Surat as a Business Centre

8/9/2019 Surat as a Business Centre

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Surat as a business centre


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Eurocentric view

In the late medieval period, commerce in

India was static

Indian merchants played a negligible rolein Indian Ocean trade

Later, when the British came into power

Self-serving partners ofE

uropean tradingcompanies


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The truth is different

Surat, and other centres, had well-established commercial institutions andpractices

The commercial activity was lively,stimulating, flourishing and systematic

Surat provides the classic example of the

vitality and resilience of Indian businesssystem to respond to the large-scaletransformations of the 17th century


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The dominance of Surat

Unquestioned capital of emporia trading in

Western Indian Ocean

Emporia were places which the traders ofone nation had reserved to their business

interests within the territory of another nation

Indian merchants and Indian products were

dominant Gujarati traders organised direct voyages with

their shipping and capital


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Surat II

Goods imported silks, carpets, brocades, dried

fruits, rosewater, wines, dye roots, drugs, coffee,

horses, coral, etc

Merchants from the ME purchased Eastern

commodities

The trade surplus (exports imports) was repatriated

to India as bullion, coins, or like goods

The pilgrim traffic Surat as departure point

was significant, and also facilitated trade


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Surat III

Trade was also firmly entrenched with Sumatra,

Java and Malaya

Surat was also an important transhipment centre

from SE Asia and W Asia and vice versa

In fact, English traders saw the Surat traders as

threats

T

heir attempts to infiltrate was resented by the Surattraders

1619, they complained to the Mughals for redress


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Structure of Surat trade

At one level small scale traders carriedout business

At another level merchants whosewealth and power compared favourablywith princes

Bourgeoisie had considerable

accumulation of capital Rich merchants had access to very large

amounts of capital


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Virji Vora

One of the richest man in the world at that

time

Lender of vast sums of money toEuropean companies

Dominant in Surat branches in

Ahmedabad, Agra, Burhanpur, Konkan,

Malabar and Coromandel coasts

Owner of a large fleet of ships


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Other rich merchants

Haji Zahid Beg

Shivaji demanded > ` 3 lacs from him

Hari Vaisya

Prominent broker and merchant

Good contacts with Dutch and English Cos Henry

Bessy

By 1631, both the European companies were deeply

in debt to him

Other merchants owned more than 200 ships

each


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Merchant families

Spread across large areas and countries

Worked as an integrated group, using

each others ships, capital, etc Major CSR activities

Veterinary hospitals

T

emples, mosques Reservoirs, sarais

Bridges, wells, cattle reservoirs, etc


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Rulers enter trading

Early 17th century

Rulers and officials invest in shipping and

overseas commerce

Moghul emperors owned ships trading with

the Red Sea

Moghul aristocracy was an important source

of capital for sea-borne trade Such capital investment most evident in

Surat


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The merchants & the rulers

Clear link of common mercantile and monetary

interests of both

European companies

Seen as opportunity for commercial expansion

Also seen as threat to existing trade network

Moghuls acted on the side of the local merchant

networks and took punitive measures againstthe European companies


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Self-management

Ports and markets operated with aconsiderable amount of autonomy

Merchants & artisans organised intocommunities Panch or artisan guild headed by a Patel

By 16th century, guild system had become

consolidated and prominent in commercialworld

Authority of Mahajan & guild organisationsover their members was strong


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Monetary supply

Monetary media in the form of gold, copper and silver

By 1600, supply of cheap American silver was plentiful

Surat became a major centre of minting rupees after1620

Regulations forced European and other merchants toconvert to Moghul coinage minted in Surat

By 1666-76, Surat alone was issuing 25.3% of the coinsof the Moghul empire

In 1672, Surat mint turned out 30,000 rupees a day forthe English company alone

Surat handled coins from all over the world, includingPersia, Europe and even Mexico!


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Commercial activities

Merchants

Shipping

Banking

Money lending

Bills of exchange transactions

Business insurance

Hundi facilities across India and even abroad Accepted deposits from their clients, albeit to a

limited extent


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Money to make money

Money was transformed into usurious

capital

Speculation insuring goods in transit,advances at high rates of interest

Hundis became fully saleable hence a

channel of investment

Mainly conducted by professional money

lenders sarafs (shroffs)


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Capital for production

The dadni system A system of cash advances, called dadni loans, developed

whereby prospective buyers of cloth would advance the money,in return for which, in a sellers market, the lender/buyer wouldpre-empt delivery of the finished goods from the weaver

In the case of dadni loans, the weaver was given the loan by theprospective buyer of his product which thereby bound him todeliver the finished goods to that buyer. But, given the money,the weaver was left to his own devices to procure his rawmaterials and work on them. The buyer-moneylender, the dadni-merchant, did not handle the raw materials or equipment andwas not involved in the process of production in any way.

By contrast, in the 'putting out system' of the English, theentrepreneur took the raw materials round to the weavers, fromdoor to door, and collected the finished cloth. He soon realisedthat instead of going from door to door, he could simplify his taskby bringing all his weavers under one roof.


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The brokers

Link between buyers and sellers

Producers, wholesalers, retailers, consumers

Highly sought after, particularly in large markets

1634 English agents it is most usual to effect

business at a distance by a broker

2% of the value of the transaction

Brokers also traded on their own accounts

And, associated with the payment of customs

and tolls on roads


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The connections of Surat

To both the fore and the hinterland The leading mercantile conglomeration of India in the

17th century

Centres like Cambay, Bharuch, Navsari, Rander,

Variao, Dumas, Dumka, Olpad closely connectedwith Surat

Providing commodities like textiles, services likebleaching, dyeing, transport, supplies for ships,sailors, etc

Good and easy communication Well-organised merchant community in the

hinterland as well


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Shipbuilding in Surat

Shipbuilders of Surat were highly praisedfor their craft, design and workmanship

Mainly Konkani and Parsi by ethnicity

Advantages

Very good quality

Superiority of craftmanship

Lower cost than Europe An early example of cost arbitrage working to

Indias advantage


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The long distance links

Export goods cotton piece goods, yarn,

indigo

Silk industry in Surat and Ahmedabad

Yarn and raw silk from Kasimbazar, Bengal

Pepper from Malabar and Kanara

Some imports by late 17th century

Coffee, tobacco, opium

Silk and sugar were being re-exported


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The decline of Surat

Entrepreneurial exodus to Bombay

By 1673, some leading Surat merchants,e.g. Bhimji Parekh, had migrated toBombay

We will examine reasons later on

Today, Surat remains a very centre for a

few specific industries diamonds, textiles and recently for diamond-

studded gold jewellery manufacturing.

Documents

Surat as a Business Centre