What caused the decline of the Mughal Empire? Causes include:
1) The despotic reign of rulers such as Aurangzeb, who instituted draconian religious policies.
Arguably the greatest Mughal Emperor, Akbar was a shrewd and progressive ruler who concentrated on putting reliably capable leaders in his government, regardless of religious affiliation.
Even though Akbar was Muslim, he was well-known for his outreach to his Hindu constituents. He married a Hindu princess, rolled back the unpopular jizya tax on non-Muslims, and counted Hindu Rajput warriors as vigorous defenders of his throne. In contrast, Aurangzeb's reign saw the random desecration and destruction of Hindu temples and the disenfranchisement of Hindus and the minority Shia Muslims in government. He made the Sikhs, the Jats, and the Marathas his bitter enemies through his autocratic policies toward them. While Aurangzeb's kingly ancestors had relied on Shias as capable administrators, Aurangzeb himself distrusted them. As a result, his government was deprived of able and efficient administrators.
2) The degeneration of the army.
After Akbar, the military began its long decline; during the last days of the Mughal Empire, the demoralized Mughal Army lacked every possible definition of an effective fighting force. The army was undisciplined and lacked rigorous training regimens to support its continued efficiency. Equipment was out-dated and useless. Furthermore, the Mughals never bothered to raise up an adequate navy to counter those belonging to enemy powers. The British and French used this weakness to advantage and established control over India.
3) The absence of a definite law of succession led to corrupt nobility exploiting the situation to protect their own power.
The wars of successions greatly weakened the Mughal Empire. Opposing noble factions grappled for power. Weaker emperors of the Mughal Empire were not able to staunch the flow of corruption from the noble military officer classes (mansabdars). The mansabdars were grasping opportunists who fought for influence and power within the Empire. Their short-sighted ambitions caused further deterioration in the integrity of Mughal government.
4) Economic bankruptcy.
Government corruption was a major cause of the economic problems which plagued the Mughal Empire in its last days. Later emperors such as Shah Jahan robbed the royal treasury to finance favored projects. Taxes were raised to support wasteful spending. Aurangzeb's long military campaigns against the Shia Muslim kingdoms of Bijapur and Golkunda, plus his violent persecutions against various minorities, further drained the treasury.
The invasions of Nadir Shah and Ahmed Shah Abdali also depleted the royal treasury. The Persian King Nadir Shah personally ordered the massacre of about 30,000 people in Delhi.
For more information, please refer to the links below. Thanks for the question!