The Vape Market in South Asia: Growth, Regulation, and What Comes Next

Walk into any decent café in Lahore's Gulberg or Karachi's Clifton on a Friday night and count the vapes. I did this last month — kind of unscientifically — and came up with 23 in one hour at a single spot. Three years ago, that number would've been maybe four.

Something's shifting. Fast.

The vape market across South Asia is doing what most consumer categories take a decade to do: moving from fringe novelty to mainstream habit in roughly 36 months. And nobody — not the regulators, not the public health folks, not even most of the brands selling these devices — really has a handle on where it's all headed.

The numbers nobody agrees on

Here's the problem with writing about this market. Official data barely exists. Pakistan's Federal Board of Revenue still doesn't have a clean tax category for e-cigarettes. India banned them outright in 2019, which means the actual market there went underground rather than disappearing (anyone who's been to a Delhi house party in 2024 knows what I'm talking about). Bangladesh is somewhere in between — technically legal, practically unregulated.

But piecing together import filings, retailer surveys, and a few decent industry estimates, the regional vape market is probably worth somewhere between $340 million and $480 million annually. Growing at 27% year-on-year by most credible reads.

For context: that's faster than the regional e-commerce sector. Faster than ride-hailing was at its peak. Honestly, I underestimated this category for years. I used to think it was a Karachi-Lahore-Islamabad bubble. Then I started seeing vape shops in Multan, Faisalabad, Sylhet, Kandy. The bubble theory died.

What's driving the growth

Three things, mostly.

First, harm reduction is becoming a real conversation. Younger smokers — and I mean people in their late 20s and early 30s — are switching, not because they think vaping is healthy, but because it's perceived as less awful than cigarettes. Whether that's true is a public health debate I'll leave to people with actual medical training. The market doesn't wait for that debate to conclude.

Second, distribution finally caught up. Five years ago, if you wanted a decent device in Lahore, you were buying something smuggled through Dubai with no warranty and dubious authenticity. Now there are proper authorized retailers. Brands like IVG run legitimate online operations — IVG Pakistan is a good example of what the category looks like when it grows up: actual product authentication, proper customer service, real return policies. That kind of infrastructure didn't exist in 2020.

Third, and this is the one most analysts miss: tier-2 city disposable income hit a threshold. A premium disposable vape costs roughly Rs 2,500-4,000 in Pakistan. That used to be a lot. For an emerging middle-class professional in Gujranwala or Hyderabad, it's now a Tuesday purchase.

The regulatory mess

This is where things get genuinely complicated.

Pakistan's approach has been to slap excise duties on imports without building a domestic licensing framework. Result? A booming grey market that pays no tax and follows no quality standard. Sri Lanka has gone harder — proposed bans, then walked them back, then introduced restrictions on flavors. Bangladesh is debating a framework that would essentially copy parts of UK regulation, which is honestly the most sensible model in the world right now.

India's blanket ban is the outlier and, in my opinion, a policy failure. The category didn't disappear. It just moved to WhatsApp groups, unregulated imports, and zero consumer protection. You can't ban demand. You can only choose whether to regulate supply.

Here's the thing — and this is where I'll probably annoy people on both sides — the vape industry actually wants regulation. Or at least the serious players do. Quality standards, age verification, taxation, product registration. All of it. Because regulation is what separates a real business from a smuggler with a Telegram channel. The brands selling counterfeit pods at half price aren't competing on quality; they're competing on the absence of rules.

What comes next

A few predictions, and I'll bet money on at least two of them.

Pakistan will introduce a vape-specific tax category within 24 months. The revenue is too tempting and the political cover (it's still a sin tax, conceptually) is too easy. Once that happens, the grey market shrinks by maybe 40% and legitimate retailers consolidate.

Disposables will lose share to refillable pod systems. This is already happening in the UK after their disposable ban discussions, and South Asian consumers — who are price-sensitive and increasingly environmentally aware — will follow. Refillable economics are just better: you pay more upfront and a lot less per month.

Flavor restrictions are coming. Probably not bans, but restrictions. Mango and ice variants are way too popular with people under 25, and even the industry knows that's politically untenable long-term.

And the biggest one: at least one regional brand will emerge as a serious player. Right now it's all UK and Chinese imports. But the margins are good enough, the manufacturing isn't impossibly complex, and the market is large enough that someone — probably out of Karachi or Dhaka — builds a regional vape brand worth $100M+ within five years. I'd be surprised if it didn't happen.

What I'm less sure about is the public health verdict. Ten years from now, will we look back at vape adoption as a net positive because it pulled smokers off cigarettes? Or as a mistake because it hooked a generation that would otherwise have stayed nicotine-free? Honestly, I don't know. The data isn't there yet.

But the market isn't waiting for the data. It rarely does.