A subsidiary alliance is a term used, in the context of South Asian history to describe a protectorate-type relationship between, on one hand, princely states and, on the other, the East India Company and/or the British Raj.
The doctrine of subsidiary alliance was introduced by Lord Wellesley, British Governor-General in India from 1798 to 1805. Early in his governorship Wellesley adopted a policy of non-intervention in the princely states, but he later adopted the policy of forming subsidiary alliances. This policy was to play a major role in British expansion in India.
According to the terms of a subsidiary alliance, princely rulers were not allowed to have an independent armed force. They were to be protected by the East India Company, but had to pay for the 'subsidiary forces' that the company was supposed to maintain for the purpose of this protection. If the Indian rulers failed to make the payment, then part of their territory was taken away as penalty. For example,the ruler of Awadh was forced to give over half of his territory to the company in 1801,as he failed to pay for the "subsidiary forces". Hyderabad was also forced to cede territories on similar grounds.
By the late 18th century, the power of the Maratha Empire had weakened and the Indian subcontinent was left with a great number of states, most small and weak. Many rulers accepted the offer of protection by Lord Wellesley, as it gave them security against attack by their neighbours.
The main principles of a subsidiary alliance were:
Under this doctrine, Indian rulers under British protection surrendered the control of their foreign affairs to the British. Most disbanded their native armies, instead maintaining British troops within their states to protect them from attack. As British power grew, in most parts of India this became increasingly unlikely.
The Nizam of Hyderabad was the first to enter into such an alliance. Tipu Sultan of Mysore refused to do so, but after the British victory in the Fourth Anglo-Mysore War, Mysore was forced to become a subsidiary state. The Nawab of Awadh was the next to accept the Subsidiary Alliance, in 1801. After the Third Anglo-Maratha War, the Maratha ruler Baji Rao II also accepted a subsidiary alliance. several states like: Hyderabad (1798 and 1800), Tanjore (1799), Awadh (1801), Bhonsle (1803), and Indore(1817) adopted this system.