Trade and Commerce

Business is an activity to fulfil the need for goods by the people, where the goods are produced and sold to the consumers as per their needs. A business or trade aims to earn money by selling goods and services to the people. We must know the concept and importance of trade and commerce. We will further discuss the factors which helped the growth of commerce.

History of Trade and Commerce

The physical environment of a country helps in its commercial evolution. As in the case of India, it is surrounded by land in the north and water in the south contributing as a major advantage for trade since the history of trade and commerce in India. Ancient Indian traders indulged in the barter system for trade, in which goods were exchanged in return for goods.

India participated in the export of silk, precious stones, cotton, and sugar through the silk route. While the country traded spices via the sea route, known as the spice route. Civilisations like Harappa and Mohenjodaro developed trade relations with Mesopotamia, and trade in terracotta pots, precious stones, pearls, gold, silver, and other items occurred between the two countries.

Ancient Trade Routes of India

Indigenous Banking System

An Indigenous banking system was a system in which money was accepted to grant loans to the people. The indigenous banks used to grant the manufacturers or traders loans to grow and expand the trade. Hundi and Chitti were the documents used for the transactions which were passed from hand to hand.

In the subcontinent, the hundi was a common form of exchange. It involved a contract that:

• Guaranteed the payment of money, the unconditional promise, or the order.

• Was transferable through legal negotiation.

The practice of lending money in exchange for precious metals helped manufacturers to produce more goods, hence leading to economic growth.

Promotion of Trade in India with the Rise of Intermediaries

An intermediary is an individual or a third party providing financial security to the manufacturers, considering the risk involved in foreign trade. Loans were used to finance international trade. There are two types of intermediaries:

• Financial Intermediaries: These institutions are a link between two parties where a financial transaction happens. For example, investment bankers, insurance companies, stock exchanges and pension funds.

• Trading Intermediaries: An individual who acts as a link between two parties while a business deal takes place is known as a trading intermediary. Examples of trading intermediaries are retailers, wholesalers, and consultants.

The availability of loans on trade resulted in more exports than imports in ancient India, eventually benefiting ancient Indian traders and manufacturers. In this way, intermediaries helped India in the growth and expansion of trade and commerce.

Merchant Corporations

For the protection of the interests of the traders, guilds for the merchant community were established. Even the king had to recognise and accept the rules and protocols these formally organised corporations created for members. Since these taxes were the primary source of income, traders were required to pay the taxes imposed on the majority of imports (either in cash or in-kind).

Transport - An Important Means of Trading

Transport was one of the important factors that helped grow commerce. In ancient times, trade relied mainly on land and water transportation. The key role of the trade route was to transport goods from the area of production to the ultimate consumer. Roads held an important role in expanding trade, not just inland but also in long-distance trade with various countries in ancient India. India not just traded the goods like coloured gemstones and ornaments for metals but also crops like barley, wheat, melon seeds, mustard and dates.

Another important trade means was maritime trade, further establishing the global trade network. Black pepper, known as black gold, was traded since the era of the Roman empire by the Malabar Coast.

Major Trade Centres in Ancient India

The following are the major trade centres of India that helped flourish the trade and led to the evolution and growth of commerce:

• Broach - It was the most significant trade route in western India. Since it was situated on the banks of the Narmada river, it connected important roadways.

• Indraprastha - It was one of the central trading points in ancient India. It lies in present-day New Delhi. Most significant routes from North, East, West and South converged here.

• Kanchi - This port was an important place of trade with the Chinese. The goods like pearls, glass and stones were bought by them in exchange for gold and silk.

• Mathura - It was a hub for trade, and the locals relied on it for their livelihood. Numerous roads from south India passed through and surpassed Mathura.

• Peshawar - It acted as an important junction for exports of wool and import of horses. In the first century A.D., it was a key player in commerce between India, China, and Rome.

• Taxila - Taxila was a crucial land route between India and Central Asia. The city was a hub of commercial and financial banks. The remarkable Taxila University flourished here.

Summary

Trade and commerce aim to provide finished goods to consumers to earn money. Ancient Indian traders used the barter system for trade. In the indigenous banking system, loans were granted in exchange for money. Foreign trade was carried out with the help of intermediaries in which financial security was provided for the trade.

The two types of intermediaries were financial and trading intermediaries. Merchant corporations were established for the protection of the interest of traders. Roads and Maritime trade routes were majorly used in ancient India by traders to transport goods. Broach, Indraprastha, Kanchi, Mathura, Peshawar, and Takshila were the major trade centres in ancient India.