A major scandal has been uncovered regarding the smuggling of acetate tow, a raw material used in cigarette filters, linked to Pakistan’s illegal cigarette industry. According to research by the international firm Alvarez & Marsal (A&M), there is a significant gap between the quantity of acetate tow imported and the actual production of cigarettes, leading to annual revenue losses worth billions of rupees for the government.
The report was presented to the media by Nick Hudzman, Global Head of Illicit Trade at British American Tobacco (BAT). Findings reveal that in 2023, enough acetate tow was imported to manufacture 60 to 80 billion cigarettes. Out of this, only 39 billion cigarettes were produced legally, with 2 billion exported (not subject to tax). Meanwhile, around 41 billion cigarettes were produced illegally, on which no duty or tax was paid.
FBR data shows that excise duty and sales tax were collected on only 37 billion cigarettes, highlighting a substantial loss to government revenue.
Nick Hudzman stated, “Acetate tow provides a transparent way to gauge actual cigarette production capacity, and these figures show a large discrepancy between declared quantities and real output.”
In FY 2024–25, the government imposed an advance excise duty of Rs. 44,000 per kilogram on acetate tow imports to improve transparency. However, weak enforcement has increased both smuggling and misreporting of imports. In 2023, recorded acetate tow imports stood at 2.36 kilotons, but this year they dropped sharply to just 0.145 kilotons. Despite this decline, the availability of illegal cigarette brands in the local market has not decreased — pointing to smuggling as a major supply source.
Recent FBR operations seized large quantities of acetate tow at the Sost (China) border and the Torkham (Afghanistan) border, indicating new smuggling routes. Experts warn that unless the government strengthens enforcement at these entry points and ensures transparency in import records, illicit cigarette consumption will continue to rise, causing not only huge revenue losses but also severe damage to legitimate businesses and the national economy.
