The termination of paramountcy would have in principle meant that all rights that flowed from the states' relationship with the British crown would return to them, leaving them free to negotiate relationships with the new states of India and Pakistan "on a basis of complete freedom". Early British plans for the transfer of power, such as the offer by the Cripps Mission, recognized the possibility that some princely states might choose to stand out of independent India. This was unacceptable to the Congress, which regarded the independence of princely states as a denial of the course of Indian history, and consequently regarded this scheme as a "Balkanisation" of India. The Congress had traditionally been less active in the princely states to organise there and focus on the goal of independence from the British, and because Congress leaders, in particular Gandhi, were sympathetic to the more progressive princes as examples of the capacity of Indians to rule themselves. This changed in the 1930's as a result of the federation scheme contained in the Government of India Act 1935 and the rise of socialist Congress leaders such as Jayaprakash Narayan, and the Congress began to actively engage with popular political and labor activity in the princely states. By 1939, the Congress' official stance was that the states must enter independent India, on the same terms and with the same autonomy as the provinces of British India, and with their people granted responsible government. As a result, it insisted on the incorporation of the princely states into India in its negotiations with Mountbatten. Dissolution of Ruler’s Union The Minister for States, Mr. N. Gopalaswami Ayyangar, told Parliament on April 3 1955, that the Government of India would not recognize the Rulers' Union.
Mr. Ayyangar said some of the big and small Princes had met recently and discussed, among other things, a suggestion that the rulers of the merged and integrated States should combine for the restoration of the States to them.
Mr. Ayyangar told a cheering House that the great edifice built by Sardar Patel was going to be permanent and “any association or any agitation which has for its object the toppling over that edifice will be sternly and firmly dealt with”.
Initial Resistance by rulers and its gradual collapse The rulers of the princely states were not uniformly enthusiastic about integrating their domains into independent India. Some, such as the kings of Bikaner and Jawhar, were motivated to join India out of ideological and patriotic considerations, but others insisted that they had the right to join either India or Pakistan, to remain independent, or form a union of their own. Bhopal, Travancore and Hyderabad announced that they did not intend to join either dominion. Hyderabad went as far as to appoint trade representatives in European countries and commencing negotiations with the Portuguese to lease or buy Goa to give it access to the sea, and Travancore pointed to the strategic importance to western countries of its thorium reserves while asking for recognition. Some states proposed a subcontinent-wide confederation of princely states, as a third entity in addition to India and Pakistan. Bhopal attempted to build an alliance between the princely states and the Muslim League to counter the pressure being put on rulers by the Congress.
A number of factors contributed to the collapse of this initial resistance and to nearly all princely states agreeing to accede to India. An important factor was the lack of unity among the princes. The smaller states did not trust the larger states to protect their interests, and many Hindu rulers did not trust Muslim princes. Others, believing integration inevitable, sought to build bridges with the Congress, hoping thereby to gain a say in shaping the final settlement. The resultant inability to present a united front or agree on a common position significantly reduced their bargaining power in negotiations with the Congress. The decision by the Muslim League to stay out of the Constituent Assembly was also fatal to the princes' plan to build an alliance with it to counter the Congress, and attempts to boycott the Constituent Assembly altogether failed on 28 April 1947, when the states of Baroda, Bikaner, Cochin, Gwalior, Jaipur, Jodhpur, Patiala and Rewa took their seats in the Assembly.
Many princes were also pressured by popular sentiment favouring integration with India, which meant their plans for independence had little support from their subjects. The King of Travancore, for example, definitively abandoned his plans for independence after the attempted assassination of his dewan, Sir C. P. Ramaswamy Aiyar. In a few states, the chief ministers or dewans played a significant role in convincing the princes to accede to India. The key factors that led the states to accept integration into India were, however, the efforts of Lord Mountbatten, the last Viceroy of British India, and Vallabhbhai Patel and V. P. Menon, who were respectively the political and administrative heads of the Indian Government's States Department, which was in charge of relations with the princely states.