Understanding Indian States and British Control Systems

The question asks about the specific system or settlement under which Indian princely states gave up control over their foreign relations and defense matters. This transfer of critical sovereign powers was a key aspect of how the British East India Company and later the British Crown gradually established dominance over the Indian subcontinent.

Analyzing the Options and Their Impact

Let's examine each option to understand its nature and impact on Indian states:

• Doctrine of Lapse: This was an annexation policy implemented by Lord Dalhousie. It stated that if a ruler of a princely state died without a natural heir, the state would be annexed by the British. This policy was about acquiring territory directly, not primarily about controlling existing states' foreign policy or defense while keeping them nominally independent.
• Subsidiary alliance system: Introduced by Lord Wellesley, this system involved forging alliances with Indian states. Under the terms of a subsidiary alliance, the Indian ruler had to accept permanent stationing of a British force within his territory and pay for its maintenance. Crucially, the ruler had to dismiss his own army and surrender control over his foreign affairs and defense to the British. The ruler also had to accept a British Resident in his court and could not enter into any alliances with other Indian rulers or engage in conflict without British permission. This system directly led to the loss of sovereign rights, particularly foreign affairs and defense.
• Permanent settlement: This was a land revenue system introduced in Bengal, Bihar, and Orissa by Lord Cornwallis. It fixed the land revenue demand from zamindars (landlords) permanently. This system dealt with revenue administration and had no direct impact on the foreign affairs or defense capabilities of princely states.
• Dyarchy system: This system was introduced under the Montagu-Chelmsford Reforms (Government of India Act 1919). It involved a division of governmental powers (subjects) into 'reserved' and 'transferred' categories at the provincial level in British India, not in the princely states, and certainly not related to their historical loss of foreign affairs and defense autonomy under earlier British expansion.

Subsidiary Alliance System: Loss of Foreign Affairs and Defense

The Subsidiary Alliance System was a strategic tool used by the British to expand their power without direct annexation in every case initially. By forcing Indian rulers to accept a British force, disband their own armies, and relinquish control over foreign policy, the British effectively isolated these states and made them dependent. The Resident acted as an intermediary, ensuring British interests were paramount and preventing rulers from forming anti-British coalitions.

Under this system, an Indian state essentially lost its external sovereignty and its ability to protect itself independently. All negotiations with other states had to go through the British, and the state's defense became solely the responsibility (and under the control) of the British army stationed there.

Based on the analysis, the system under which Indian States lost their right to foreign affairs and defense was the Subsidiary Alliance System.

Revision Table: Key British Policies in India

Additional Information: The British Resident

A crucial component of the Subsidiary Alliance System was the British Resident. The Resident was a representative of the British East India Company (and later the Crown) posted in the court of the Indian ruler who had signed the alliance. While officially a diplomat, the Resident often wielded significant influence, interfering in the internal administration of the state, providing 'advice' that was often mandatory, and ensuring the ruler acted in accordance with British interests. The presence of the Resident symbolized the loss of internal autonomy that followed the loss of external control (foreign affairs and defense) under the subsidiary alliance system.