<p>Despite sustained policy efforts to modernize agricultural marketing in India, smallholder paddy farmers in eastern India remain weakly integrated into formal markets and continue to rely heavily on informal channels that offer lower and less stable prices. Using nationally representative data from the 2018–19 NSO Situation Assessment Survey (77th Round) covering 8,940 paddy-cultivating households across seven eastern Indian states, this study examines the determinants of marketing channel choice among four alternatives: informal local traders, state-regulated buyers, farmer collectives, and private channels, using a multinomial logistic regression framework. The results reveal that over 82% of smallholders sell through informal traders, indicating severely limited uptake of formal and collective marketing arrangements. State-level institutional infrastructure emerges as the dominant structural determinant: farmers in Chhattisgarh and Odisha, where public procurement systems are active, are 16.6 and 4.4% points more likely to use regulated channels, respectively, compared to states like Bihar and Jharkhand, where formal procurement is near-absent. KCC possession and crop insurance are negatively associated with formal channel use, consistent with the theoretical prediction that single-instrument financial inclusion does not improve market integration when complementary procurement infrastructure is absent. Scheduled Tribe farmers show the weakest formal market participation across all channels, underscoring persistent structural exclusion. Price realization analysis indicates that regulated buyers are associated with a robust selection-adjusted price premium of approximately 21% over informal traders. The findings point to the need for state-specific interventions; procurement infrastructure in Bihar and Jharkhand, FPO strengthening in Odisha and Chhattisgarh, and targeted inclusion programs for tribal farmers.</p>