Foreign investors urge crackdown on illegal cigarette trade

KARACHI: Foreign investors operating in Pakistan have raised serious concerns over the rapidly growing illegal cigarette market.In its budget proposals for the fiscal year 2025-26, the Overseas Investors Chamber of Commerce and Industry (OICCI) -- which represents a major portion of foreign investment in the country -- urged the government to adopt immediate measures to tackle the issue.

According to the OICCI, illicit cigarette trade is costing the national exchequer more than Rs300 billion annually. The illegal market not only undermines legitimate businesses but also significantly impairs the government’s ability to meet its revenue targets.

To counter this, the OICCI recommended a comprehensive crackdown on tax evasion within the tobacco sector. Key proposals include full enforcement of the track and trace system, stronger coordination among regulatory authorities, and tougher penalties for those involved in illicit activities.

The chamber also stressed the importance of implementing SRO 96(I)/2021 to regulate the movement of taxable goods from non-tariff areas -- such as Azad Jammu and Kashmir -- into the federally taxed market. In addition, the recommendations advocated for public awareness campaigns to educate consumers about the health risks associated with illegal cigarettes and to promote responsible consumption by supporting legitimate brands.

The OICCI’s proposals underscored the urgent need for policy reforms that prioritise transparency, enforcement, and equitable taxation in the upcoming federal budget. Tackling the illegal tobacco trade, it said, must be a top priority to support economic stability, safeguard public health and ensure a level playing field for all businesses.