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The Indian industrialization era brought forward great prosperity for technological innovation as it did for the economy.

Railways[edit]
Main article: Indian Railways § History The railway network of India in 1871, all major cities, Calcutta, Bombay and Madras, as well as Delhi are connected The railway network of India in 1909, when it was the fourth largest railway network in the world "The most magnificent railway station in the world." says the caption of the stereographic tourist picture of Victoria Terminus, Bombay, which was completed in 1888

British India built a modern railway system in the late 19th century, which was the fourth largest in the world. At first the railways were privately owned and operated. They were run by British administrators, engineers and craftsmen. At first, only skilled British workers could operate machinery and manage Indian steel plants.

The East India Company (and later the colonial government) encouraged new railway companies backed by private investors under a scheme that would provide land and guarantee an annual return of up to 5% during the initial years of operation. The companies were to build and operate the lines under a 99-year lease, with the government having the option to buy them earlier.

Two new railway companies, the Great Indian Peninsular Railway (GIPR) and the East Indian Railway Company (EIR) began to construct and operate lines near Bombay and Calcutta in 1853–54. The first passenger railway line in North India, between Allahabad and Kanpur, opened in 1859. The East Indian Railway Company (EIR) had all of its train carts manufactured within India as many of the imported ships were lost on their way from Imperial Britain to India.

In 1854, Governor-General Lord Dalhousie formulated a plan to construct a network of trunk lines connecting the principal regions of India. Encouraged by the government guarantees, investment flowed in and a series of new rail companies were established, leading to rapid expansion of the rail system in India. Soon several large princely states built their own rail systems and the network spread to the regions that became the modern-day states of Assam, Rajasthan and Andhra Pradesh. The route mileage of this network increased from 1,349 kilometres (838 mi) in 1860 to 25,495 kilometres (15,842 mi) in 1880, mostly radiating inland from the three major port cities of Bombay, Madras, and Calcutta.

Most of the railway construction was done by Indian companies supervised by British engineers. The system was heavily built, using a broad gauge, sturdy tracks and strong bridges. By 1900 India had a full range of rail services with diverse ownership and management, operating on broad, metre and narrow gauge networks. In 1900, the government took over the GIPR network, while the company continued to manage it. During the First World War, the railways were used to transport troops and grain to the ports of Bombay and Karachi en route to Britain, Mesopotamia, and East Africa. With shipments of equipment and parts from Britain curtailed, maintenance became much more difficult; critical workers entered the army; workshops were converted to making artillery; some locomotives and cars were shipped to the Middle East. The railways could barely keep up with the increased demand. By the end of the war, the railways had deteriorated for lack of maintenance and were not profitable. In 1923, both GIPR and EIR were nationalised.

Headrick shows that until the 1930s, both the Raj lines and the private companies hired only European supervisors, civil engineers, and even operating personnel, such as locomotive engineers. The government's Stores Policy required that bids on railway contracts be made to the India Office in London, shutting out most Indian firms. The railway companies purchased most of their hardware and parts in Britain. There were railway maintenance workshops in India, but they were rarely allowed to manufacture or repair locomotives. TISCO steel could not obtain orders for rails until the war emergency.

The Second World War severely crippled the railways as rolling stock was diverted to the Middle East, and the railway workshops were converted into munitions workshops. After independence in 1947, forty-two separate railway systems, including thirty-two lines owned by the former Indian princely states, were amalgamated to form a single nationalised unit named the Indian Railways.

India provides an example of the British Empire pouring its money and expertise into a very well-built system designed for military purposes (after the Mutiny of 1857), in the hope that it would stimulate industry. The system was overbuilt and too expensive for the small amount of freight traffic it carried. Christensen (1996), who looked at colonial purpose, local needs, capital, service, and private-versus-public interests, concluded that making the railways a creature of the state hindered success because railway expenses had to go through the same time-consuming and political budgeting process as did all other state expenses. Railway costs could therefore not be tailored to the current needs of the railways or of their passengers.