The word originated from India describing a band of ruthless bandits in the hills of India. These mythical bandits wore yellow (or orange) bandana which they used to strangle unsuspecting travelers. The ‘hugghi’ only kill their victims by this way.
During British occupation, the British soldiers decided to erradicate the ‘thugghi’. They found thousands of bodies burried by them. From that point on, the word ‘thug’ was used to describe someone who is ruthless.