Cash Crop Conundrum: India's Opium Farmers Plough On To Make Hay Out Of A Revised Licensing Policy

On September 12 this year, the Annual Licensing Policy for Opium Crop Year 2025-26 was released. As per the latest policy, opium farmers must now achieve a minimum qualifying yield of 5.9 kg of morphine per hectare to be eligible for a licence for the succeeding year — a sharp increase from the 4.2 kg threshold of 2024-25. 

Fitting The Criteria

The annual opium licensing policy lays down the eligibility criteria, the minimum qualifying yields, and area limits. It has also given leeway for enhanced use of digital services.

The policy is revised and the licences are renewed annually to meet the treaty obligations under the Single Convention on Narcotic Drugs, 1961. 

Almost 56,000 farmers in India are engaged in (legal) opium cultivation in Madhya Pradesh, Rajasthan, and Uttar Pradesh.

Controlled Cultivation

Under the Narcotic Drugs and Psychotropic Substances Rules, 1985, the Central Bureau of Narcotics (CBN) regulates opium cultivation, taking into view parameters such as the eligibility, the quantity, and the conditions. 

The opium farmers, however, live in perpetual fear of licence cancellation. “We are looking forward to the sowing season, but even as the new guidelines for growing opium are out, confusion remains,” a farmer from Rajasthan, on the condition of anonymity, told The Secretariat.

Their plight is exacerbated by meagre and diminishing returns despite long hours of manual labour. 

"What we receive per kilogram of opium gum ranges between ₹1,000 and ₹2,500, while the capital required can cross ₹1,00,000, sometimes even ₹1,50,000,” said the farmer.

Who Cashes In?

In India, the pharmaceutical sector gains the most from opium cultivation since the cash crop is a raw material used to extract alkaloids such as morphine, thebaine, and codeine — extensively utilised by the pharmaceutical industry. 

Pharmaceutical manufacturers anticipate little disruption in supply from the annual licence renewal process, says Sumit Agrawal, Vice Chairman, IDMA - Gujarat State Board. 

Impeded Imports

The raw opium produced in the country exceeds the domestic healthcare requirements, giving rise to an imbalance in the supply chain. 

Further, the morphine extracted from Indian opium does not meet international regulatory standards. As a result, global buyers depend on concentrated poppy straw (CPS) technology, which yields alkaloids more efficiently. The Department of Revenue has also granted a licence to process using CPS technology, but this is yet to be taken up in full swing, Agrawal said.

Devesh Malladi, Chairman, NDPS Committee, IDMA, said, "India produces opium exceeding its domestic demand, and also not in the right quality or form to reduce the dependence on imports." 

This leaves the country largely incompetent in a global market abounding with CPS-derived opioids. 

Global Perspective

Besides India, opium is grown in two other regions: the Golden Crescent (Afghanistan and Pakistan) and the Golden Triangle (Myanmar, Thailand, and Laos). 

But unlike in India, opium is predominantly produced illicitly and trafficked to the international drug market from these principal regions. 

The Tariff Effect

As US President Donald Trump imposes a 100 per cent tariff on the pharmaceutical sector, analysts observe that its ripple effects could likely be felt in opium cultivation in India too, since the US is one of the largest consumers of opioids and painkillers. 

The Road Ahead

India remains one of the few cultivators of legal opium, with a tradition spanning centuries. But outdated technology and an international market that has long moved away from raw opium gum have been detrimental to opium production. 

For farmers, the stakes have been very high, as their livelihoods hinge upon the constantly changing licensing structure. They seek financial support, subsidies, better incentives, and awareness camps from the government. 

Meanwhile, the pharmaceutical sector is faced with the question of whether India should modernise enough to reduce import dependence and regain its key role in the global supply chain. 

The 2025-26 Opium Licensing Policy, with its higher yield thresholds and digital monitoring, aims to modernise the structure for a positive reform. But unless and until investment pours in and there are more varieties and an enhanced system for cultivation and quality checks, India is at risk of being left behind.