akistan has been ranked 101st out of 158 countries in the 2025 Illicit Trade Index, sparking serious concern over the country’s economic resilience and its attractiveness to foreign investors. The alarming ranking comes amid revelations that Pakistan loses an estimated Rs 751 billion annually due to illegal trade, according to a report published by The News International.
The new findings were unveiled in a report titled Pakistan’s Battle Against Illicit Trade: An Analysis of Challenges and Pathways to Resilience, jointly released by the Policy Research Institute of Market Economy (PRIME) and the Transnational Alliance to Combat Illicit Trade (TRACIT). The study paints a troubling picture of how widespread smuggling and black-market activity is sapping Pakistan’s fiscal strength.
Among the five sectors most affected, the tobacco industry leads with a staggering Rs 300 billion in losses. This is followed by petroleum products such as petrol and diesel, which account for Rs 270 billion. Tires and lubricants contribute Rs 106 billion to the deficit, pharmaceuticals Rs 60–65 billion, and the tea sector adds a further Rs 10 billion in losses annually.
Pakistan scored 44.5 on the Illicit Trade Index, falling well below the global average of 49.9. While the country performed relatively well in the area of Trade, Customs, and Border control with a score of 75.4—indicating robust border and customs procedures—it struggled significantly in other key areas. The score for Supply Chain Intermediaries was a low 25.9, and Sectoral Illicit Trade Indicators scored just 29.3, highlighting critical vulnerabilities within domestic trade and sector-level compliance.
Moderate scores in other categories—such as Taxation and Economic Environment (47.3), Regulatory Framework and Enforcement (46.4), and Criminal Enablers of Illicit Trade (42.7)—suggest deeper systemic weaknesses in policy enforcement and regulatory infrastructure.
The report concludes that while Pakistan has made some progress in controlling illicit trade at its borders, sweeping reforms are urgently needed across internal trade systems, enforcement mechanisms, and regulatory compliance in order to stem the tide of economic loss and lay the foundation for sustainable development.