From an essay by historian William Dalrymple in Time Asia (thanks to Matthew Rees for the tip):
At their heights during the 17th century, the subcontinent’s fabled Mughal emperors were rivaled only by their Ming counterparts in China. For their contemporaries in distant Europe, they were potent symbols of power and wealth. In Milton’s Paradise Lost, for example, the great Mughal cities of Agra and Lahore are revealed to Adam after the Fall as future wonders of God’s creation. This was hardly an overstatement. By the 17th century, Lahore had grown even larger and richer than Constantinople and, with its two million inhabitants, dwarfed both London and Paris.
What changed was the advent of European colonialism. Following Vasco da Gama’s discovery of the sea route to the East in 1498, European colonial traders — first the Portuguese, then the Dutch and finally the British — slowly wrecked the old trading network and imposed with their cannons and caravels a Western imperial system of command economics. It was only at the very end of the 18th century, after the East India Company began to cash in on the Mughal Empire’s riches, that Europe had for the first time in history a favorable balance of trade with Asia. The era of Indian economic decline had begun, and it was precipitous. In 1600, when the East India Company was founded, Britain was generating 1.8% of the world’s GDP, while India was producing 22.5%. By 1870, at the peak of the Raj, Britain was generating 9.1%, while India had been reduced for the first time to the epitome of a Third World nation, a symbol across the globe of famine, poverty and deprivation.
In hindsight, what is happening today with the rise of India and China is not some miraculous novelty — as it is usually depicted in the Western press — so much as a return to the traditional pattern of global trade in the medieval and ancient world …
I think the changing GDP shares probably had at least as much do with a little economic novelty called the Industrial Revolution as with British economic mismanagement in India. But his point still mostly stands.