Political warfare in British colonial India aided a British minority in maintaining control over large parts of present-day India, Bangladesh, Pakistan and Burma.
The East India Company obtained a foothold in India in 1757 and from that start expanded the territory it controlled until it was the primary power in the subcontinent. After the Indian Rebellion of 1857 the British Government nationalised the Company creating the British Raj. The Company lost all its administrative powers; its Indian possessions, including its armed forces, were taken over by the Crown pursuant to the provisions of the Government of India Act 1858. A new British government department, the India Council, was created to handle the governance of India, and its head, the Secretary of State for India, was entrusted with formulating Indian policy. The Governor-General of India gained a new title (Viceroy of India), and implemented the policies devised by the India council. As a result of their relatively small presence in the country the British resorted to many methods to retain control of India.
Economic manipulation
Once it had established its factories (trading bases) in India the East India Company started to highlight the benefits of trade with them to the local merchant classes in Surat and Bengal. This helped lure the merchant class away from local rulers to the East India Company as when it persuaded local financiers to abandon the Bengali nawab in 1756.
The East India Company recruited James Steuart in 1772 to help advise on the political aspects of the Indian and Bengali economy. Steuart recommended creating a central bank and making local bankers and moneylenders directors to soak their pooled wealth back into the economy, as well as a more efficient system of taxation to keep that wealth from falling back into their hands. While this policy was not adopted, the Company did establish a more universal currency based on the sicca rupee to restrain the power of the shroff moneylenders.
Later when the Company had increased its power and influence in the subcontinent it started acting as a government. In 1793, Lord Cornwallis abolished the right of local landholders to collect dues on trade which cut back on the feudal powers of the princes, limiting their military strength and turning them into landlords.
Indian Civil Service
After the Indian Rebellion in 1857, the new British administration created a close partnership with certain land-holders and princes to strengthen their grip on power. This was either to create a colonial hierarchy of the various ethnic groups in India, "each arranged into appropriate social classes, whose spiritual and material improvement were entrusted to the paternal direction of gentlemanly rulers" or 'a single hierarchy all its subjects, Indian and British'.
The Army and the Civil Service were the main instruments of British power, staffed by only a small number of European officials. This imperial service became, "a large vested interest of the educated upper middle class. By 1913–14, for example, the Government of India devoted no less than 53 million pounds (65 percent of the total budget of 82 million pounds) to the army and civil administration. Imperial service enabled the mainly southern, professional and public-school culture to reproduce itself abroad and also... create facsimiles among elites in the new colonies established. The Indians in the Civil Service were to be brought up as gentlemen and an "Eton in India" was established, thereby perpetuating a political ruling class of Indians owing their position to England. The native Indians in the Civil Service became the bridge by which the British governed their territories in India or as the official Zachary Macaulay said in 1834, we "must do our best to form a class who may be interpreters between us and the millions whom we govern; a class of persons, Indian in blood and colour, but English in taste, opinions, in morals, and in intellect." The Indian civil service (ICS) held nearly every senior, non-military, position in the government and through the creation of a new ruling caste, and propaganda, "invented an ideology of imperial service and amassed a scholarly literature in which India’s history, society, economy and culture were interpreted as a story of chaos from which only the "steel frame" of Civilian [Indian Civil Service] rule had been able to save them."