Millions of Indians migrated internally within the British Empire during the 19th and 20th centuries. While some migrated as labor migrants, many others did so as merchants and other businesspeople. By the start of World War II, more than 200,000 Indians worked in trade outside of India. These merchants played key roles in the British Empire within India and the larger Indian Ocean economy. Several conditions facilitated and perhaps caused Indian merchant migration within the British Empire. First, precolonial Indian commerce continued and adapted to imperial trade patterns. Second, within India, British rule lowered transaction costs and opened markets. Third, British rule brought preferential access to British colonies outside India, access that was denied to merchants from outside the British Empire. Internal merchant migration within India shows the importance of distinct religious, caste, and linguistic groups, many of which were active before British control. Gujarati-speaking merchant migrants and Parsis were bulwarks of Bombay’s commercial class. Specific merchant communities migrated within trading networks across India as railroads connected the subcontinent. Outside India, merchants—often from these same groups—accompanied British expansion in Asia and Africa. In Burma and Malaya, Chettiars from the south formed banking and trading networks that tied these colonies closer to the Indian economy. Chettiar finance was crucial in the development of industry in both Burma and Malaya. Indian businesspeople dominated commerce in East Africa and played key roles in commerce. Indian businesses in Uganda developed local commercial agriculture and industry, and Indians in South Africa played a large role in commerce before legal restrictions reduced their involvement. Distant colonies in which indentureship was the dominant form of migration experienced a transition from labor to trade, with merchant migration playing a smaller role. These colonies do not fit the pattern of merchant migration seen in India and the larger Indian Ocean economy, but they illustrate the role of Indian tradespeople outside India.
Since the seminal publication of Kenneth Pomeranz’s The Great Divergence (2000), there has been a continuing upsurge of writings on the possible reasons behind the rise of the West from a “global perspective.” Most of these studies focus on comparisons between Western Europe and China. Yet, in recent years works on India and the great divergence have followed suit, taking up research questions that have not been as prominent since the proliferation of debates on the subcontinent’s pre-colonial potentialities for capitalist development in the 1960s and 1970s. As of now, the paucity of quantitative data complicates endeavors to compare pre-colonial India with Europe and explore the underlying reasons behind the great divergence. Case studies examining the socio-economic history of a number of South Asian regions are still needed in order to conduct systematic comparisons between both advanced and underdeveloped regions of the subcontinent and those of Europe. The existing evidence, however, suggests that some of the "core areas" of 16th- to 18th-century India had more or less comparable levels of agricultural productivity, transport facilities (during the dry season), military capabilities in terms of ground forces (e.g., Mysore and the Marathas), commercial and manufacturing capacities (especially in textile, ship, and metal production), and social mobility of merchants (e.g., in Gujarat). Moreover, Indian rulers and artisans did not shy away from adopting European know-how (e.g., in weapon and ship production) when it redounded to their advantage. On the other hand, South Asia possessed some geo-climatic disadvantages vis-à-vis Western Europe that also impeded investments in infrastructure. India seems to have had a lower degree of consumer demand and lagged behind Western Europe in a number of fields such as mechanical engineering, the level of productive forces, higher education, circulation of useful knowledge, institutional efficiency, upper-class property rights, the nascent bourgeois class consciousness, and inter-communal and proto-national identity formations.