The following were the features of system of Subsidiary Alliance given by Lord Wellesley:

a) According to this alliance Indian rulers were not allowed to form their own independent armed forces.

b) Indian rulers accepting the Subsidiary Alliance were not allowed to form any alliance with another ruler, nor can they declare war against any power without the permission of English.

c) The Indian rulers accepting this system were to agree to the stationing of the British contingent force for whose maintenance they would pay a subsidy.

d) He would allow a British resident to stay in his state.

e) He would not employ any Europeans other than the English and if there was already any, he would dismiss them.

f) In return for acknowledging the British Company, army of English was to protect them but the ruler has to pay for the Subsidiary forces.

g) If any ruler failed to make the payment, then part of his territory was taken away as penalty.