Charter Act 1813 – Background, Provisions, Features

Indian Polity Mindmap Notes for UPSC » Historical Background » Charter Act 1813

Charter Act of 1813 renewed the company’s charter for another 20 years. It is also called the East India Company Act, 1813 and it clearly defined the constitutional position of the British territories in India.

Charter Act 1813 upsc notes
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This topic of “Charter Act 1813 – Background, Provisions, Features” is important from the perspective of the UPSC IAS Examination, which falls under General Studies Portion.


  • Napoleon Bonaparte’s Continental System in Europe: prohibited the import of British goods to French allies in Europe through the Berlin decree of 1806 and the Milan Decree of 1807 → British traders and merchants suffered → they demanded permission to trade in Asia and to dissolve the monopoly of the East India Company.
  • Adam Smith’s Laissez-Faire (Free Trade Policy): became popular in Britain → supporters argued for the ending of the company’s monopoly in the east which would help in the growth of British commerce and industry.
  • The company opposed these arguments mentioning that its political authority and commercial privileges cannot be separated.
  • The controversy was finally resolved by allowing all the British merchants to trade with India under a strict license system.


  • Asserted the Crown’s sovereignty over British possessions in India.
  • Company’s trade monopoly in the east except for tea, and trade with China → Trade with India for all commodities except tea opened to all British people.
  • Permission for Christian missionaries to go to India to promote Christianity and a Bishop for British India was appointed with headquarters at Calcutta.
  • Clearly defined the constitutional position of the British territories in India.
  • The company should keep its territorial and commercial accounts separate.
  • The Board of control was defined and enlarged.
  • The company’s debt was reduced and its dividend was fixed at 10.5% per annum.
  • Empowered local governments to impose taxes on persons subject to Supreme Court jurisdiction and punish those who didn’t pay taxes.
  • Gave more powers for the courts in India over European British subjects.
  • Provided a financial grant towards the revival of Indian literature as well as for the promotion of science.
  • The company should invest ₹1 lakh every year for the education of Indians → foundation of modern education in India.

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