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India
The second-largest country in the world by population and the seventh-largest by area, India also possesses one of the fastest-growing economies in the world, thanks to its 1991 economic reforms. Despite this growth, inequality between the most and least privileged is great, and poverty, illiteracy, and malnutrition are widespread. Although Indian authorities have downplayed the extent of drug trafficking in the country, the U.S. government considers the country one of the 20 major trafficking hubs. In addition, India is the source of some three-quarters of the global supply of counterfeit pharmaceuticals, and a large number of patent-violating pharmaceuticals that are sold as discounted brand-name drugs to the Western market.
Opium
India has been involved in the global drug trade since the 18th century, when the Chinese opium-smoking practice was fueled by Indian poppy; domestically, Indians never took to smoking opium, and instead consumed it infused in water. Opium pills were used medicinally, especially for malaria, asthma, and chronic pain or coughing. Throughout the 19th century, Indian opium was one of the most important trade goods to British India, profiting both the Empire and the locals. However, having witnessed the effects of opium addiction on foreign customers, the government of India was careful to craft one of the world's earliest bodies of drug policy.
It was assumed at the start of the 19th century that prohibition was impractical because it would leave the state with no means by which to enforce moderation; instead, different regions within India restricted opium usage and domestic sales to varying degrees. In 1878, after the passage of the Opium Act, the central Indian government was given full authority over opium regulation throughout British India, and made illegal the growing, processing, sale, or possession of opium without government permission—essentially a revenue matter, much like with cigarettes in the 21st century.
The government needed to ensure that it would profit from the opium trade, whether domestically or internationally, and each province adopted a different system of domestic opium sales. Such systems essentially revolved around the sale of opium production or retail licenses, which were limited to a specific number. There were also limits on the amount that a customer could be sold at one time, or could possess, the purpose of which was to make resales impractical. Further, the price of opium was controlled by the government, and was kept high enough to not only maximize their revenues, but to discourage usage from spreading.
Contraband opium on display in Jaisalmer, India. According to some estimates, 30 percent of Indian opium may be illicit.

Today, opium continues to be legally produced for medicinal purposes (i.e., the production of morphine and codeine). India has been praised in the past for the close control it maintains over medicinal production, but in recent years officials have found evidence of previously unsuspected illegal opium cultivation. The extent of contraband opium production within Indian borders is a matter of dispute; American narcotics authorities have said they believe as much as 30 percent of Indian opium is being diverted to illegal purposes. The Indian government insists the amount is much lower—5 or 6 percent—and that they have caught most illegal operations not long after they began.
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