During the colonial era, how did worldwide empires like the British and French profit from their colonies?

by QuarterOztoFreedom

Was it a direct taxation? Or did they exploit the labor? Or some other way perhaps?

Shriman_Ripley

First and foremost Trade. Access to raw materials for manufacturing as well as access to market for finished products. In fact East India company started as a trading outpost. The policies were decided in such a way that British would buy raw materials from India, manufactured in Britain and then sent back to India. There were high taxes on import of finished goods from India, whereas no tax on import of finished goods from Britain and into India.

Initially the company was involved in conflicts when the local rulers who have given them license to trade tried to revoke the said permission. Once victorious they got into agreements where they would be paid a large amount of fine. This led to taxation, first by local rulers on behalf of the company as in Bengal after the battle of plassey in 1757 and later by the company itself. In this scenario, taxation and exploitation of labour can be assumed to be one and the same. Around this time much of indian product of agricultural. There was high tax on land and hence the farmer would have to work hard in order to be able to meet the tax payments. Otherwise he would be stripped of the land.

A lot of landowners were stripped of their land it was passed onto either loyal indians or British landowners. There were a lot of plantation in Assam(Tea), Bihar(Indigo) which were owned by British.