Why did opium production in British territories decline by 1820s whereas the production outside the British territories increased?
The British Government in Bengal established a monopoly to trade in opium. No one could trade in the product except the company. By the 1820s opium was produced in Central India and Rajasthan, within Princely States that were not under British control.
In these regions, opium was growing more than it was growing in British territories. Here, the local traders were offering much , higher prices to peasants which made the peasants interested to grow opium. So, there was a thriving opium business outside the British territories and in British territories, it declined.