In the sixteenth century the English started trade with the east. The English had to pay high prices for goods bought from the east. Lured by the Portuguese profits the English too wished to have their share of wealth and profits.  Attaining power in this area would result in getting goods at prices they decide. Besides this the defeat of the Spanish Armada had made England the mistress of the seas. In 1500 a group of merchants under the Chairman ship of Lord Mayor formed an association in London to trade with India. In 1600 Queen Elizabeth granted a charter to the governor at a company of merchants to trade freely with the countries of the east. Voyages were made to South East Asia to trade in spices. Attention towards India was diverted due to the Dutch influence in the Spice islands and getting raw materials for the English. The vast Indian mainland could be a market for the finished goods. The voyage to India was led by Captain Hawkins. He landed at the west coast of Surat and succeeded to get some trade concession for the company from Emperor Jahangir. He also secured permission to set up a factory at Surat. The Portuguese influence in the Mughal Court proved a obstacle to the English trade. In 1612 Captain Best defeated the Portuguese fleet near Surat thus reducing their influence. He secured permission for building of a factory at Surat. In 1615 King James I of England sent Sir Thomas Roe as his ambassador to the court of Jahangir, and secured permission for the company to set up factories. Thus factories were set up at Ahmedabad, Broach and Agra.

In 1661 the company obtained Bombay from Charles II and converted it to a flourishing centre of trade. By 1687, its was the most well established settlement of the Company on the west coast of India. In 1611 factories were set up on the east coast at Masaulipatam. In 1540 Fancis Day built a fortified factory called Fort St. George beside which the town of Madras flourished. English settlements rose in Orissa and Bengal. In 1633, in the Mahanadi delta of Hariharpur at Balasore in Orissa, factories were set up. In 1650 Gabriel Boughton an employee of the Company obtained a license for trade in Bengal. An English factory was set up in 1651 at Hugli. Various factors besides the lack of a political authority in India encouraged the company to unleash a vigorous policy of trade. The disintegrating Mughal empire had excited the English. At a petty pretext during the rule of Aurangazeb, the British brought a fleet from England and attacked Hugli. Aurangazeb attacked the English settlements and, captured their settlements at Patna, Cassim Bazar, Masaulipatam and Vizagapatanam. The superior English navy avoided the progress of the Mughals and found it wise to conclude peace on the conditions imposed by Aurangzeb. In 1690 Job Charnock established a factory. In 1698 the factory was fortified and called Fort William. The villages of Sutanati, Kalikata and Gobindpore were developed into a single area called Calcutta. In 1717 Emperor Farukhiyar permitted duty free trade. In Gujarat and Madras too they secured concessions. The  company at Bombay minted rupees to be circulated in India.

Owing to the economic factors at England and the discredited submission to the terms  of Aurangzeb, a rival trading company was established called General Society. A compromise between the two companies on common trade saved the East India Company in 1702.