• In the 17th century, the European companies were peaceful trading bodies, seeking the favour of the Mughal Government rather than challenging its authority.
• Towards the close of the 17th century the decline of the Imperial authority and the political disorders in the country particularly, in South India brought about a change of policy.

Bengal

• The East India Company secured valuable privileges in 1717 under a royal Farman by the Mughal, which had granted the Company the freedom to export and import their goods in Bengal without paying taxes and right to issue passes or dastaks for the movements of such goods.
• The Company servants were also permitted to trade but were not covered by this Farman. They were required to pay the same taxes as Indian merchants.
• This Farman was a perpetual source of conflict between the Company and the Nawabs of Bengal. All the Nawabs of Bengal from Mushld Quli Khan to Alivardl Khan, had ob­jected to the English interpretation of the Farman of 1717. They had compelled the Company to pay the lump sums to their treasury and firmly suppress the misuse of dastaks.
• Matters came to a head in 1756 when the young and quick tempered Siraj-ud-Daulah succeeded his granfather, Alivardi Khan. When the Nawab ordered the English to demolish their fortifications at Calcutta, the British re­fused to do so. It was now determined to remain in Bengal against the wishes of Nawab and to trade there on its own terms.
• Nevertheless the English company demanded the absolute right to trade freely in Bengal irrespective of the Bengal Nawab’s orders. English joined a conspiracy organised by the enemies of the young Nawab to place Mir Jafar on the throne of Bengal, they presented the youthful Nawab (Siraj-ud-Daulah) with an impossible set of demands. Both sides realised that a war to the finish would have to be fought between them. They met for the battle on the field of Plassey, 20 miles from Murshidabad, on 23rd June 1757.
• The fateful battle of Plassey was a battle only in name. The major part of the Nawab’s army led by the traitors Mir Jafar and Rai Durlabh, took no part in the fighting. The Nawab was forced to flee and was captured and put to death by Mir Jafar’s son Miran.
• The English proclaimed Mir Jafar, the Nawab of Bengal and set out to gather the reward. The company was granted undisputed right to free trade in Bengal, Bihar and Orissa. It also received the Zamindari of the 24 Parghanas near Calcutta.
• Mir Jafar paid a sum of Rs. 177, 00,000 as compensation for the attack on Calcutta to the company and the traders of the city. Mir Jafar’s treasury was soon emptied by the demands of the Companies officials for presents and bribes.
• When Mir Jafar hesitated to fulfil their all expectations they forced him in a October 1760 to leave the throne in favour of his son-in-law Mir Qasim, who rewarded his benefactors by granting the Company the zamindari of the districts of Burdwan, Madinapur and Chittagong and giving handsome presents, totalling 29 lakhs of rupees to the high English officials.
• Mir Qasim, however belied English hopes and soon emerged as a threat to their position and designs in Bengal. Mir Qasim was defeated in a series of battles in 1763 and fled to Avadh where the formed an alliance with Shuja-ud-Daulah, the Nawab of Avadh and Shah Alam, the fugitive ruler of Mughal Empire. (In 1763 the British had restored Mir Jafar as Nawab of Bengal). The three allies crashed with the English army at Buxar on 22nd October, 1764 and were thoroughly defeated.
• Company became the real master of Bengal atleast from 1765. Its army was in sole control of its defence and the supreme political power was in its hands. The Nawab depend for his internal and external security of the British.
• As the diwan, he East India Company directly collected its (Bengal, Bihar, Orissa) revenues, while through the right to nominate the Deputy Subedar, it controlled the nizamat or the police and judicial powers.