Important causes of the Revolt of 1857 were:
Policy of Expansion - The British authorities annexed many independent Indian states on one pretext or the other. As a result the Company became the supreme ruling power in India and the rest of the ruling class became mere puppets in their hands.
Annexation of Awadh - On February 13, 1856, Lord Dalhousie annexed Awadh to the Company’s territories. This was done under the pretext of alleged misrule by the Nawab Wajid Ali Shah. However, this led to a lot of resentment among the ruling elite of Awadh and the Indian sepoys working under the East India Company.
Ill-treatment of Indian Soldiers - The East India Company discriminated against their Indian sepoys. They were poorly paid, ill-fed and badly housed. They were forbidden from wearing any caste or sectarian marks, beads or turbans. As a result, there was resentment among the Indian troops.
General Service Enlistment Act - The General Service Enlistment Act of 1856 required Indian soldiers to be sent overseas for deployment if required. However, traditionally it was a taboo for the Brahmins to cross the seas. Hindus reacted negatively to this decision which was taken in complete disregard totheir religious beliefs.
Larger Proportion of Indians in the British Army - In the year 1856, the Company army had2, 38,000 Indians and 45,322 British soldiers. Dalhousie had recommended recruitment of more British troops but it was not done at that point of time. As a result, it became easier for the rebelling Indian troops to overwhelm their British colleagues.
Interference with Social Customs - Many of the social reforms introduced by the Company government were not appreciated by the conservative sections of Indian society. Reforms like the abolition of Sati (1829), the introduction of the Widow Remarriage Act (1856) and the opening of Western education for girls led to a lot of resentment.
Policy of Racial Discrimination - The British officers of the East India Company’s army often mistreated their Indian sepoys. Muslim soldiers were dubbed as cruel and all communities had to witness racial abuse in some or the other form. As a result, there was a lot of anger against the racial discrimination policy.
Corruption in Administration - The police and petty officials of the Company government were very corrupt. The wealthy often used loopholes in the law to their advantage whereas the common populace continued to be exploited under the British administration.
Exploitation of Economic Resources - Under British rule, India was turned into an exporter of raw materials like raw cotton, raw silk, indigo, tea, food grains, etc. British goods were brought in either duty free or at nominal duty rates. On the other hand, Indian products were subjected to high import duties in England. Indian handmade goods were not in a position to compete with machine madeBritish goods. This resulted in the ruin of Indian industry, unemployment among artisans, reduction in agricultural surplus and a steep increase in the price of raw materials.
Drain of Wealth - Till the Battle of Plassey (1757), the British brought gold into India in order to buy Indian cotton and silk. However, after the conquest of Bengal, the purchase was done with the surplus revenue from Bengal profits acquired from duty free inland trade. This effectively unilateral transfer of wealth from India to England is called the ‘Drain of Wealth’. The drain included the salaries, incomes and savings of the Englishmen, British expenditure in India on military goods, office establishments, interest on debts, military expeditions, etc.
Decay of Cottage Industries and Handicrafts - Due to the British policy of preferential treatment to British businesses, Indian industries were gradually destroyed. By the middle of the 19th century, export of cotton and silk goods had practically ceased. The misery of the unemployed artisans was further complimented by the disappearance of their traditional patrons and buyers, i.e., the princes, chieftains and zamindars.