Explanation:

Tipu Sultan was the ruler of the Kingdom of Mysore in South India from 1782 to 1799. He was known for his resistance against British colonialism. During his reign, he implemented several economic policies to strengthen the local economy and reduce dependence on foreign trade. One such policy was the disallowance of local merchants from trading with the British East India Company.

Reasons behind the policy:

Tipu Sultan had several reasons for disallowing local merchants from trading with the British East India Company. Some of them are:

- To reduce dependence on foreign trade: The British East India Company had a monopoly on trade in India, which meant that they controlled most of the trade that happened in the region. This made India heavily dependent on foreign trade, which was not beneficial for the local economy. Tipu Sultan wanted to reduce this dependence and promote local trade instead.

- To promote local industries: By disallowing local merchants from trading with the British East India Company, Tipu Sultan wanted to encourage the growth of local industries. He believed that this would create employment opportunities for the local population and boost the local economy.

- To reduce the influence of the British: Tipu Sultan was against British colonialism and wanted to reduce their influence in India. By disallowing local merchants from trading with the British East India Company, he wanted to limit their power and control over the region.

Impact of the policy:

The policy of disallowing local merchants from trading with the British East India Company had several impacts. Some of them are:

- Boost to local economy: The policy encouraged the growth of local industries, which created employment opportunities and boosted the local economy.

- Reduction in British influence: By limiting the power and control of the British East India Company, Tipu Sultan was able to reduce their influence in India.

- Negative impact on local merchants: The policy of disallowing local merchants from trading with the British East India Company had a negative impact on their businesses. They were not able to trade with the most powerful company in India, which affected their profits.

Conclusion:

In conclusion, Tipu Sultan's policy of disallowing local merchants from trading with the British East India Company was aimed at reducing dependence on foreign trade, promoting local industries, and reducing the influence of the British. While the policy had some positive impacts, it also had negative impacts on local merchants.