When cigarette import duties were cut by 50 percent in July 2026, the government's stated rationale was clear: high prices had widened the gap between legal and illicit products, creating conditions that allowed illegal and smuggled cigarettes to gain a foothold in the market. The revised duty structure was introduced as part of an effort to address this challenge and encourage a shift back towards the legal market.
Adhadhu spoke with retailers across the Greater Male' area to understand how the market has evolved since the policy was introduced.
Where shopkeepers once stocked unnamed, illegal brands, many now report having little or no illicit stock available. "Previously, we used to sell more illegal brands, but we don't get those anymore," one retailer said. "This is the last stock of these that we have. People have shifted to legal brands. It's the only ones we carry in-store now."
Retailers' experiences suggest that the revised duty structure may be helping to create a more balanced market environment by narrowing the gap between legal and illicit products and supporting a shift towards regulated channels. While enforcement continues to play an important role, the policy may also be addressing some of the market conditions that previously enabled illicit trade to thrive.
A more balanced market can bring broader benefits. As legal products become more competitive relative to illicit alternatives, consumers may be more likely to purchase through regulated channels. This can help strengthen the legal economy, support legitimate businesses, and contribute to government revenue over time. It can also improve the effectiveness of regulatory oversight by reducing the space in which illicit operators can operate.
The government's five-year campaign aims to reduce tobacco use and create a tobacco-free society. The generational ban protects young people, while cessation programmes support those who wish to quit. Alongside these efforts, measures that reduce the attractiveness of illicit trade may play an important role in creating a more effective and sustainable regulatory framework.
Has the revised tobacco duty helped create a more balanced market?
If recent market observations are any indication, the policy may be contributing to a gradual shift away from illicit products and towards the legal market. The next challenge will be ensuring that taxation, enforcement, and public health measures continue to work together to support both market integrity and long-term public health objectives.
