The boom of sugar plantation in Cuba, led the huge settlement in Guyana and Trinidad and Tobago. African slaves and Indian indenture labours were brought to Caribbean islands including to Guyana and Trinidad & Tobago.  The Indian indentured labours were cheap and habitual to do work in tropic conditions.  During the period from 1834 and 1917, approximately 12,50,000 labourers were sent from India to far away places in the South Pacific, Africa, and the Caribbean.

 The 'East Indian' indentured labours, available in abundance, were carried out under the system of indentureship. The abundance plantations were abandoned and available land was available for settlement and cultivation.  The system of indentureship was no different from slavery. It was a modified system of slavery with modified form of provisions. The indenture labours were punished severely for petty issues.  The indenture labours were barred from land holdings and return to their homeland. The planters continuously depress the wages and maintain competition among wage earners for employment. 

 The economic competition in a context of scarcity of employment, low wages and land tenure system also sowed the seeds of racial and ethnic hostility between the Africans and the Indians. Equally important, the plantation economy shaped the formation of social classes and occupational groups along racial and ethnic lines. Indentureship had nearly devastated the free villages set up by the emancipated slaves, and had driven the blacks towards towns in a state of pecuniary. 

 The Indian indentured labour and their descendants remained insular and immobile on the sugar plantations. The indenture-expired free Indians also remained confined to their small agricultural plots and seasonal jobs on the plantations. Towards the end of the 19th Century, agricultural diversification took place with the rise of cash crops of banana, cocoa etc and the discovery of bauxite and petroleum. The chasm between the two racial groups widened further as mineral-industrial sector created more opportunities of employment and higher wages than were available in the agricultural sector and also settled the two communities along urban-rural divide. The policies of colonial administration also clearly favoured the formation of social classes and groups along ethnic lines. 

 Social hierarchy was built on 'colour', the Whiter the colour of the skin, the higher the social status. The Indians, although, 'brown' in colour, were regarded as outcasts, and despised by the Creole society as 'coolies'. They were generally illiterate and stuck to their faith. The political economy of plantation societies fomented racial divisions and cemented them along the urban-rural and industrial-agricultural divide. 

 Plantation societies were hierarchical and assigned the lowest position to the Indians, which, in the dominant perception of the Creole society, also corresponded to their low economic status and their menial labour in agriculture. Plantation societies thus evolved as segmented societies where ethnic and racial divisions were fed upon occupational, residential and economic divisions. In the 20th Century, trade unions and political parties were formed on the line of racie and ethnicity. Independence in the 1960s, also intensified the racial and ethnic divisions between the blacks and the Indians.