San José State University
Department of Economics
Thayer Watkins
Silicon Valley
& Tornado Alley

Economic History of Mumbai (Bombay)

Bombay (Mumbai) was originally established on seven islets off the coast of India but the separating waterways have been filled in to connect these islands to each other and to the much larger Salsette Island. Now the site of the city is essentially a peninsula (although technically still an island). A bridge across Thana Creek brings the extensive development on the mainland into the metropolitan area of Bombay.

What is now Mumbai was known to the Greek Ptolemy as Heptanesia, seven islands. But in even more ancient times the area was known for the temple to the goddess Mumba, a consort of Shiva. The name Bombay stems from the 16th century when the Portuguese acquired control of the area. Bombay is a corruption of Mumbai into Bom Bahia, Portuguese for good bay. The Portuguese monarchy transferred control of the area to the British monarchy in 1661 a part of the dowry of the sister of of the Portuguese king when she married King Charles II of England. The monarchy transferred control in 1668 to the East India Company.

Initially Bombay was far less important to the East India Company than its trading stations in Calcutta and Madras. But Bombay began to grow as a result of refugees from the region seeking the protection that the British could provide.

Over the years Bombay grew to be the most important center of trade, commerce, manufacturing and finance for India. Bombay was particularly important in the cotton textile industry in the 19th century, but that industry is now less significant. Bombay has well-developed industries in vehicles, chemicals, electronics, paper making, publishing and food processing. Bombay is the home of the Reserve Bank of India, the central bank of the nation. Private banking is also concentrated in Bombay. In effect, Bombay is the New York and Chicago of India. With Bollywood, the movie industry of Bombay, being the largest in the world, Bombay could said to be the Los Angeles of India as well.

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