Indian rulers could maintain their own independent armed forces.
Explanation
The Subsidiary Alliance system was a diplomatic and military strategy introduced by Lord Wellesley (Governor-General, 1798–1805). It was designed to bring Indian states under British control without direct annexation, effectively establishing British paramountcy.
Analysis of Options:
- Indian rulers were protected by the Company. is Correct: A core feature of the alliance was that the British East India Company undertook the responsibility of protecting the Indian state against external threats and internal disorders.
- Indian rulers had to pay for the subsidiary forces. is Correct: In return for protection, the Indian ruler was required to station a British armed contingent within their territory and pay a subsidy for its maintenance.
- Indian rulers could maintain their own independent armed forces. is Incorrect: The Indian ruler was explicitly required to disband their own independent armed forces. This ensured that the ruler became militarily dependent on the British and could not pose a threat to Company power.
- Territory could be taken as penalty for non-payment. is Correct: If the ruler failed to pay the subsidy for the maintenance of the troops, a portion of their territory was annexed by the Company as a penalty. For instance, the Nawab of Awadh was forced to cede over half of his territory in 1801 on these grounds.
Key Takeaway: The Subsidiary Alliance system stripped Indian rulers of their sovereignty and right to self-defense, forcing them to disband their armies and conduct foreign relations only through the British Resident.