The East India Company developed beyond a purely commercial enterprise when war between Britain and France spread to India in the mid-1740s. The Company established military supremacy over rival European trading companies and local rulers, culminating in 1757 in the seizure of control of the province of Bengal.
In 1765, the Mughal Emperor granted the Company the diwani (the right to harvest the revenues of Bengal, Bihar and Orissa), which provided funds to bolster the Company’s military presence in the sub-continent. Further territorial acquisitions in India during the late eighteenth and early nineteenth centuries cemented the change in the Company’s role from mere trader to a hybrid sovereign power.
By 1803, at the height of its rule in India, the British East India company had a private army of about 260,000—twice the size of the British Army. The company eventually came to rule large areas of India with its private armies, exercising military power and assuming administrative functions. Company rule in India effectively began in 1757 and lasted until 1858, when, following the Indian Rebellion of 1857, the Government of India Act 1858 led to the British Crown’s assuming direct control of the Indian subcontinent in the form of the new British Raj.