Ian Bruce Watson's 1980 study Foundation for Empire: English private trade in India 1659 - 1760 is invaluable for researching the milieu of early India merchants like Thomas Pitt. Watson fits his detailed analysis into the broader context of the phenomenon of imperialism.

Empire

Where empire was seen to be the manifestation of a mixture of military might, cultural superiority, humanitarian zeal, and industrial supremacy, which was itself a central component of cultural superiority, theorists of empire began using the term imperialism, under which they subsumed the various component parts in hierarchies which suited their purposes. In effect, the '-ism' was used to explain the 'empire' in one way or another. It was not used to explain why it should have been that an empire could have been gained in the first place. The existence of empire was argued ex post facto, in terms which reflected the dominant political beliefs of the proponents. Generally speaking, most of the theorists concluded that the defining principle of imperialism was the rule of a single hegemonial people over widely diversified cultural groups. p. 5

He goes on to describe the Marxist school, who placed their emphasis on the economic struggles of the industrial powers in Europe.

This view was contested by those who considered the problems as the manifestation of political struggles. Mostly with ancient heritages within Europe and the need to protect colonies and dominions overseas to preserve the European balance of power. The economic view was based on the logic of the classical economists and their conclusion that the tendency of the rate of profits in Europe to fall drove the financiers and industrialists to seek more, ever more speculative investments outside Europe. In this situation, the state was drawn along behind the economy, and the state was drawn along behind the capitalists. The political view was founded in the more traditional belief that power politics was predicated upon the spatial areas controlled by individual nations in Europe. The value of these areas lay not so much in any wealth they may possess, but rather in the number of population which could be mobilised in conflicts outside Europe, and in the prestige somehow accruing to the nation with the most subordinate. The distinctions were often more Jesuitical than helpful, but they were debated fiercely.

Hegemony and expansionism

Looking to identify imperialism, Watson sets out a few defining features. First, repeating the idea about hegemony:

A specific hegemonial relationship between a controlling group and those national groups over which it dominates. p. 7

The main source he rests on for these definitions is Lichtheim, Imperialism (Harmondsworth, 1971).

The second feature is an expansionary attitude, which leads to one group having a real or imagined advantage:

This group need not have been pre-eminent in a strictly political sense, it need only have enjoyed dominance in areas where its activities impinged on, and altered, the power relations inherent in the state in which the activities occurred, so that an advantage was seen to have been gained. Moreover, imperialism entails an expansionary attitude among hegemonial people in relations with other peoples and states.We can therefore agree with Lichtheim and state that we are not engaging in metaphysics, when we assert that the essence of an imperialism is to infringe the sovereignty, however it is perceived, of other states and peoples. p. 8

This is the sense in which imperialism will be used in this essay, which will attempt to demonstrate how and why an 'image of dominance' could be realised in the assertion of power by a commercial intruder into a vulnerable economy.

Historical development

Then Watson looks at examples of impositions of dominance in European history. He follows Emanuel Wallerstein's analysis in The Modern World System, Wallerstein, 1974. And as Watson explains it, during the 16th century,:

The Imperium failed to continue providing its own cohesion for imperial strength, and strong internalized states came to the fore within the European Empire.

Watson identifies the redistribution of wealth towards wealthy merchant cities as a major factor behind this, a process described almost as economic nationalism. By the end of the 16th century, this process had reached imperialism. And given rise to the commercial dominance of Amsterdam, the city which created The smooth operation for the world economy from the dissolution of the Habsburg Empire, enabling England and France to appear as strong states. That's taken from Wallerstein, page 199. Watson continues:

The three broad phases in this development are characterized by Wallerstein as 'world-systems'. The politically based 'world-empire' gave way to the 'world-economy', itself a highly unstable system, which crumbled under the onslaught of the 'modern world system', the consequence of the development of capitalism. p. 9

He quotes Wallerstein again:

Capitalism has been able to flourish precisely because the world economy has had within its bounds not one but a multiplicity of political systems Wallerstein p. 348 acc. to Watson

Watson concurs:

Wallerstein's analysis, for all its systems and '-isms', is conceptually coherent, and is explicitly based on Marx's analysis of the development of capitalism in the sixteenth century p. 10

Footnote citing Marx:

The modern history of capital dates from the creation in the sixteenth century of world-embracing commerce and a world-embracing market. ... Although we come across the first beginnings of capitalist production as early as the 14th or 15 century, sporadically, in certain towns of the Mediterranean, the capitalistic era dates from the 16th century. Marx, Capital, vol. 1 of 3 (Moscow, 1954), pp. 145 & 669

Mercantilism

As explained in the literature, mercantilism comprises five central tenets, all of which are interrelated. (1) The unification of the territory of the state into an economic unit and the use of the resources of the economy in the interests of the state. (2) The pursuit of power for the state. (3) The necessity for protection of the state. (4) The accumulation of treasure through a favourable balance of trade. (5) A distinct conception of harmony in society as being managed best by the state. p. 10 (numbering added)

The most striking conclusion to arise out of these tenets when taken as a whole and considered as actions by this state is the emphasis on defensive measures relative to other economies and states. An aspect of this emphasis was the attempt to expel the foreign merchants such as the Italians and Hansards from England. The pre-condition for such actions was the internal power of the state. The state has also to rely on the strength of its economy to maintain such independence. The underlying assumtpion of mercantilism was that the resources of the world were finite; therefore, protection of the activities of the state were paramount.The impact of competition in such a world was evident in the tremendous fall in the price of pepper, the the Dutch and English penetrated the Portuguese monopoly of the spice trade. p. 11

English rise to mercantile dominance

When the English found their commerce checked by the Dutch, they resorted to force, because the economic independence of England demanded protection. Within the conditions of society and economy perceived by the English, this was a defensive measure, a desire to protect their independence. p. 11

By 1651, however, attitudes began to change. The burgeoning power of England was beginning to be felt in the North Atlantic, while English commerce with the East was expanding. In this situation, Englishmen began to perceive their own potential. The relative lack of internal tolls and bureaucratic regulations in England allowed the growth of a strong domestic commerce and the expansion of English industries. The development in England was such that the Venetian ambassador reported in 1651, 'merchants and trade were making great strides, as government and trade are ruled by the same persons.' p. 12

Source

I. B. Watson, Foundation for Empire (Vikas: New Delhi 1980)