How did the Assumption of Diwani Benefit the East India Company?

By BYJU'S Exam Prep

Updated on: November 9th, 2023

The assumption of Diwani benefited the East India Company in meeting their trade expenses with the revenues that they collected in India. In 1765, the East India Company was made the Diwan of Bengal, sanctioned by the then-Mughal Emperor. Robert Clive accepted the title on behalf of the company. Appointed as a Diwan, the East India Company held the notion of a Diwani. According to the Diwani system, they got the right to collect revenue and take over the administration of the Bengal region.

Benefit of Diwani System in the East India Company

The inclusion of the Diwani system benefited the East India Company by cutting down on gold and silver being imported from Britain to buy goods in India. Now, with civil revenue, the company could buy Indian goods using Indian revenue.

This helped the Company to purchase textiles such as silk and cotton in India and to maintain its offices, forts, buildings, and the Company’s troops by using the Diwani revenue.

In the early 18th century, the British government started increasing its trade with India. Since the East India Company had no goods to sell in trade, they had to buy Indian goods in exchange for the gold and silver coming from Britain. Here’s how it changed after Diwani’s notion:

  • The East India Company got civil rights by being appointed as the Diwan of Bengal in 1765.
  • According to this authority, the British could collect revenue and take over the administration of Bengal.
  • They no longer had to use their own gold and silver to trade in India. They could use civil revenue for conducting business.

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