The recent debate on discontinuing Paki stan’s Tobacco Track and Trace System (TTS) demands sober reflection, not administrative haste. Illicit tobacco trade is not merely a fiscal inconvenience; it is an administrative issue, a structural assault on the national economy, public health governance, and the rule of law.
At stake is not simply a contract but the architecture of supply chain transparency that Pakistan painstakingly built in alignment with its international commitments. Dismantling this system risks reversing a rare and significant governance achievement.
Pakistan’s obligations are not optional. By acceding on June 29, 2018 to the Protocol to Eliminate Illicit Trade in Tobacco Products under the WHO Framework Convention on Tobacco Control (FCTC), the country formally committed itself to securing the tobacco supply chain through robust tracking and tracing measures. Article 8 of the Protocol mandates Parties to establish a comprehensive global tracking and tracing regime within five years of entry into force. The core requirement is unequivocal: tobacco products must carry unique, secure identifiers enabling monitoring from production to the first retail outlet. This is not a symbolic measure, but rather it is the backbone of any serious strategy to eliminate illicit trade.
Similarly, Article 15 of the Convention further obliges Parties to adopt effective measures to eliminate illicit trade in tobacco products, including monitoring, licensing, record-keeping, and enforcement cooperation. These provisions recognize a fundamental principle: illicit trade flourishes in opacity. Where production volumes are unverifiable and distribution channels remain unmonitored, revenue leakage becomes systemic rather than incidental. In a country where tobacco taxation constitutes a critical component of public revenue, the stakes are substantial. It is in this legal context that the Federal Board of Revenue (FBR) introduced the Track & Trace System for cigarettes on July 1, 2022, achieving full operational status soon thereafter. The system embeds digitally encrypted tax stamps with unique identifiers on every legitimate cigarette pack. These identifiers allow authorities to authenticate products, verify tax compliance, and trace movement along the supply chain. Crucially, it transforms enforcement from episodic raids to systemic oversight. Instead of chasing contraband downstream, regulators gain visibility at the source.
The logic is straightforward: illicit trade cannot be sustainably addressed through sporadic enforcement alone. It requires end-to-end traceability, an integrated system that links production data, tax payments, distribution records, and retail verification into a single accountable chain. A camera-based counting mechanism (the proposed “digital eye”), however technologically appealing, cannot substitute for secure, serialized identification and end-to-end tractability. Counting production volumes at factory gates does not prevent diversion, under-declaration, parallel supply chains, or counterfeit replication once products leave the premises. It addresses quantity, not traceability.
Replacing a secure digital stamp regime with a “digital eye” system risks narrowing oversight to a single node in the supply chain. Illicit trade networks are adaptive; they exploit precisely such gaps. Without unique identifiers tied to centralized databases, enforcement agencies lose the capacity to authenticate products in real time. Retail-level verification becomes impossible. Cross-border intelligence cooperation weakens. Most importantly, the deterrent effect, grounded in the certainty of traceability, erodes.
The economic implications are equally significant. Illicit tobacco trade deprives Pakistan of vital revenue annually, distorts market competition, and undermines legitimate industry actors who comply with tax obligations. Revenue loss in this sector is not an abstract fiscal statistic; it directly constrains public investment in health, education, and development. A weakened tracking regime effectively subsidizes non-compliance. Beyond national boundaries, there is a reputational dimension. The global T&T architecture envisioned under Article 8 anticipates interoperability and cooperation among parties. Pakistan’s early and operational implementation positioned it as a regional example of compliance. However, with increasing exports (10 pack cigarettes to Sudan, for example), Institutions such as the Sustainable Development Policy Institute (SDPI) have not only supported TTS domestically but have also trained tobacco control stakeholders across the Eastern Mediterranean Region on supply chain security and illicit trade control. Rolling back this system would send a contradictory signal at a time when regional collaboration against illicit tobacco trade is intensifying.
It is worth emphasizing that track and trace is not an experimental innovation; it is an evidence-based regulatory standard endorsed globally. Jurisdictions that have invested in secure serialization systems report measurable improvements in tax compliance and reductions in illicit market share. The premise is simple but powerful: transparency dis-incentivises evasion. When every pack can be verified and every movement recorded, the cost of diversion increases dramatically. This also helps settle the long-standing industrial claims that illicit tobacco products are smuggled or produced in another jurisdiction. Replacing a comprehensive traceability framework with a narrower production-counting device would represent regression, not reform.
The broader question is one of policy coherence. Pakistan’s public health commitments, fiscal consolidation efforts, and international treaty obligations converge on a single imperative: secure the tobacco supply chain comprehensively. Illicit trade control is not achieved through partial visibility. It demands systemic design. The decision before policymakers is therefore not technical but strategic. Will Pakistan reinforce an end-to-end monitoring system aligned with its international commitments and domestic revenue needs? Or will it substitute it with a mechanism that, by design, cannot deliver full traceability, and is prone to industrial interference and help industry evade taxes?
Illicit tobacco trade is sophisticated, networked, and profit-driven. The response must be equally sophisticated, networked, and systemic. Preserving and strengthening the Track and Trace System is therefore not about defending a contract. It is about defending the principle that transparency, accountability, and compliance are non-negotiable foundations of economic governance. Pakistan has already taken the difficult step of implementation. The prudent course now is consolidation and enhancement, not retreat.
Copyright Business Recorder, 2026
The writer is Head of Centre for Health Policy and Innovation and a tobacco control advocate at the Sustainable Development Policy Institute (SDPI), Islamabad