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Local traditions fix the establishment of the modern city in the last years of the fifteenth century, and in 1514 the Portuguese traveller Duarte Barbosa described it as an important seaport, frequented by many ships from Malabar and all parts of the world. There still is an irregular picturesque fortress on the banks of the river built in 1540. One particular village in the suburbs of Surat is Barbodhan Village, possibly named after the explorer Duarte Barbosa (it derives from "Bab-ul-Aden"—Doorway to Aden, Yemen—where it has strong cultural and trading links).

Surat eclipsed Cambay as the major port of western India, as Cambay's harbour had begun to silt up by the end of fifteenth century. Subsequently during the reigns of Mughal emperors Akbar, Jahangir and Shah Jahan it rose to be the chief commercial city of India. An Imperial mint was established at Surat during that time. As the major port on the western seaboard of that time, Surat also served as the sailing port for the Hajj to Mecca. At the end of the 16th century the Portuguese were undisputed masters of the Surat sea trade. In 1608, ships from the British East India Company started docking in Surat, which was established as a trade transit point. In 1612, the British Captain Best, and after him Captain Downton, destroyed the Portuguese naval supremacy and obtained an imperial firman establishing a British factory at Surat following the Battle of Swally. The city was made the seat of a presidency under the British East India Company after the great success of the embassy of Sir Thomas Roe to the court of emperor Jehangir. The Dutch also founded a factory.

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