On the restaurant wall of Dishoom in King’s Cross, London, is a list of forbidden activities. “No violence. No sticking of bills. No making mischief. No gambling. No combing hair. No dacoity.” What’s that last one again? The 1903 Glossary of Colloquial Anglo Indian Words and Phrases explains dacoity as the anglicisation of a term used in Hindi, Kannada and Urdu that means robbery by armed bandits.

But it’s another prohibition that intrigues me most of all. “No foreign clothes.” What does “foreign” mean in a London restaurant that simulates the food and decor of Bombay cafes in the early years of the 20th century? Are saris unacceptable? Should I have checked my pith helmet? Are dashikis out or in? Alex, the waiter, explains that the prohibition is an allusion to Mahatma Gandhi’s call for a boycott of foreign clothes as a tactic to raise political consciousness to end British rule. “By foreign he meant British – the western clothes that came to India during the Raj,” says Alex.

Dishoom – which means “Kerpow!” in Bollywood films – offers an alluring, if sanitised, reproduction of a dining experience that thrived during the Raj. Each of Dishoom’s three branches is designed to evoke the old cafes of Bombay set up by Zoroastrian immigrants from Iran. There used to be about 400 of these cafes; now fewer than 30 – such as Britannia Restaurant and B Merwan – remain. Mumbai’s loss is London’s gain. In 2010, Shamil and Kavi Thakrar, and Amar and Adarsh Radia, founded the first Dishoom in Covent Garden. Earlier this year, it was voted by reviewers of Yelp as the best restaurant in the UK – beating Dinner by Heston Blumenthal, Gordon Ramsay’s eponymous restaurant and L’Atelier De Joël Robuchon. “We feel privileged to be able to serve the guests ... and perhaps share a little bit of our love for Bombay food and culture with them,” Shamil Thakrar has said.

Dishoom is catching a wave of colonial nostalgia as Britons time-travel to the era when the people of this rain-soaked dot in the dismal north Atlantic raped, traded, pillaged and murdered their way to running the biggest empire the world has ever seen. And today’s bankable nostalgia, if that’s what it is, focuses on the jewel in the crown, India.

Certainly, Dishoom is hardly the only restaurant in London where Indians or Britons of Indian ancestry astutely sell a commodified dream of the Raj to Britons. Gymkhana, the London restaurant modelled on joints in Delhi and Mumbai and established by Karam, Sunaina and Jyotin Sethi in 2013, was last year voted the best restaurant in Restaurant magazine’s annual poll of the top 100 in Britain. Gymkhana’s interior design, like Dishoom’s, references the Raj – there are ceiling fans hanging from a dark-lacquered oak ceiling, cut-glass wall lamps from Jaipur, hunting trophies from the Maharaja of Jodhpur and, throughout, the vibe of Raj gymkhana clubs recreated for diners who, you would think, weren’t alive to witness it first time round.

Colonial nostalgia isn’t confined to restaurants. Channel 4’s current costume drama, Indian Summers, is set in the Raj’s summer capital of Shimla in 1932, its sizzling palette of colours so blinding for Britons in our winter gloom that when I reviewed its first episode, I dreamed of reinvading and re-establishing colonial rule. The drama – subcontinental Downton with plenty of bosom-heaving miscegenation – doesn’t airbrush the vexed politics of empire: there are gun-toting Indian revolutionaries in the shrubbery, while Julie Walters’s memsahib tries to ensure that the Royal Club’s unspeakable policy (no dogs, no Indians) is upheld.

Judi Dench in The Second Best Marigold Hotel. Photograph: Allstar/Fox Searchlight

There is also The Second Best Exotic Marigold Hotel, the sequel to the film adaptation of Deborah Moggach’s novel about British retirees who travel to Jaipur and become seduced by India. While the film is hardly set during the Raj, it does continue a long yet unrequited British love affair with India, which is only explicable because of our imperial connection. It’s of a piece with those Merchant Ivory films set during the British Raj – their adaptations of Ruth Prawer Jhabvala’s Heat and Dust and Shakespeare Wallah, and EM Forster’s A Passage To India – that dramatised two cultures colliding, unequally, decorously and for the most part in suffocating good taste.

But here’s the twist. In 2015, colonial nostalgia offers a business opportunity for Indians or Britons of Indian ancestry. It involves them selling a fetishised simulation of the British Raj back to the gullible British.

A reverse takeover

Consider, for example, what has happened to the East India Company.

Established in 1600 by Queen Elizabeth I, the joint-stock company originally traded in tea, silk and spices, but developed into a vast, corporate colonial force that came to rule large areas of India with its own private armies. But in 1857, its army’s sepoys (the term used for local soldiers) rose in revolt against the British. This mutiny led to the disestablishment in 1874 of the East India Company, which trundled on as a small tea and coffee concern.

In 2005, though, Mumbai-born businessman Sanjiv Mehta bought the company and turned it into a consumer brand focused on luxury foodstuffs. Then, on Indian Independence day 2010, he launched its website and a flagship store on Regent Street, London. Mehta denied that he was making money from one of history’s most toxic brands: “One must have the ability to judge yesterday and learn from it. The East India Company had great pioneering spirit and that remains. Without the company, Britain would not have tea on its tables and in Mumbai and Bangalore, people would not be having jam on their toast for breakfast,” said Mehta, who argued that his aim was to “capitalise on and retain the brand’s impeccable pedigree and enviable heritage”. Impeccable? Enviable? What about the company’s historic association with opium smuggling, or its links to the the Boston tea party, or the fact that as early as 1783, Edmund Burke, an East India Company shareholder, railed in parliament against its abuse of power over Indian people?

Land grab: the East India Company, 1781. Photograph: Lebrecht Music & Arts/Lebrecht Music & Arts/Corbis

To be fair, no businessman is going to succeed by drawing attention to his brand’s historic role in the racist exploitation of a subcontinent at gunpoint. Rather, Mehta’s East India Company today capitalises on its 400-year heritage by selling hampers that evoke the pioneering merchant spirit of yore – airbrushing anything such as colonialism’s brutality or how Indians felt about British rule. “Homecomings were a much-anticipated occasion for company officers, returning after years away from home and hearth with trunks overspilling with delicacies from foreign lands,” reads the blurb. “Conjure up a taste of the explorer’s spirit today with a hamper of surprises or gift boxes to delight friends and family alike.” If this sounds like a reverse takeover, in which Indians sell deluded dreams of colonial rule back to British dupes remembering the past through rose-tinted glasses, then perhaps it’s no more than the descendants of former colonial overlords deserve.

But why this colonial nostalgia now? Are Britons so hobbled by the gloom of austerity that they are impelled to look back to a time when this country ruled the waves, subjugated a third of the world’s population and, if that wasn’t bad enough, made them learn cricket?

How can nostalgia be bankable in a multicultural Britain?

Recycling the Raj fantasy

To get a sense of what this new wave of colonial nostalgia means in 2015, I talk to Paul Gilroy, professor of social theory at LSE and author of Postcolonial Melancholia. “I’m not familiar with the gory detail of these trends,” he replies laconically when I tell him about Indian Summers and London’s pre-independence Indian restaurants. “I’d see them less as nostalgia and more as melancholia – mourning’s pathological variant. The idea of the empire gets (re)visited obsessively because its loss remains painful but cannot be worked through. Britain might learn too many uncomfortable truths about its history if it was known and considered. In the absence of that encounter, phenomena such as the Raj get recycled as fantasy. The lost greatness of the imperial period can thereby be fleetingly restored.”

The loss does not get worked through. Travel companies are currently offering trips such as The Raj Reborn, a 15-day, £1,699 holiday that takes in the Taj Mahal, the Palace of the Winds, the Amber Fort and the glories of Shimla. But not, you’d think, the location of the Amritsar massacre.

Gilroy is no doubt right. The Raj is certainly being recycled as fantasy here, but not all the uncomfortable truths are being suppressed. Diners at Dishoom are reminded, very gently, if we care to look at the walls, that many Indians resented British rule and burned western clothes by way of protest. Dishoom wants to have its post-colonial cake (ideally a mawa cake with cardamom and cashews) and eat it. This is hardly the working through of postcolonial melancholia that Gilroy recommends. It’s much more conflicted than that.

But then no successful restaurant business model involves waiters coming up to the table to ask: “How’s your food, imperialist scum? More self-loathing with that?” Indian Summers has a similarly conflicted approach to the past. The drama wants us to both fall in love with the glamour of the Raj and realise it was an excrescence that had to go. Paul Rutman conceived the series while on a visit to Darjeeling with his wife and child, in part envisioning it as filling an empire-sized hole in Britain’s self-image. “Danny Boyle’s Olympics opening ceremony was a fantastic expression of what it means to be British, but it excised all mention of empire,” Rutman has said. “People on the right are quietly still terribly proud of it, while those on the left see it as a great source of shame. In the midst of that, there were ordinary people who went out there to try to make something of [themselves]. There’s a [dying] generation for whom empire was a huge part of their lives. I wanted to ask the question: what did we think we were doing out there?”

The dangers of nostalgic omission

Colonial nostalgia ain’t what it used to be. In the 1970s, there was a sitcom called It Ain’t Half Hot Mum, about a Royal Artillery concert party in second world war India. It took the pith out of the twilight days of the Raj, making them seem rather jolly: the effete limeys were desperate not to be sent to the front line while the Indians – Char Wallah Muhammad, Punka Wallah Rumzan and a blacked-up Michael Bates as bearer Rangi Ram – merely obliging underlings sporting cheerful grins that, even when I was a boy, made me cringe. One of the show’s creators, Jimmy Perry, denied that it was racist: “It’s not the British Asians who call the show racist,” he told me in 2003. “They called – and still call it – ‘our programme’. It was BBC executives who’d never been to India who thought it was racist.”

It Ain’t Half Hot Mum. Photograph: BBC

After It Ain’t Half Hot Mum, there was a spate of tales of the Empire on British TV and at the cinema, including Richard Attenborough’s Gandhi (1982), David Lean’s A Passage to India (1984) and ITV’s The Jewel in the Crown (1984). None was straightforwardly nostalgic for the Raj – Lean’s adaptation of EM Forster was too sweatily mired in psycho-sexual trauma, the other two too fixated on the death throes of empire – for that. But none of that mattered – each could be aberrantly decoded by nostalgic Britons, as the New York Times reported in 1984. “Fashions in Britain, we are told, are being influenced by Indian images, from local dress to the khaki uniforms of the former English ruling residents. There is talk about a certain nostalgia in Britain for the supposed glory days of Empire. All of which, if true, is certainly puzzling. The Jewel in the Crown is anything but nostalgic. It is an unflinching portrait of the arrogance and inevitable corruption of imperialism, exploring its underbelly of vicious social snobbery and racism.”

Indian Summers is doing something similar three decades on: snobbery, racism and corruption are all there in its depiction of the Raj’s summer capital. But if there is corruption, there is also seduction – it’s as if we perverted Brits need to masochistically admit doing the bad stuff (you know, rape, murder, colonising a third of the world), before we can enjoy basking in colonial nostalgia properly.

Viewed thus, British costume dramas about the disgrace of the Raj function as pretexts for the pleasures of fixating on the opposite – the cross-cultural slap and tickle, the spices, saris and sahibs and all the rest of the costume drama dross of Anglo-Indian history. Britain may have lost an empire, but it has become a nation of virtuosic, aberrant decoders.

I ring Scottish historian William Dalrymple, many of whose wonderful books, such as White Mughals and Return of a King, have dealt with the pleasures and pains of the British imperial experience in India. While I sit in London gloom, Dalrymple’s unacceptably sunning himself on his farm on the outskirts of Delhi. He is pleased, not about colonial nostalgia, but that the British are taking an interest in a chapter of their history that’s too often passed over. “Interest in empire is entirely justified,” he says. “It was an amazing thing the British did, in all its horrors and wonders. There are certainly very good reasons for being embarrassed about what we did – think of the half million whom we killed after 1857 [the date of the Indian Mutiny, brutally suppressed by the British].

“Therefore I think the right response to the Amritsar massacre [in which British troops fired on a large crowd of unarmed Indians, killing several hundred and wounding many hundreds more on 13 April 1919] is not for David Cameron to apologise [in fact, the prime minister declined to do so during a visit to the Punjabi city in 2013], but for it to be taught in British classrooms. At the moment our imperial history is not taught in schools – our children go from Henry VIII to the Nazis, omitting that very interesting period in between when we had the greatest empire the world has ever known.”

Dalrymple says he hasn’t yet been exposed to the new wave of colonial nostalgia. “I rather suspect, though, that Indian Summers is a good thing because it’s encouraging those who may not know about our empire to think about it, to realise that along with the horrors, along with the stereotypically racist British rulers, we did something in India that is worth celebrating – we brought the beginnings of parliamentary democracy, for one. Of course, nothing that the British brought to India can be unambiguously celebrated, but to ignore our past is fatuous.”

Are colonial-themed Indian restaurants similarly defensible? “Well, there’s an aesthetic pleasure in colonial style – all that dark mahogany and wickerwork is lovely and it’s rather silly, I think, to condemn those who enjoy all that. The danger is that it is merely an exercise in nostalgia and if it suggests that the empire was all wonderful, then clearly that’s dreadful.”

But what Dalrymple finds most striking is that, if Britain is experiencing colonial nostalgia, Indians are hardly returning the compliment. “Younger Indians don’t look to Britain any more. They see Britain as a land of racist inefficiency. They think Britain is becoming Rwanda. Which is somewhat unfair,” giggles Dalrymple. “After all, we do have a seat on the UN security council, which Rwanda doesn’t yet.

Gandhi. Photograph: Allstar/Columbia

“But many young Indians are not only not nostalgic, they imagine that they are going to be running the world.” They suppose, perhaps, that India could be to the 21st century what the British empire was to the 19th – or at least just as barmily hubristic? “Well, they may not be China, and [prime minister Narendra] Modi has to do a lot on the infrastructure, but the dream is there. So nostalgia for the Raj in India is now a complete irrelevance.”

And that, Dalrymple argues, represents a huge change during the 30 years he has been living in India. “When I was first here, older people would say to me: ‘They may have been bastards, these British, but I remember this wonderful time before the independence.’ Younger people didn’t care then, and don’t care now, of course. Well, those old people who remembered the Raj with fondness are now dead.”

After speaking to Dalrymple, I read Pankaj Mishra’s introduction to Rudyard Kipling’s Kim, the British Nobel laureate’s love letter of a novel to the India in which he was born. “His feeling for the land of his innocent childhood also made Kipling fiercely possessive: there was never any question in his mind that it was India’s destiny to be subject to the British Empire,” writes Mishra. “He thought of the British as custodians of a wonderful old culture, and he was often impatient with the British at home for failing to awaken to her imperial destiny as bringers of law and order to places like India.”

In 2015, the idea of Britons having such a destiny – one that Kipling elsewhere described as the “white man’s burden” – seems laughable, as the notion that Indians weren’t the best custodians of their culture isracist.

But it’s another remark by Kipling that resonates across the years. When Kipling retired to Sussex, he wrote to that other monster of British colonialism, Cecil Rhodes: “England is a stuffy little place, mentally, morally and physically.” Perhaps it was then, and perhaps remains so now – only with the difference that in 2015, it doesn’t have an empire attached. Maybe that very littleness is why there’s a market for a certain kind of nostalgic folie de grandeur. We don’t confront the pathology of postcolonial melancholia, as Gilroy argues we should. We don’t have the energy for that. And we certainly don’t have what it takes to recolonise. So we go for second best – we dream, futilely and deludedly, of what we lost.