainstay of the economy of ancient India carried out by water
and land. Commercial cities like Harappa and Mohenjo-Daro were founded in the third
millennium B.C.
The civilization had established commercial connections with Mesopotamia and traded in
gold, silver, copper, colored gemstones, beads, pearls, sea shells, terracotta pots, etc.

Indigenous Banking System
As economic life progressed, metals began to supplement other
commodities as money because of its durability and divisibility. As
money served as a medium of exchange, the introduction of metallic
money and its use accelerated economic activities.
Documents such as ‘Hundi’ and ‘Chitti’ were in use for carrying out
transactions in which money passed from hand to hand.
Hundi as an instrument of exchange, which was prominent in the
subcontinent. It involved a contract which — (i) warrant the
payment of money, the promise or order which is unconditional (ii)
capable of change through transfer by valid negotiation.
Indigenous banking system played a prominent role in lending
money and financing domestic and foreign trade with currency and
letter of credit.

1.Take away from the Yesterday class
• 1. The purpose behind most business activities is to earn money by
meeting people’s demands for goods and services. Business is central
to our lives.
•2. The maritime routes linked the east and the west by sea and were
used for the trade of spices and known as ‘spice route’. Due to the
flow of wealth through these routes, the chief kingdoms, important
trade centers and the industrial belt flourished, which in turn further
facilitated the progress of domestic and international trade in ancient
India.
• 3. Indigenous banking system played a prominent role in lending
money and financing domestic and foreign trade with currency and
letter of credit.
• 4. Documents such as ‘Hundi’ and ‘Chitti’ were in use for carrying out
transactions in which money passed from hand to hand.
• 5. Hundi as an instrument of exchange (Bill of Exchange), which was
prominent in the subcontinent.

‘Hundi’ and ‘Chitti’
• The purpose of Hundi is, that it will protect the traders from Dacoit's, Robber’s,
Thief’s who attacked them in the journey and steal valuable money or gold coins
from the traders who were traveling long distances on foot to procure goods.
• Hundis have a very long history in India. Written records show their use at least
as far back as the Twelfth century. The merchant Banarasi Das, born 1586,
received a hundi for 200 rupees from his father to enable him to borrow money
to start trading.
• Before the Portuguese or Britishers, the Indian Indigenous traders were well
versed with usage of Hundi instead of Money. For that certain Communities
developed the networking of Individual Bankers(Marvadis) in all the prominent
trade centers
• During the colonial era, the British government regarded the hundi system as
indigenous or traditional, but not informal. They were reluctant to interfere with
it as it formed such an important part of the Indian economy and they also
wished to tax the transactions taking place within the system.
• Official hundi forms were produced incorporating revenue stamps bearing the
image of British monarchs, including Queen Victoria, and disputes between
merchants often entered the court system, so in no way was the system an
underground one even though it did not take place through normal banking
channels.

Names of Spices :
1.cumin seeds – జీలకర్ర
2.Turmeric – పసుపు
3.Cinnamon – దాల్చిన
4.Coriander leaves – కొత్తిమీర్
5.Clove – లవంగం
6.Black Mustard seeds – ఆవాలు
7.Black pepper – మిరియాలు
8.Bay leaves — బిరియానీ ఆకు
9.Cardamom — యాలకులు
10.Fenugreek — మంతులు
11.Asafoetida — ఇంగువ
12.Fennel seeds — సో పు గింజలు
13.Curry leaves — కరివేపాకు
14.Poppy seeds — గసగసాల
15.Sesame seeds – నువుులు
16.Watermelon — పుచ్ికాయ
Carom seeds — వాము
Garlic — వెలు
ు ల్చు
Nutmeg — జాజికాయ
Camphor — కర్పూర్ం
Saffron — కుంకుమపువుు
Mace — జాపత్తి
Wailong — మరాఠి మొగగ
Basil — తులసి
Sandal — చ్ందనం
Soap nuts – కుంకుడు
Betal nuts – వకకలు
Dried ginger – శ ంఠి
Sago — సగు
గ బియయం
Jaggery — బెలుం
Mint — పుదీన
Coriander Seeds — ధనియాలు
Almond — బాదం
Spices : సుగంధ ద్రవ్యాలు

Why Spices were so important for
Europeans
In the Middle Ages, Europeans lacked refrigeration and general hygiene, leading to
food spoiling quickly. Spices were so important because they helped mask the flavor
of not-so-fresh food.
For Europeans the staple food is only meat procured from Beef and Large animals hunted in
the summer. In winter it is not possible for the Europeans to hunt the animals, because of
heavy snow fall all the animals hide in hibernation.
Because of that the people in Europe procure and store the meat in advance for next 6 months
of winter season. Spices are the best food preservatives. Spices not only add flavor to food but
also preserve and improve on the shelf life of food items.
So to preserve the meat in big storage vessels, they badly need our spices. Not only animal
meat but also the bread can be stored for long periods if it is mixed with spices powder.
Addition of spices to food had an effect in reducing food spoilage. Garlic was found to be the
most effective in enhancing food preservation.
After the fall of Constantinople, Europeans unable to get the spices on the land trade routes,
because the Turks were controlling all the land routes, vandalizing the traders.
Then the Pope of the Known world ordered the Portuguese and Spanish kings and queens to
find out a viable sea route to India.

1. Kerala, was a major spice trade center as early as 3,000 B. C.
2. Arab traders controlled the spice trade between Europe and the East, like China, Indonesia,
India and Ceylon for almost 5,000 years until Europeans started looking for a new route to the
Far East after the fall of Constantinople (Istanbul)
3. Christopher Columbus found America by accident, on his way to finding a new route to
India. He found Jamaica instead, which has many spices of its own, like allspice.
4. It was Portuguese explorer Vasco de Gama who was the first to finally reach India in 1497,
successfully navigating the southern tip of Africa. He returned from his landing spot on the
southwest coast of India with his ships laden with nutmeg, cloves, cinnamon, ginger and
peppercorns.
5. Treaty of Tordesillas:The lands to the east would belong to Portugal and the lands to
the west to Castile. The treaty was signed by Spain, 2 July 1494, and by Portugal, 5 September
1494. The other side of the world was divided a few decades later by the Treaty of Zaragoza,
signed on 22 April 1529,(PAPAL BULLS)
6. The Netherlands really, really wanted a small Indonesian island called Run for it’s high
volume of nutmeg, so it traded a few colonies across the Atlantic. One is now called
Manhattan.
7. Wars over those “Spice Islands” in Indonesia, like Run, lasted for about 200 years, between
the 15th and 17th centuries.
8. Piracy was rampant on the seas, especially off the coast of Portugal, preying on the ships
that were carrying spices back to Europe from the Far East.
9. India is the top spice-producing country in the world.
Some Fascinating Facts about Spice Trade

2.Take away from the Yesterday class
•1. ‘Hundi’ and ‘Chitti’ Bills of Exchange, Letter of Credit
•2. Indigenous Banking System, Indian traders
•3. Why Spices were so important for Europeans
•4. Some Fascinating Facts about Spice Trade
•5. Treaty of Tordesillas( Spain and Portugal)
•6. Papal Bull ( Catholic Church Charter)
•7. Spices : సుగంధ దివాయలు (List of Spices)
•8. POSITION OF INDIAN SUBCONTINENT IN WORLD
ECONOMY ( 1 AD UP TO 1498)
•9. The Fall of Constantinople (present Istanbul)
•10. How the Indian Subcontinent was flourished because
of Spices, Handicrafts, Handlooms, Artifacts.

The Fall of Constantinople
Changed the Economic Prosperity of India

All the Roads leads to Constantinople

GALATA Bridge on Bosporus strait

GALATA Tower at Golden Horn Water Way

The seize of Constantinople led by
Mehmed II the Ottoman Turk

Orban, a Hungarian (though some suggest he was
German), His 27 feet (8.2 m) long cannon was
named "Basilica" and was able to hurl a 600 lb
(270 kg) stone ball over a mile (1.6 km).
This huge cannon was first time used by Mehmed
II to blast Theodosian Walls, the intricate series of
walls and ditches protecting Constantinople from
an attack. This Cannon successfully bombarded
the wall in the war to seize Constantinople.

Theodosian Walls, the intricate series of walls and ditches
https://www.youtube.com/watch?v=qe9uOpCCvnI&t=431s

PAPAL BULL: Treaty of Tordesillas
A papal bull is a type of public decree, letters patent,
or charter issued by a pope of the Catholic Church. It is named
after the leaden seal (bulla) that was traditionally appended to
the end in order to authenticate it. The most distinctive
characteristic of a bull was the metal seal (bulla), which was
usually made of lead, but on very solemn occasions was made
of gold, as those on Byzantine imperial instruments often were
(see Golden Bull). On the obverse it depicted, originally
somewhat crudely, the early Fathers of the Church of Rome,
the Apostles Saint Peter and Saint Paul, identified by the
letters Sanctus PAulus and Sanctus PEtrus (thus, SPA
•SPE or SPASPE). St. Paul, on the left, was shown with flowing
hair and a long pointed beard composed of curved lines, while
St. Peter, on the right, was shown with curly hair and a shorter
beard made of dome-shaped globetti (beads in relief).

A papal bull
Pope Alexander VI
Pope Alexander's papal bulls of 1493 confirmed or reconfirmed the rights of the
Spanish crown in the New World following the finds of Christopher Columbus in
1492.

Treaty of Tordesillas
• Isabella I was Queen of Castile from 1474 until she died in 1504,
reigning over a dynastically unified Spain jointly with her
husband, King Ferdinand II of Aragon. She was Queen of Aragon
after Ferdinand ascended in 1479. Together they are known as
the Catholic Monarchs.
• John II, called the Perfect Prince, was King of Portugal from
1481 until his death in 1495, and also for a brief time in 1477. He
is known for re-establishing the power of the Portuguese
monarchy, reinvigorating the Portuguese economy, and renewing
his country's exploration of Africa and Asia
• The Treaty of Tordesillas, signed in Tordesillas, Spain on June 7,
1494, and authenticated in Setúbal, Portugal, divided the newly-
discovered lands outside Europe between the Portuguese
Empire and the Spanish Empire, along a meridian 370 leagues
west of the Cape Verde islands, off the west coast of Africa.

ORIENTAL
OCCIDENTAL
Treaty of Tordesillas:The lands to the east would belong to Portugal and the lands to the
west to Castile. The treaty was signed by Spain, 2 July 1494, and by Portugal, 5 September 1494.
The other side of the world was divided a few decades later by the Treaty of Zaragoza, signed
on 22 April 1529,
EAST
WEST

Map showing main Portuguese (blue) and Spanish (white) oceanic trade routes in the 16th
century, as a result of the exploration during the Age of Discovery. Showing the Spanish colonial
Manila-Acapulco Galleons route (1565-1815) between the Viceroyalty of New Spain (México)
and the Spanish East Indies (Philippines), using the ports of Acapulco and Cavite.

POSITION OF INDIAN SUBCONTINENT IN WORLD
ECONOMY ( 1 AD UP TO 1498)
Between the 1st and the 7th centuries CE, India is estimated to have the largest
economy of the ancient and medieval world, controlling about one third and
one-fourth of the world’s wealth (timeline). The country was often referred to
as ‘Swaranbhumi’ and ‘Swarndweep’ in the writings of many travelers, such as
Megasthenes, Faxian (Fa Hien), Xuanzang (Huen Tsang), Al Beruni (11th
century), Ibn Batuta (11th century), Frenchman Francois (17th century) and
others. They repeatedly refer to the prosperity of the country.
The pre-colonial period in Indian history was an age of prosperity for Indian
economy and made the Europeans embark great voyage of discovery. Initially,
they came to plunder but soon realized the rewards of trade in exchange of gold
and silver.
Despite the growing commercial sector, it is evident that the 18th century
India was far behind Western Europe in technology, innovation and ideas.
With the increasing control of the East India Company causing lack of freedom
and no occurrence of agricultural and scientific revolution, limited reach of
education to the masses, population growth and preference to machines over
manual skills made India a country which was prosperous but with people
who were poor.

The economy of the empire was largely dependent on agriculture. Sorghum (jowar), cotton, and
pulse legumes grew in semi-arid regions, while sugarcane, rice, and wheat thrived in rainy areas.
Betel leaves, areca (for chewing), and coconut were the principal cash crops, and large-scale
cotton production supplied the weaving centers of the empire's vibrant textile industry.
Spices such as turmeric, pepper, cardamom, and ginger grew in the remote Malnad hill region
and were transported to the city for trade.
The empire's capital city was a thriving business center that included a burgeoning market in
large quantities of precious gems and gold. Prolific temple-building provided employment to
thousands of masons, sculptors, and other skilled artisans
Vijayanagara Empire

According to Paes, the king of Vijayanagar had a lot of money. The residents of the city of
Vijayanagar carried on trade in precious stones. Things were in plenty and also cheap.
Barbosa refers to Vijayanagar as “of great extant, highly populous and the seat of an active
commerce in country diamonds, rubies from Pegu, silks of China and Alexandria, and cinnabar,
camphor, musk, pepper and sandal from Malabar.”

■
Instrument Act,
■
Bills Of Exchange, HUNDI, CHITTI, Letter Of Credit (IMPEX)
1. A bill of exchange is a written order binding one party to pay a fixed sum of money to
another party on demand or at some point in the future.
2. A bill of exchange often includes three parties—the drawee is the party that pays the sum,
the payee receives that sum, and the drawer is the one that obliges the drawee to pay the
payee.
3. A bill of exchange is used in international trade to help importers and exporters fulfill
transactions.
4. While a bill of exchange is not a contract itself, the involved parties can use it to specify the
terms of a transaction, such as the credit terms and the rate of accrued interest.

A Hundi for Rs 2500 of 1951, Stamped in the
Bombay Province with a Pre-printed Revenue
Stamp.

Working Model of Bills Of Exchange/Letter of
Credit/Hundi/Chitti/HAWALA
Mirchi Whole
Sale Agent @
GMY
SBI Bank
@
Guntur
MIRCHI
BUYER
from
PUNJAB
The Guntur Mirchi Agent Selling Rs. 25
Lakhs worth of MIRCHI to PUNJAB
Buyer on Credit, They know each other
for a long time and there are some
Commission Brokers who will
guarantee for the sale
The
PUNJAB
Buyer
Promised
to pay
Rs25
Lakhs
after
3months
to Guntur
Mirchi
Agent via
SBI of
Punjab
The PUNJAB Buyer after unloading the MIRCHI
from the Railway Wagons, starts selling the
Mirchi in Punjab and collect the money from
sales and pay Rs 25 Lakh Due amount to the SBI
on the name of the Guntur Mirchi Agent
Now the Mirchi Agent
Load the Cargo in the
Rail Wagons to Punjab
and get (RR) Railway
Receipt From the
Railway Authorities
Slide
1
1
2
3
1
2
3

Credit/Hundi/Chitty/HAWALA
Mirchi Whole
Sale Agent @
GMY
SBI Bank
@
Guntur
MIRCHI
BUYER
fromPUNJAB
The Guntur Mirchi Agent Sells Rs.25
Buyer on Credit, They know each
other for a long time and there are
some Commission Brokers who will
Receipt From the
Railway Authorities
Immediately, the Guntur Agent submits the RR in the Guntur SBI and
Draws the Money worth of Rs.25 Lakh with an acceptable rate of
Discount for a period of 3 months from the Guntur SBI. He use the
money for his business rotation .
As per the Promise the Punjab buyer Pays the Due
Amount Rs.25 Lakhs in the SBI Branch at Punjab at
the end of the 3 months with Interest and Discount
Commission and clears the Guntur Agents Liability to
SBI.
Slide
2
1
2
3
1
2

Credit/Hundi/Chitty/HAWALA
Mirchi Whole
Sale Agent @
GMY
SBI Bank
@
Guntur
MIRCHI
BUYER from
PUNJAB
The Guntur Mirchi Agent Sells Rs.25
Buyer on Credit, They know each
other for a long time and there are
some Commission Brokers who will
Receipt From the
Railway Authorities
The Guntur Mirchi Agent is already got the sanction of HUNDI facility
from Guntur SBI for Certain Amount depends upon his need of the
business, and submit the RR’s in the bank and gets back Rs 25 Lakhs and
invest in the business for purchasing the Mirchi from the farmers.
The Three Parties to the BILLS Of EXCHANGE
1. DRAWEE– SBI Guntur 3
2. DRAWER--- GMA
3. PAYEE---- Punjab Buyer
Slide
3
1
2
3
1
2

Hundi as practiced by Indian Merchant Communities

Types of Hundi
Sahyog Hundi: This is drawn by one merchant on another, asking the latter to pay
the amount to a third merchant. In this case the merchant on whom the hundi is
drawn is of some 'credit worthiness' in the market and is known in the bazaar.
A sahyog hundi passes from one hand to another till it reaches the final recipient,
who, after reasonable enquiries, presents it to the drawee for acceptance of the
payment.
Sahyog means co-operation in Hindi and Gujrati, the predominant languages of
traders. The hundi is so named because it required the co-operation of multiple
parties to ensure that the hundi has an acceptable risk and fairly good likelihood of
being paid, in the absence of a formalized credit monitoring and reporting framework.
Darshani Hundi: This is a hundi payable on sight. It must be presented for payment
within a reasonable time after its receipt by the holder. Thus, it is similar to a demand
bill.
Muddati Hundi: A muddati or miadi hundi is payable after a specified period of time.
This is similar to a time bill.
There are few other varieties; the Nam-jog hundi, Dhani-jog hundi, Jawabee hundi, Jokhami
hundi, Firman-jog hundi, etc.

Types of Hundi
• Nam-jog hundi - such a hundi is payable only to the person whose name is
mentioned on the Hundi. Such a hundi cannot be endorsed in favour of any other person
and is akin to a bill on which a restrictive endorsement has been made.
• Furman-jog Hundi - such a hundi can be paid either to the person whose name is
mentioned in the hundi or to any person so ordered by him. Such a hundi is similar to a
cheque payable on order and no endorsement is required on such a hundi.
• Dhani-jog Hundi - when the hundi is payable to the holder or bearer, it is known as a
dhani jog hundi. It is similar to an instrument payable to bearer.
• Jokhim-Hundi - normally a hundi is unconditional but a jokhim hundi is conditional in
the sense that the drawer promises to pay the amount of the hundi only on the
satisfaction of a certain condition. Such a hundi is not negotiable, and the prevalence of
such hundis is very rare these days because banks and insurance companies refuse to
accept such hundis.
• Jawabi Hundi - if money is transferred from one place to another through the hundi and
the person receiving the payment on is to give an acknowledgement (jawab) for same,
then such a hundi is known as a Jawabi Hundi.
• Khaka Hundi - a hundi which has already been paid is known as a Khaka Hundi.
• Khoti Hundi - In case there is any kind of defect in the hundi or in case the hundi has
been forged, then such a hundi is known as a khoti hundi.

Indigenous Banking System
Agriculture and the domestication of animals were important
components of the economic life of ancient people. In addition to
this, by resorting to weaving cotton, dyeing fabrics, making clay
pots, utensils, and handicrafts, sculpting, cottage industries,
masonry, manufacturing, transports (i.e., carts, boats and ships),
etc., they were able to generate surpluses and savings for further
investment.

Workshops (Karkhana) were prominent where skilled artisans worked
and converted raw materials into finished goods which were high in
demand. Family-based apprenticeship system was in practice and duly
followed in acquiring trade-specific skills. The artisans, craftsmen and
skilled laborer's of different kinds learnt and developed skills and
knowledge, which were passed on from one generation to another.

Rise of Intermediaries
Intermediaries played a prominent role in the promotion of trade. They provided
considerable financial security to the manufacturers by assuming responsibility for
the risks involved, especially in foreign trade. It comprised commission agents,
brokers and distributors both for wholesale and retail goods. An expanding trade
brought in huge amounts of silver bullion into Asia and a large share of that bullion
gravitated towards India.
The institution of Jagat Seth's also developed and exercised great influence during
the Mughal period and the days of the East India Company. Bankers began to act as
trustees and executors of endowments. Foreign trade was financed by loans.
However, the rate of interest for longer voyages was kept high in view of the huge
risk involved.
The Indian subcontinent enjoyed the fruits of favourable balance of trade, where
exports exceeded imports with large margins and the indigenous banking system
benefitted the manufacturers, traders and merchants with additional capital funds
for expansion and development. Commercial and Industrial banks later evolved to
finance trade and commerce and agricultural banks to provide both short-and
long-term loans to finance agriculturists.

TRANSPORT
Transport by land and water was popular in the ancient times. Trade was maintained by
both land and sea. Roads as a means of communication had assumed key importance in
the entire process of growth, particularly of the inland trade and for trade over land. The
northern roadway route is believed to have stretched originally from Bengal to Taxila.
There were also trade routes in the south spreading east and west. Trade routes were
structurally wide and suitable for speed and safety.
Maritime trade was another important branch of global trade network. Malabar Coast, on
which Muziris is situated, has a long history of international maritime trade going back to
the era of the Roman Empire. Pepper was particularly valued in the Roman Empire and
was known as ‘Black Gold’. For centuries, it remained the reason for rivalry and conflict
between various empires and trade powers to dominate the route for this trade. It was in
the search for an alternate route to India for spices that led to the discovery of America
by Columbus in the closing years of 15th century and also brought Vasco da Gama to the
shores of Malabar in 1498.
Calicut was such a bustling emporium that it was even visited by Chinese ships to acquire
items, like frankincense (essential oil) and myrrh (fragrant resin used in perfumes,
medicines) from the Middle East, as well as, pepper, diamonds, pearls and cotton from
India. On the Coromandel Coast, Pullicat was a major port in the 17th century. Textiles
were the principal export from Pullicat to Southeast Asia.

The most famous trading route that connected the east to the west from China to the
Mediterranean sea. This route not only became a major trading route for goods but also a way
to exchange ideas regarding culture, technology, medicine and much more. The main
commodity traded was silk which gave this route its name. Silk was traded from China to Rome
along with horses in exchange for wool, gold, and silver coming in from the Europe. The trade
started during the Han dynasty(207BCE- 220CE). The Chinese took great care of their products
and thus built the Great Wall Of China so as to protect their trade route. The trade route played
an important role in the development of various countries. The beneficiaries include China,
Korea, the Subcontinent, Persia, Europe, Horn Of Africa and Arabia. Apart from the economic
benefits it also led to spread of cultural values, religion, philosophies, art, and various
technologies. The main traders were Indians, Chinese, Arabs, Turkmens, Persians, Somalis,
Greek, Syrians, Romans, Armenians, and Bactrians. The silk road fell out of use and became
unsafe when the Roman empire crumbled in the 4th century CE. It remained unused until the
13th century. The route is also considered to be the main cause of the spread of plague bacteria
which caused Black death and deterioration of empires.

This route was mainly a maritime route used by many countries to trade spices. The availability
of spices like cinnamon, cassia, cardamom, ginger, pepper, nutmeg, cloves was rare in the west.
These commodities were highly sought after. Before the 15th century, the whole market of
spices was controlled by the Arabs and the North African men which made them extremely
costly. With the advent of the Age Of Exploration sailing, long distances became possible and
Europeans used this opportunity to forge economic relations with the east. This made the
middlemen useless and the availability of spices easy and cheap.
SPICE ROAD

It comprises of a network of major ancient land and sea routes connecting the Mediterranean
world with the Eastern and Southern end of the Arabian peninsula(present Yemen and Oman).
The route stretched from the ports of Mediterranean to India and beyond. It included Levant,
Egypt, Northeastern Africa and Arabia. Main items of trade were Arabian frankincense and
myrrh. These two were derived from tree sap and were used as perfumes or burned as incense.
These were also popularly used in burial rituals for embalming. The other items included Indian
spices, precious stones, pearls, ebony, silk, textiles, Horn Of African rare woods, feathers, animal
skins.
Incense ROAD

This route gained popularity because the trading cargo included valuable items like gold. The
commodities traded also included slaves, salt, cloth, kola nuts and cowrie shells. Later on,
multiple other products such as ostrich eggs, feathers, spices and even guns became the chief
trading commodities. The transportation took the form of caravans which consisted of as much as
1200 camels, soldiers, traders and other goods. This route was instrumental in the growth of the
monetary system and state building. The rulers understood the benefit of acquiring land and
commodities. This gave rise to great cities Gao, Timbuktu, and Djenne
Trans-Saharan Trade Route

The course derives its name from amber beads also known as "gold of the north" which are nothing but naturally occurring
precious stones which are found across the coastal areas of North sea and the Baltic sea. Amber has been traded since 3000
BCE and has been found in the necklace of the Egyptian pharaoh Tutankhamen. The Amber road that connects the Baltic sea
to the rest of the Europe was created by the Romans. The Romans used them as ornaments as well as for its medicinal
purposes. Amber is found under the Baltic sea which was formed millions of years ago when the area was covered by forests.
Storms washed the beads to the shore and were harvested by the traders across the shores of the beaches. During the crusades
of the 12th and 13th century, the Teutonic Knights gained control of the business and yielded the profits. Traces of this road
can be still found in Poland where a major highway is named as "Amber Highway".
Amber Road

Trading Communities Strengthened
In different parts of the country, different communities dominated trade. Punjabi and
Multani merchants handled business in the northern region, while the Bhats managed the
trade in the states of Gujarat and Rajasthan. In western India, these groups were called
Mahajan, Chatt is were important traders from the South. In urban centers, such as
Ahmedabad the Mahajan community collectively represented by their chief called
Nagarseth. Other urban groups included professional classes, such as hakim and Vaid
(physician), wakil (Lawyer), pundit or Mulla (teachers), painters, musicians, calligraphers,
etc.
Merchant Corporations: The merchant community also derived power and prestige from
guilds, which were autonomous corporations formed to protect the interests of the
traders. These corporations, organized on formal basis, framed their own rules of
membership and professional code of conduct, which even kings were supposed to accept
and respect.
Tariffs varied from province to province. The ferry tax was another source of income
generation. It had to be paid for passengers, goods, cattle and carts. The right to receive
the labor tax was usually transferred to the local bodies. The guild chief dealt directly with
the king or tax collectors and settled the market toll on behalf of its fellow merchants at a
fixed sum of money. The guild merchants also acted as custodians of religious interests.

Major Exports and Imports
Exports consisted of spices, wheat, sugar,
indigo, opium, sesame oil, cotton, parrot, live
animals and animal products—hides, skin, furs,
horns, tortoise shells, pearls, sapphires, quartz,
crystal, lapis, lazuli, granites, turquoise and
copper etc.
Imports included horses, animal products,
Chinese silk, flax and linen, wine, gold, silver,
tin, copper, lead, rubies, coral, glass, amber, etc.

Leading trade centers in ancient India:
1. Pataliputra: Known as Patna today. It was not only a commercial town, but also a
major center for export of stones.
2. Peshawar: It was an important exporting center for wool and for the import of
horses. It had a huge share in commercial transactions between India, China and
Rome in the first century A.D.
3. Taxila: It served as a major center on the important land route between India and
Central Asia. It was also a city of financial and commercial banks. The city occupied
an important place as a Buddhist center of learning. The famous Taxila University
flourished here.
4. Indraprastha: It was the commercial junction on the royal road where most routes
leading to the east, west, south and north converged.
5. Mathura: It was an emporium of trade and people here subsisted on commerce.
Many routes from South India touched Mathura and Broach.
6. Varanasi: It was well placed as it lay both on the Gangetic route and on the
highway that linked North with the East. It grew as a major center of textile
industry and became famous for beautiful gold silk cloth and sandalwood
workmanship. It had links with Taxila and Bharuch.

INDRAPRASTHA
TAXILA
PESHAWAR
PATALIPUTHRA

7. Mithila: The traders of Mithila crossed the seas by boats,
through the Bay of Bengal to the South China Sea, and traded at
ports on the islands of Java, Sumatra and Borneo. Mithila
established trading colonies in South China, especially in Yunnan.
8. Ujjain: Agate, carnelian, muslin and mallow cloth were
exported from Ujjain to different centres. It also had trade
relations through the land route with Taxila and Peshawar.
9. Surat: It was the emporium of western trade during the
Mughal period. Textiles of Surat were famous for their gold
borders (zari). It is noteworthy that Surat hundi was honoured in
far off markets of Egypt and Iran.
10. Kanchi: Today known as Kanchipuram, it was here that the
Chinese used to come in foreign ships to purchase pearls, glass
and rare stones and in return they sold gold and silk.

11. Madura: It was the capital of the Pandayas who controlled
the pearl fisheries of the Gulf of Mannar. It attracted foreign
merchants, particularly Romans, for carrying out overseas trade.
12. Broach: It was the greatest seat of commerce in Western
India. It was situated on the banks of river Narmada and was
linked with all important marts by roadways.
13. Kaveripatta: Also known as Kaveripatnam, it was scientific in
its construction as a city and provided loading, unloading and
strong facilities of merchandise. Foreign traders had their
headquarters in this city. It was a convenient place for trade with
Malaysia, Indonesia, China and the Far East. It was the centre of
trade for perfumes, cosmetics, scents, silk, wool, cotton, corals,
pearls, gold and precious stones; and also for ship building.
14. Tamralipti: It was one of the greatest ports connected both by
sea and land with the West and the Far East. It was linked by road
to Banaras and Taxila.

PULICOT
KAVERI PATTINAM
TAMRALIPTI

POSITION OF INDIAN SUBCONTINENT IN
WORLD ECONOMY ( 1 AD UP TO 1991)
Between the 1st and the 7th centuries CE, India is estimated to have the largest
economy of the ancient and medieval world, controlling about one third and
one-fourth of the world’s wealth (timeline). The country was often referred to
as ‘Swaranbhumi’ and ‘Swarndweep’ in the writings of many travelers, such as
Megasthenes, Faxian (Fa Hien), Xuanzang (Huen Tsang), Al Beruni (11th
century), Ibn Batuta (11th century), Frenchman Francois (17th century) and
others. They repeatedly refer to the prosperity of the country.
The pre-colonial period in Indian history was an age of prosperity for Indian
economy and made the Europeans embark great voyage of discovery. Initially,
they came to plunder but soon realized the rewards of trade in exchange of gold
and silver.
Despite the growing commercial sector, it is evident that the 18th century
India was far behind Western Europe in technology, innovation and ideas.
With the increasing control of the East India Company causing lack of freedom
and no occurrence of agricultural and scientific revolution, limited reach of
education to the masses, population growth and preference to machines over
manual skills made India a country which was prosperous but with people
who were poor.

India begins to Reindustrialise
After Independence, the process of rebuilding the economy started and India
went for centralized planning. The First Five Year Plan was implemented in 1952.
Due importance was given to the establishment of modern industries, modern
technological and scientific institutes, space and nuclear programmes. Despite
these efforts, the Indian economy could not develop at a rapid pace. Lack of
capital formation, rise in population, huge expenditure on defense and
inadequate infrastructure were the major reasons. As a result, India relied heavily
on borrowings from foreign sources and finally, agreed to economic liberalization
in 1991. The Indian economy is one of the fastest growing economies in the world
today and a preferred FDI destination. Rising incomes, savings, investment
opportunities, increased domestic consumption and younger population ensures
growth for decades to come.
The recent initiatives of the Government of India such as ‘Make in India’, Skill
India’, ‘Digital India’ and roll out of the Foreign Trade Policy (FTP 2015-20) is
expected to help the economy in terms of exports and imports and trade
balance.

History of Trade and Commerce in Ancient India . p1 VIVA VVIT

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History of Trade and Commerce in Ancient India . p1 VIVA VVIT