Jati is the name of the caste system in place in India. Its aim is to provide services that Indian society needs. New jati groups emerged as new learning and expertise were developed. This knowledge is heriditary, preserving knowledge and minimizing the need for writing material.
Since this system was so crucial to preserving Indian knowledge and skills, there were very strict rules when it came to marriage. People could only marry within their own jati class, which prevented the dillution of knowledge. The health problems of intermarriages were well known to the Indians, and so they decided that people could not marry within their own village. This had the secondary effect of distributing knowledge and techniques from one village to the next.
Warriors that invaded India were frequently integrated into its system. The warrior jati class was in chronic shortage (they tend to die a lot), so these invaders easily became part of the elite warrior jati.
The economic system did not require money or even barter. Ever person belonged to a group under a large land owner, and would be allocated resources based on their contributions to the village and their jati. A hard working peasant would get more food than a lazy one, but never as much as a priest (brahman). The jati hiearchy was based on how important different groups were perceived to be to village life, and this justified the unequal allocation of resources.
