Under Mughal rule, Bengal Subah was a midpoint of the worldwide muslin and silk trades during the 16th to 18th centuries. During the Mughal era, the most important center of cotton production was Bengal, particularly around its capital city of Dhaka, leading to muslin being called «daka» in distant markets such as Central Asia. Bengal also exported cotton and silk textiles to markets such as Europe, Indonesia and Japan. Bengal produced more than 50% of textiles and around 80% of silks imported by the Dutch from Asia, for example.

Bengal was conquered by the British East India Company after the Battle of Plassey in 1757 and the Bengal Presidency was founded in 1765. British colonization forced open the Bengali market to British goods, while at the same time Britain implemented protectionist policies such as bans and high tariffs that restricted Bengali imports to Britain. Raw cotton was also imported without taxes or tariffs to British factories, which used them to manufacture textiles, many of which were exported back to Bengal. British economic policies led to deindustrialization in Bengal.