The East India Company gained control over the Carnatic region primarily due to the Nawabs' mounting debts and the resulting loss of autonomy. The Nawabs, particularly Muhammad Ali Khan Wallajah, sought British military and financial support during conflicts with the French, Marathas, and Hyder Ali, which led to significant indebtedness.
For instance, Wallajah received major loans from English businessman Paul Benfield to fund military campaigns, including the conquest of the Maratha state of Tanjore.
This financial dependence allowed the East India Company to exert increasing political influence over the Nawabs.
The British capitalized on this situation, gradually assuming administrative control. After the death of the last Nawab, Ghulam Muhammad Ghouse Khan, in 1855, who died without a male heir, the British applied the doctrine of lapse to annex the Carnatic Nawabdom, formally ending Nawabi rule.
Prior to this, the Treaty of 1801 had already reduced the Nawab to a titular ruler by ceding civil and military administration to the Company, with the Nawab retaining only a fraction of the revenue.
Thus, the cession of control was a result of sustained financial dependency, military alliances, and strategic exploitation by the East India Company.