Pakistan’s cosmetics and personal care market has grown rapidly over the past decade, but smuggled and grey-market products have captured a significant share of this growth. Industry studies estimate the domestic personal care market at about US$1.7 billion, expanding at roughly 15 percent per year, with experts suggesting the actual growth rate is closer to 20 percent once unrecorded sales are included. A notable part of that “missing” growth is attributed to black market channels, including smuggled brands and under-invoiced imports that never fully enter the tax net.
This problem sits within a much larger national challenge. The Pakistan Business Council estimates that illegal trade across sectors, including smuggling, misdeclaration, and under-invoicing, results in annual tax losses of around Rs 8 trillion. Cosmetics and personal care products form a visible part of that landscape, particularly because they are high-margin, brand-driven goods that are easy to transport and sell through informal networks.
One of the primary conduits for smuggled cosmetics has been the Afghan Transit Trade. Official data show that while Pakistan’s recorded imports of cosmetics have declined, Afghanistan’s imports of the same categories have surged sharply, a pattern that points to diversion of duty-free transit cargo back into Pakistani markets.
Recognizing this risk, the Ministry of Commerce, through SRO 1397(I) of 2023, placed cosmetics among a list of “smuggle-prone” items banned from transiting to Afghanistan via Pakistan, along with tyres, black tea, fabrics, and certain home appliances.
Once inside the country, smuggled cosmetics move through established wholesale markets in Karachi, Lahore, Quetta, and Peshawar, as well as through smaller retail outlets and online sellers. Border-trade assessments list cosmetics alongside tyres, electronics, cigarettes, tea, and textiles as everyday smuggled items entering Pakistan through informal routes.
For consumers, the presence of these products is normalized; they appear on shelves alongside legal brands, often at lower prices and with inconsistent labeling, making it challenging to distinguish compliant products from illegal ones.
The economic impact is significant. Formal importers and local manufacturers, who pay customs duties, sales tax, and comply with regulatory requirements, are forced to compete against untaxed products that can be sold at lower prices. A case study of a leading Pakistani cosmetics company notes that although the category shows strong underlying demand, part of the apparent market growth is captured by smuggled and grey-market products, which dilute returns on legitimate investment and discourage expansion.
Consumer health and safety are also at risk. Manufacturing and importing of cosmetics are supposed to be licensed and overseen by the Drug Regulatory Authority of Pakistan (DRAP), yet smuggled products bypass these controls entirely.
International seizures of unauthorized cosmetics of Pakistani origin in foreign markets have highlighted the potential presence of untested or improperly labeled ingredients, reinforcing concerns about weak oversight of quality in unregistered products.
Policy responses have begun but remain incomplete. The transit trade restrictions on cosmetics are a step toward constricting one major route. Pakistan Customs has also increased seizures of mixed consignments that include cosmetics alongside other smuggled goods. However, the Pakistan Business Council and other experts argue that sustainable progress requires a broader framework: political consensus against informality, tighter control over cash-based trade, stronger border management, and greater use of technology and data to track supply chains and retail sales.
Unless smuggled cosmetics are systematically pushed out of mainstream retail and online channels, Pakistan will continue to lose revenue, local manufacturers will remain at a disadvantage, and consumers will be exposed to products whose safety and quality have never been adequately vetted.