ABSTRACT
The rise of modern industries in colonial India, relied on new sources of capital and labour that led to the development of modern capital and labour markets. Bagchi's investment constructed an empirical narrative of the rise of modern industry in colonial India while staying within the mould of the nationalist historiography. This chapter breaks away from these debates and uses insights from informational and institutional economics to trace the development of the modern industrial sector in colonial India. It explores the role of information flows and social networks in product, capital and labour markets. The chapter also explores the political economy implications of the pattern of industrialization. The Indian Jute Mills Association (IJMA) was set up with the primary objective to coordinate output decisions to keep prices high. Finally, the chapter summarizes the debates on the pattern of industrialization in colonial India using three well-researched strands of the literature.
