France and England had made peace; the English and French Companies in India had not laid down arms.

Their power, as well as the importance of their establishments was as yet in equipoise.

At Surat both Companies had places of business; on the coast of Malabar the English had Bombay, and the French Mahe; on the coast of Coromandel the former held Madras and Fort St.George, the latter Pondicherry and Karikal.

The principal factories, as well as the numerous little establishments which were dependencies of them, were defended by a certain number of European soldiers, and by Sepoys, native soldiers in the pay of the Companies.
These small armies were costly, and diminished to a considerable extent the profits of trade.

Dupleix espied the possibility of a new organization which should secure to the French in India the preponderance, and ere long the empire even, in the two peninsulas.