Abstract:Tokenization is a crucial step in NLP, especially with the rise of large language models (LLMs), impacting downstream performance, computational cost, and efficiency. Existing LLMs rely on the classical Byte-pair Encoding (BPE) algorithm for subword tokenization that greedily merges frequent character bigrams. This often leads to segmentation that does not align with linguistically meaningful units. To address this, we propose morphology-aware segmentation as a pre-tokenization step prior to applying BPE. To facilitate morphology-aware segmentation, we create a novel dataset for Hindi and Marathi, incorporating sandhi splitting to enhance the subword tokenization. Experiments on downstream tasks show that morphologically grounded tokenization improves performance for machine translation and language modeling. Additionally, to handle the ambiguity in the Unicode characters for diacritics, particularly dependent vowels in syllable-based writing systems, we introduce Constrained BPE (CBPE), an extension to the traditional BPE algorithm that incorporates script-specific constraints. Specifically, CBPE handles dependent vowels. Our results show that CBPE achieves a 1.68\% reduction in fertility scores while maintaining comparable or improved downstream performance in machine translation, offering a computationally efficient alternative to standard BPE. Moreover, to evaluate segmentation across different tokenization algorithms, we introduce a new human evaluation metric, \textit{EvalTok}, enabling more human-grounded assessment.