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Second Anglo-Mysore War

During the lengthy conflict with the Marathas, Hyder had several times requested the assistance of the East India Company, and it had each time been refused, in part due to the influence at Madras, of Hyder's enemy, the Nawab of Arcot. The British had also angered the Marathas by repudiating treaties, with whom they were at war for much of the 1770s, and they had also upset the Nizam of Hyderabad Asaf Jah II over their occupation of Guntur.

In 1771, Maratha envoys had approached Hyder with a proposal to ally against the company, with the goal of wresting control of eastern India from their rule. Since Hyder was at the time still attempting alliance with the British, he informed them of this offer, noting that he thought the Marathas would gain too much power and even threaten his own position under those circumstances. The Marathas, still at war with the British, renewed an offer of alliance in 1779. In this case, the alliance was to include the Nizam. His decision to join this alliance was prompted by two British actions. The first was the British capture by capitulation of the west-coast port of Mahé, part of a concerted effort by the British to capture all French outposts after the 1778 French entry into the American Revolutionary War. Hyder received much of his French-supplied equipment through this French-controlled port, and had provided troops for its defence. Furthermore, the action had provoked the Nairs on the Malabar coast to rise in rebellion again, although Hyder had quickly put this down. The second offence was the movement of British troops through territory under his control (and also other territory controlled by the Nizam) from Madras to Guntur. There was a skirmish in the hills, and the British detachment ended up retreating to Madras.

Hyder Ali began rebuilding his navy in 1778. Employing Joze Azelars, a Dutchman, he had built eight ketches with masts and 40 cannons and eight smaller dhows. When the war broke out in 1779, Azelars noted that the Brahmans and their allies made every possible effort to halt progress of the newly rebuilt navy based at Bhatkal.

The alliance planned to make virtually simultaneous attacks on British holdings all throughout India, while the Marathas agreed to honour Hyder's claims to territories he currently held north of the Tungabhadra River and reduced the amount of tribute he was required to pay under earlier agreements. Hyder expected to receive assistance from the French, especially in the Carnatic, the territory he sought to conquer. However, diplomatic actions by Governor Warren Hastings and the Company successfully convinced both the Nizam and the Marathas not to take up arms, and Hyder ended up fighting the war on his own.

He successfully gained alliances with Ali Raja Bibi Junumabe II of Cannanore Arakkal Kingdom and the Muslim Mappila community and later even met with Muslim Malays from Malacca, who were in Dutch service.