The first recorded history of opium cultivation in India in the 15th century refers to Khambhat and Malwa as the places where it was grown. During the Mughal Empire, opium was grown extensively and was an important article of trade with China and other eastern countries. During the second half of the 16th century, opium was brought under a state monopoly. However, during the twilight years of the Mughal Empire, the state lost its hold and control over the production and sale of opium was appropriated by a group of merchants in Patna. In 1757, the monopoly of opium cultivation passed into the hands of the East India Company, which till then had taken over the responsibility of revenue collection in Bengal and Bihar. In 1873, the then Governor General Lord Warren Hastings brought the entire opium trade under the control of the government.
Under the East India Company and later under British rule, the unrestricted cultivation of opium and the production of opium were banned. The current structure of legalized cultivation and production of opium in India under a regulated system of control thus dates back to the early nineteenth century. Although there were some changes in the methods of control, production, distribution, sale and possession of opium over the years, the monopoly remained entirely in the hands of the government.