During the seventeenth and eighteenth centuries, Mumbai lagged behind Calcutta and Madras in importance. However, a series of events in the early and mid-nineteenth century propelled the city to a position of prominence. The continuing struggle for power between the Mughals (the Muslim rulers based in north India) and the Hindu Marathas created unstable political conditions in Gujarat and western India. Artisans and merchants fled to Mumbai for security, providing the stimulus for growth and expansion. This was further enhanced by the British defeat of the warlike Marathas and the expansion of trade both with the mainland and with Europe. In 1857, the first spinning and weaving mill was established in Mumbai, creating a cotton textile industry that was given a great boost by the American Civil War (1861–65), which cut off supplies of cotton to Britain. The opening of the Suez Canal in 1869 was another stimulus to Mumbai’s growth, further enhancing its position as a major trade, commercial, and industrial center.
Mumbai’s size and economic power are reflected in its role in India’s modern political history. The city was an important center in India’s struggle for independence from British colonial rule. The Indian National Congress, which led the nation’s fight for freedom, was founded there in 1885. Mohandas Karamchand Gandhi (1869–1948), the Mahatma, spiritual leader of the independence movement, launched his “Quit India” campaign against the British in Mumbai in 1942. Linguistic tensions between Mumbai’s Marathi and Gujarati speakers resulted in violence in the city in the late 1950s. This led eventually to the separation of Gujarati-speaking areas from Mumbai state and the creation of Maharashtra State (1960).
During the early 1990s, communal violence between Hindus and Muslims in Mumbai again shattered the myth of a tolerant, cosmopolitan city. Rioting led to the deaths of several hundred people (mostly Muslims) and culminated in the bombing (with numerous fatalities) of several buildings in March 1993. The Shiv Sena, a right-wing Maharashtra-based Hindu political party led by Bal Thackeray, was widely blamed for instigating Hindu violence against Muslims in the city. Subsequently elected to office, the Shiv Sena party in 1996 changed Mumbai’s name to “Mumbai,” the Maratha name for the city.
Source :
http://www.lonelyplanet.com/india/mumbai-bombay
http://www.city-data.com/world-cities/Mumbai-Bombay.html