Shifting its role from a trading corporation, the English East India Company gradually became supreme political power in India. There were other regional kingdoms which were conquered by the British.
Haidar Ali and his son Tipu Sultan the legendary rulers of Mysore (in Carnatic, modern day Indian state of Karnataka ), gave a tough time to the British forces in the second half of the eighteenth century.
Haidar Ali was in command of the army in Mysore from 1749; he became the ruler of the state in 1761. Until his defeat by Sir Eyre Coote in 1781 Haidar Ali continued his struggle against the Company. Mysore finally fell to the Company forces in 1799, with the slaying of Tipu Sultan in 1799.
With the gradual weakening of the Maratha Empire in the aftermath of the three Anglo-Maratha wars fought during 1772-1818, the British also secured the Maratha territories. It was during these campaigns, both against Mysore and the Marathas, that under the command of Arthur Wellesley, the British had secured the entire region of Southern India (with the exception of small enclaves of French and local rulers), Western India and Eastern India.
The second method was the use of subsidiary agreements (sanad) between the British and the local rulers. This development created what came to be called the Native States, or Princely States. The Subsidiary Alliances system was also introduced by Lord Wellesley in and after 1798.
The British, under the subsidiary alliance system, agreed to protect the Indian rulers against external threats and internal disorder but, in return, the Indian rulers who accepted the Subsidiary Alliance system were to agree to the stationing of British contingent for whose maintenance they would pay a subsidy to the British. The ruler under the system of alliance could neither enter into alliance with any other power nor fight a war without prior permission from the British.
A British resident was stationed at these ruling states that had the authority to interfere in state politics. This system was suited best to the advantage of the British as, without even spending a single penny the British were able to maintain large forces.
Moreover this system enabled the English to weed out the foreign influence from the Indian courts. The Nizam of Hydrabad was first to enter into a subsidiary alliance with the English in 1798. He was forced to replace the French officers from his court and put English officers in their place. He also granted the territories of Bellari and Cudappah to British for the maintenance of the army.
The subsidiary alliances created the Princely States (or Native States) of the Maharajas and the Nawabs, prominent among which were: Cochin (1791), Jaipur (1794), Travancore (1795), Hyderabad (1798) and Mysore (1799). The annexed regions included the North Western Provinces (comprising Rohilkhand, Gorakhpur, and the Doab) (1801), Delhi (1803), and Sindh (1843). Punjab, Northwest Frontier Province, and Kashmir, were annexed after the Anglo-Sikh Wars in 1849.
Kashmir was sold under the Treaty of Amritsar (1850) to the Dogra Dynasty of Jammu, and thereby became a princely state. In 1854 Berar was annexed, and the state of Oudh two years later. The Main purpose of the subsidiary alliance system was to expand the British Empire in India by bringing new territories under its control and to decrease the French influence so that The British could become the paramount power in India.
Punjab remained the last Indian state to be conquered by the British in 1849. It was under the rule of Maharaja Ranjit Singh who had united the various Sikh misls into one state. He had established a modern administrative system. His army was the second largest modernized regular army in Asia after the British army. The East India Company maintained friendly relations with Ranjit Singh. But just within one decade of his death in 1839, two Anglo-Sikh wars were fought and in 1849 Punjab also became part of the British India.
The Doctrine of Lapse was an annexation policy devised by Lord Dalhousie, who was the Governor General of India between 1848 and 1856. There was a widespread custom of adoption among the Indian kings to secure an heir in the absence of a natural successor i.e. son. But as per the doctrine of lapse any Indian state created by or under the direct influence (paramount) of the British East India Company, as a vassal state under the British Subsidiary System, would automatically "lapse" or annexed by the British if the ruler was either incompetent or died without a natural male heir.
Thus, not only the long-established right of the Indian sovereigns without an heir to choose successor was taken over, but the British also took over the authority of deciding the competence of the Indian rulers. With the introduction of this policy of lapse, the Company could establish absolute, imperial administrative control over many regions spread over the subcontinent.
The Company took over the princely states of Satara, Jaitpur , Sambalpur, Nagpur and Jhansi using this Doctrine. Often the annexation, such as that of Awadh [Oudh] in 1856, was justified on the grounds that the native prince was of evil disposition, indifferent to the welfare of his subjects.