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The first Europeans to come to India were the Portuguese, arriving in the persons of Vasco da Gama and his crew on 27 May 1498 at Calicut on the west coast. The Portuguese made substantial territorial gains in the following years, taking Goa in 1510. Though a strong power in the sixteenth century, they lost most of their territories, except for Goa, Daman and Diu, to the Dutch and the English in the following century, a period during which French and Danish traders also arrived on the coasts of the subcontinent. By the eighteenth century, the Dutch had been largely pushed out by the English.

The English, later the British, East India Company was created by royal charter in December 1600 and granted a monopoly of English trade with the whole of Asia and the Pacific basin. The Company established trading settlements, or factories, on the coasts of India, beginning with Surat on the western coast in 1608. The Company was trading in Bengal from the 1650s, and in 1702 they completed Fort William on the Hugli to protect their trading interests there. The city of Calcutta grew around Fort William, which by the later eighteenth century became the centre of British power in India. The French, meanwhile, had set up the French East India Company (Compagnie des Indies) in 1674 and by the early eighteenth century had made Pondicherry on the east coast the base of French power. The eighteenth century saw a major confrontation between the English and the French, who fought three wars in India between 1740 and 1763. After the Battle of Plassey (1757) the British Company established its Raj (rule) over Bengal, Bihar and Orissa in eastern India. From 1773, the British parliament started to exercise complete control over the Company's affairs, appointing Warren Hastings as the first Governor in 1772 and then as the first Governor General two years later. The Doctrine of Lapse ensured that lands belonging to any Indian ruler dying without a direct heir to the throne went into British hands, and this meant a steady expansion of British-held territory. In 1793, the Lord Cornwallis Code laid the firm foundations for British rule in nineteenth-century India, setting standards for service, law courts, and revenue collection.

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