The Economic Impact of the Cigarette Industry in Sri Lanka

This report, commissioned by Ceylon Tobacco Company PLC (CTC), examines the economic footprint of the legal cigarette industry in Sri Lanka in 2025. The analysis covers the full value chain, from tobacco leaf cultivation and manufacturing to distribution and retail, assessing its contribution to GDP, employment and government tax revenues. It also examines the impact of illicit cigarette trade on the public finances.

CTC is Sri Lanka’s sole legal manufacturer of Factory Made Cigarettes. Its operations, alongside those of tobacco farmers, distributors and retailers, support economic activity across the country, both directly and through spending with domestic suppliers and employees’ wages.

In 2025, the legal cigarette industry contributed an estimated Rs 74.0 billion to Sri Lanka’s GDP and supported around 81,400 jobs, equivalent to 1% of national employment. The industry also generated an estimated Rs 181 billion in tax revenues, accounting for 3.6% of national tax receipts. Separately, illicit cigarettes accounted for an estimated 20% of the Factory Made Cigarette market, resulting in an estimated Rs 29.5 billion in forgone tax revenue.