Even before the coming of the Europeans the Indian cotton goods had earned popularity abroad. Indian cotton-goods had a steady market in foreign countries including Britain. In the beginning the English East India Company used to purchase Indian cotton-goods and sell them abroad.

But after 1757 the policy of the British traders was to flood the Indian markets with foreign goods. The causes which were responsible for the decline of the Indian cotton industry are as follows:

First, the English traders forced the cotton-weavers to sell their products at a price dictated by them. Second, the English traders had monopolized the sale of raw-cotton at a higher price.

Third, the decline of the cotton industry was also due to the fall of the native states that were the chief promoters of the cotton-weavers. These are some of the factors responsible for the destruction of the cotton industry.