Question: The Indian Cotton export market collapsed, and the local market shrank at the beginning of the 19th century. Why?
Answer: The British cloth was very cheap. The Indian cloth was expensive as it was a hand-made and little bit uncomfortable at that time. Their was an increase in the number of mills in Britain as a result of which huge quantities of cloth was produced at a very large scale. In comparison to India Britain was producing on a very large scale. When the American civil war broke, there was pressure on India for all the imports in England. As a result, a huge amount of loan was taken, and the debt increased at cotton was bought at an exorbitant price , after the war, the imports again came from America thus Indian producers had so much debt that couldn’t be repaid thus it declined on a very large scale.