From the time of Sir Thomas Roe, the English Factors in India followed a policy of friendly relations with the Mughal Emperors and the Indian Princes. About 1616, the English got permission to build a factory at Masaulipatana. In 1639, Francis Day applied and got from the Ruler of Chandragiri a lease of land and later on the famous Fort St. George was built on the same land.
Although Shah Jahan took action against the Portuguese, he was friendly disposed towards the English and allowed to build factories at Hugli and Kasim Bazar in 1650-51. He also gave them certain trade concessions. The English East India Company got the Island of Bombay from Charles II in 1668 on an annual rent of £60.
On account of the general insecurity prevailing in the Deccan in the time of Aurangzeb, the English fortified their possessions. In 1684, the Directors approved of the policy of their factors in India and wrote back to say that ‘ though our business is only trade and security, we dare not trade boldly, nor leave great stocks…. where we have not the security of a fort.”
In 1685, Shayista Khan, Governor of Bengal, imposed local duties upon English Traffic. The Company openly defied the authority of Aurangzeb and resisted with force the demands of the Mughal Viceroy. The result was that a sort of semi-official war between the English and the Mughal Empire started. James II, the King of England, was persuaded to send warships to capture Chittagong. The expedition was a total failure. Its only result was to infuriate Aurangzeb.
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The latter ordered the capture of English Factories at Surat, Masaulipatnam and on the Hugli. The English Factors were forced to leave this place in 1688. This brought the English to their senses. Peace was restored between the parties. The new Governor of Bengal invited Charnock, the Chief of the English Factory at Hugli, to return to his settlement in 1690. Charnock got the Royal Firman and was allowed to start a small station which later on grew into the present city of Calcutta.