The British policy towards princely states changed with time. It can be described in the following five phases:
- Company's struggle for equality with Indian states
- Policy of ring fence.
- Policy of subordinate isolation
- Policy of subordinate union
- Policy of equal federation
1. Company's struggle for equality with Indian states (1740-65)
Prior to 1740, the British East India Company was a commercial body with very little political ambition. The political ambitions of the Europeans in India may be dated from 1740 when Dupleix started dabbling in Indian politics with a dream of laying down foundations of French dominion in India. For the defence of their commercial interests, the English followed the example of Dupleix. In 1757, the English won the Battle of Plassey and became the political force behind the Nawabs of Bengal. The Company became a ruling power after the Emperor Shah Alam II granted it Diwani of Bengal, Bihar and Orissa in 1765. Till 1765, the Company's stood in relation to Indian states in position of subordination and was striving for a status of equality with them.
2. Policy of Ringfence (1765-1813)
Warren Hastings' wars against Mysore and Maratha were fought with the objective of establishing an equality of status with Indian rulers. This period saw the emergence of policy of creating buffer states around the territories of the Company. It was the policy of defence of the neighbours frontiers for safeguarding the territories of the Company. The chief danger to the Company's territory was from the Afghan invaders and Marathas. To safeguard against these danger, the Company undertook to organise the defence of the frontiers of Oudh on the expense of Nawab. The defence of Oudh consisted of Bengal at that time.
With the arrival of Lord Wellesley, the Company's relations with the Indian states underwent a change. He aimed at bringing Indian states within the ambit of British political power and military protection. This policy may be described as the extension of ringfence. Wellesley described bis policy as defensive because he felt compelled to extend British dominions to counteract the French designs.
3. Policy of Subordinate Isolation (1813-57)
The wars of Lord Hastings opened a new stage in the relations of the British East India Company and the Indian states. The Imperial idea grew and the 'theory of paramountcy' began to develop. The treaties that he concluded with the Indian states were not on the basis of reciprocity but imposed the obligation on part of Indian states to act in subordinate cooperation with the British. Thus, the Indian state surrendered all forms of external sovereignty.
The decades following the retirement of Lord Hastings saw the rapid increase of the influence of Company in the internal administration of Indian states. The British Residents were usually the organs of communication between the British authorities and Indian princes. Gradually their influence and power increased. The policy of annexation of states whenever and wherever possible was laid down in 1834.
4. Policy of Subordinate Union (1857-1935)
The assumption of direct responsibility by the British Crown in 1858 provided an opportunity for better definition of relation between the British and Indian states. The Queen's Proclamation announced to abandon the policy of annexation. The change in policy was due to the loyal attitude of princes during the Revolt.
The friction of Indian princes standing on a status of equality with the British Crown as sovereign independent states finally came to an end. The Royal Titles Act of 1876 put the final seal on the relationship by proclaiming the Queen as Kesar-i-Hind (Queen Empress of India). The British exercised complete and undisputed control over the external and internal affairs of Indian states.
5. Policy of Equal Federation (1935-47)
The Indian princes were invited at the Round Table Conference, and in federal structure proposed by the Government of India Act, 1935, Indian states were allotted 125 seats out of 375 seats in the Federal Assembly and 104 seats out of 260 in the Council of states.
Although the Federation never came into existence because adequate number of states did not agree to join it.