The Portugese took over the Indian state of Goa and continued to hold it as their main trading post. They established strong trade relations with Southern merchants in the 1500s and became the main European presence in India. Their trade was in spices and fabrics. Europe needed new spices to preserve and flavor food. Portugese merchants were also intrigued by Indian fabrics that were not produced in Europe. Indian traders liked the chance for more money and European products, so they supported the early trade posts.

Although Portugal controlled Indian trade for almost 100 years, other nations also established smaller trading posts. Some of these included Denmark and Holland. Spain also began to challenge Portugese dominance with its own ships and exploration. As part of an ongoing battle, Spain took over Portugese holdings in 1580. However, the British defeated the Spanish soon after while trying to establish their own position.

France established a trading post in Pondicherry in 1672. The French used this base in their colonization plans and attempts to force the English out of India. The French traded many of the same items that the Portugese did 100 years earlier, but they also got involved in Indian politics. French representatives tried to force local leaders to work against each other so that the chaos would give France an chance to take over part of India's government. They also got Indian rulers to fight with the French against the British in an ongoing European war.

The French fought with the British traders throughout the 1700s. But by the end of the Seven Years War in 1763, the French had lost most of their power in India. They only had a few trading posts left, while England had increased power in India. In 1799, England ended the French presence in India by killing the local rulers who supported France. By 1800, England was the main European power in India, with the freedom to colonize.

England established the East India Company in 1600. This trading company sent ships to India in 1608 and soon set up posts along the southern and eastern coasts. At the same time, the Moghul empire was falling apart because of corruption and bad organization. The East India company began to gain influence and fill the gaps. It bought land and created new forts in cities to protect its property.

English representatives made alliances with the last of the Moghul kings. The British were allowed to collect taxes from Indians in exchange for providing police and soldiers for the Moghul empire. They also sent their own English soldiers into India to make sure that the trade posts and factories were secure. Soon, England defeated local Indian rulers by playing one prince off the other and letting them destroy themselves.

By the early 1800s, England had control over most of India. A civil service had been established, with English supervisors. Once the British bought the old princely states, they set up landlords and charged Indians who used the land. Taxation was common; the East India company owned most of the wealth of the nation. In 1857, Indian soldiers tried to rebel against the British in the Sepoy mutiny. The British stopped the revolt, passed even stricter laws, and formally made India a British colony.