Have you ever heard of any country controlled and ruled by a joint-stock company?

This happened in India. The East India Company ruled an entire country of huge size for 101 years (1757–1858). During this time they did almost everything they wanted to do and won almost every battle in India. That was like the Russian natural gas company Gazprom administering Brazil – incredible.

But, what was the principle of the successful gradual takeover of India by Britain?

There are a good number of reasons why the British were able to do so, and in fact rule over India effectively for over a century.

Disunity among Indian princely states. India was more a collection of warring princely states, at loggerheads with each other. The British sucessfully used this to play off one state against another. Add to it there was no dearth of people willing to betray the kingdom for a few pieces of silver. Robert Clive succeeded at Plassey, because Mir Jaffar was willing to betray his master Siraj-Ud-Daulah in lie of being the Nawab. Mir Jaffar himself was betrayed by Mir Qasim later on.Tipu Sultan one of the most redoubtable fighters against the British rule, was finally defeated, as the Marathas, King of Mysore, Nizam of Hyderabad all joined hands with the British.

Superiority over other colonial powers. The other colonial powers in India competing for the share of resources were France,Portugal,Denmark, Holland. Of the 4, Denmark and Holland could never really be serious competitors to the British, they had their own trading posts, scattered around, but were never a serious threat. Portugal focussed primarily on the Western coast, Goa, parts of Kerala, Karnataka, and this left the British with vast swathes of unoccupied territory. That left France as the major contender to Britian in the race for colonialism. The British Army was more well equipped, more professional, more disciplined compared to the French army, suffering from indiscipline and corruption. This made the British win key battles all over the East Coast, as they effectively grabbed control.

Doctrine of Lapse. One of the most effective tactics, the British used to take over most of India. Instead of waging an all out war against some of the princely states, they signed a treaty with them, where in if the ruling king died without a heir, the East India company could take over that. And that is how Satara became one of the first states to end up under British rule. And that was also the main reason for the conflict in Jhansi.

Subsidiary alliance as also an effective instrument. According to this alliance, the kingdom which signs the treaty will have to maintain the following rules:

• The British agreed to maintain a permanent and fixed subsidiary force within the territory of their ally.
• In return, they didn't take money but took over a part of the territory of the ally.
• A British officer called "resident" was placed at the court of the ruler.{he could interfere in the internal matters of the kingdom}
• The ally could not maintain any relation with any other ruler without the approval of the British.{so,when the rulers wanted to revolt against the British they are alone.}

The Indian rulers felt a false sense of security but in reality they were losing their independence. On the other hand the Britishers maintained large forces at the expenses of the Indian rulers and also increase their area of influence. Some states brought under control through this policy are Hyderabad, Tanjore, Awadh, etc.

At the end of it all, the British had the advantage of better manpower, were militarily more powerful and stronger, and add to it they had some very canny strategists too. And the disunity among Indian princely states, their constant warring with each other, just added to the advantage.

The British East India Company did not set out to conquer and rule India, nor did that situation manifest itself overnight, nor by any single battle or treaty.

The British

• built ties with stable commercial interests in India, leaving the freedom to act opportunistically in Indian politics as the Mughal Empire crumbled
• outmaneuvered European rivals in expanding and consolidating their presence
• amassed great wealth, increasingly taking on governmental and military functions to protect that wealth, and arguably becoming "too big to fail" for the British government

The Cambridge Concise History of Modern India is available online, and from where I draw most of the following.

Unlike China, which was first unified relatively early, no single kingdom in the Indian subcontinent predominated for long until Babur established the Mughal Empire in 1526. His successors expanded the empire across the subcontinent, but the realm was weak internally. Most regions were not ruled directly but through princely intermediaries who paid tribute, and Mughal rule (and misrule) was deeply resented. The empire was in sharp decline by the late 17th century.

The British East India Company's first conflicts were not with the Mughals or with the locals, but with other Europeans. The EIC defeated the Portuguese in a 1612 battle to gain a lucrative foothold in India, but found themselves in rivalry with not only the Portuguese but the Dutch and the French as well. As Mughal authority declined, English bases were raided more often, leading to company to hire security forces and arm its ships.

After the outbreak of the War of Austrian Succession in 1744, the French in Pondicherry intervened in succession disputes in Arcot and Hyderabad, backing one rival in exchange for favorable trade terms after that rival was in power. Having been in India for much longer, however, the EIC played this game better. They had maintained close ties with Indian financiers and producers, negotiated the most lucrative monopolies, and secured the best ports at Bombay (Mumbai), Madras (Chennai), and Calcutta (Kolkata). By the end of the Seven Years' War, although France and Portugal retained trading posts in India, Britain had no serious rivals for domination of the subcontinent, and thus there were no foreign powers with which local rulers could ally themselves to resist the British.

Direct Company rule is reckoned to have begun with the Battle of Plassey on June 23, 1757, when the EIC deposed the nawab of Bengal and installed a puppet. But again, things did not change overnight with Plassey. The EIC was extracting internal taxes and maintaining an army, but for a while it continued to collect those taxes through the nawab's agents, and acted in the name of the emperor. Judicial matters were left to the civil government. The Company's inexperience in running a state was highlighted in the Bengal famine of 1770, when as many as a third of the local population may have died.

What rule in Bengal did provide was control over what was then the richest part of India, giving it resources with which it could pursue its interests with aggression in the 19th century. By the time the notorious Doctrine of Lapse (whereby the EIC would annex lands whose rulers were deemed "incompetent" or who died without heirs) was promulgated in 1848, the Company had already extended control across India after a long series of wars and intrigues that would have been unimaginable a hundred years earlier— in the process overextending itself and requiring bailouts from Parliament, which in turn set the stage for its nationalization after the rebellion of 1857.

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