The British and the French were also kept at a distance by the First Nizam. However, his successors failed to keep the French and the English at a distance owing to the succession issues among the sons and grandson of the first Nizam. In 1768, Nizam Ali Khan leased out Coastal Andhra region to the English East India Company for a nominal rent. In lieu he was expecting military assistance from the Madras Presidency against the Marthas to win back Berar as he did not get support from the British earlier. The coastal region was finally acceded to Madras Presidency in 1823 in consideration of dues payable to the English for maintaining the British army at Hyderabad, as the Nizam joined the subsidiary alliance in 1800 seeking protection of the English.
The grant of Coastal Andhra had far-reaching effects, turning Hyderabad into a land-locked region. The Last Nizam when he preferred to be independent or to join Pakistan, felt the need for an opening to waters.
Again, Nizam Ali was the first to join the Subsidiary Alliance with the East India Company by allowing the British Resident to stay in the heart of his capital city, Hyderabad with a contingent of British Army maintained by the Nizam. The Nizam was also forced to disband his native army on economy measures because he was getting protection from the British. The Native army were disbanded. The army soldiers who lost their employment felt disgruntled against the Nizam. Their anger found reflection in the First War of Independence in 1857.
During this time, Turrebaz Khan attacked the British Residency in Hyderabad. For his heroic deed, the Residency Road in Hyderabad is named after him.
In the second half of the 18th century, Mir Nizam Ali Khan, Nizam-ul-Mulk, Asaf Jah II, had frequent clashes with the Marathas. In 1853, during the rule of Mir Tahniyat Ali Khan, Afzal-ud-Daulah, Asaf Jah V, had to hand over the administration of the very rich cotton growing Berār Province to the East India Company to pay for the cost of protection given by the Company. Berār was formally annexed by the British in 1903.