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British were a part of Europe and Europe had long back gotten through the industrial resolution. Now India had lots of resources: cotton, indigo, spices etc. So, when they colonized India, they started to use India's resources as it was more cheap. The thing is producers usually want to produce in the cheapest way possible, so they took away the resources for free and starting producing them at more cheaper costs quickly(due to machines) whereas the handloom workers and industry produced them slowly and was more expensive. So, less people bought from the indian industry...
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