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The Subsidiary Alliance System was “Non-Intervention Policy” used by Lord Wellesley who was the Governor-General (1798-1805) to establish British Empire in India. According to this system, every ruler in India had to accept to pay a subsidy to the British for the maintenance of British army.
Subsidiary Alliance was basically a treaty between the British East India Company and the Indian princely states, by virtue of which the Indian kingdoms lost their sovereignty to the English. It also was a major process that led to the building of the British Empire in India. It was framed by Lord Wellesley, the Governor-General of India from 1798 to 1805. It was actually used for the first time by the French Governor-General Marquis Dupleix.
The Nawab of Awadh was the first ruler to enter into the subsidiary alliance with the British after the Battle of Buxar. However, The Nizam of Hyderabad was the first to accept a well-framed subsidiary alliance.