Smoking breaks are often work related. If two smoking colleagues need to discuss something, then they are likely to combine it with a cigarette break, and kill two birds with one stone.
Besides, the only reason smokers go for fag breaks is because of the lily-white lung crowd forcing us away from our desks. So remember, nicotine-nazis, it's for your benefit we go outside, so as not to harm your delicate constitutions.
I expect this will not increase productivity. I suspect they'll not bother to measure in any case. The anti-smokers will still resent the smokers disappearing off to their conspiratorial conclave, but they'll no longer have any moral highground to preen themselves upon.