The outbreak of the Seven Years' War in Europe in 1756 resulted in renewed conflict between French and British forces in India.

The Third Carnatic War spreads beyond southern India and into Bengal where British forces capture the French settlement of Chandernagore (now Chandannagar) in 1757.

However, the war is decided in the south, where the British successfully defend Madras, and Sir Eyre Coote decisively defeats the French, commanded by Comte de Lally at the Battle of Wandiwash in 1760.

After Wandiwash, the French capital of Pondicherry fall to the British in 1761.

The war concludes  with the signing of the Treaty of Paris in 1763, which returns Chandernagore and Pondichéry to France, and allows the French to have "factories" (trading posts) in India but forbids French traders from administering them.

The French agree to support British client governments, thus ending French ambitions of an Indian empire and making the British the dominant foreign power in India.