The advent of colonialism in India produced major upheavals in the economy, causing disruptions in production, trade, and agriculture. A significant change was the demise of the handloom industry due to the flooding of the market with cheap manufactured textiles from England.

Before colonisation, India was a major supplier of manufactured goods to the world market. After colonisation, India became a source of raw materials and agricultural products and a consumer of manufactured goods, largely for the benefit of industrialising England. India was more fully linked to the world capitalist economy.

New groups, especially Europeans, entered into trade and business, sometimes in alliance with existing merchant communities and in other cases by forcing them out. Some merchant communities improved their position by re-orienting themselves to changing economic circumstances, while new communities emerged to take advantage of the opportunities provided by colonialism.

Tribal areas were 'opened up' through roads and 'pacification' to exploit rich forest and mineral resources. This led to an influx of traders, moneylenders, and non-tribal people. The local tribal economy was transformed as forest produce was sold to outsiders, and tribals were recruited as labourers for plantations and mines. These changes linked tribal economies to wider markets, often with negative consequences for local people.