Question

why did Britain need indigo? what caused Britain to encourage it's cultivation in India?

Answer 1

Britain needed indigo because it produced a rich blue after dyeing the clothes. the existing markets like america and west indies collapsed. 
Britain wanted a new market to cultivate indigo to fullfill its demand in britain so it started cultivation in Indai, as indian climatic conditions were favourable for indigo cultivation. 

Answer 2

Indigo is blue color dye which is used to dye cloth. There was a great demad of it in Britain. The Industrial revolution increased the demand further. Since there climate was not suitable for growing indigo , the British have to get indigo from West Indies and America . But the collapse of indigo plantation in West Indies forced the British to look for source from other places . To meet it increasing demand the British turned to India because the climate here was suitable to growing indigo.