Lord Dalhousie`s policy was the annexation of different regions of India, which had still not come under the dominion of the British. Punjab was annexed to the British Raj in 1849. The local chiefs and noblemen were ruthlessly suppressed and its annexation was complete without allowing even the trace of the earlier power structure to remain. It was Dalhousie`s opinion that the direct British administration of region or province was better than the contemporary Indian.

Various reforms were brought during his rule to improve the conditions of India. The policy of annexation known as the Doctrine of Lapse was based on the forfeiture of the right to rule in the absence of a natural heir. By this policy the state of Satara was annexed in 1848, in 1849 the state of Sambhalpur and in 1853 Jhansi was also annexed. After the death of the Raja of Nagpur in 1853 the policy claimed yet another victim. By 1854 owing to the failure to have a natural heir Nagpur too was annexed.

Another method of annexation was by conquest. Dalhousie proved his worth in the matters of administration by the demarcation of various departments of the administrative machinery and appointment of Lieutenant Governor for Bengal. He introduced the non-regulation system under which the non-regulation provinces were to be under a Chief Commissioner responsible to the Governor-General in council. Punjab, Oudh, Burma were a few non-regulating provinces.

Dalhousie also introduced Railways and Telegraph in India with a purpose to improve communication, which was essential to administer the far, flung areas of this vast country. He also reformed the postal system. To undertake works for the public benefit he introduced the public works department. In the educational field, Dalhousie`s reforms such, as the system of vernacular education was praise worthy. Anglo Vernacular Schools were established. In the matters of commerce the policy of free trade was introduced by declaring free ports. The English dominated Indian trade by now. The military reforms of Dalhousie included the shift of the Bengal Artillery from Calcutta to Meerut.

The Army head quarter shifted to Shimla from Calcutta. Sensing the dangers of the increasing Indian troops he proposed reduction of Indian soldiers. He encouraged the inclusion of Gorkhas to the Indian Army and organized an irregular force for Punjab. Dalhousie policy of annexations and reforms only appealed to the English interests in India and this is said to have created the grounds for a rise of the Indian opposition, which reflected as the mutiny of 1857. Though started by the sepoys of the Indian army, it gave an opportunity for the discontent Indian rulers to express their discontent. It also was an attempt aimed at erasing the British rule in India. Before the revolt of 1857 several revolts preceded reflecting the Indian opposition to the British domination.