FBR warns textile spinning units of import bans, blacklisting and other penalties for refusing to install its ‘digital eye’ video monitoring system on cotton use.
What Is FBR’s ‘Digital Eye’ System for Spinning Units?
The Federal Board of Revenue has introduced a video analytics monitoring system, commonly known as the “digital eye”, for textile spinning units across Pakistan. The purpose of this technology is to track the flow of cotton bales, document production and close loopholes that allow untaxed cotton to move through the supply chain.
Out of 421 registered spinning units in the country, around 300 are currently operational. FBR plans to fully deploy the digital eye system at these facilities so that movement of cotton bales can be monitored in real time. The spinning stage is seen by the tax authority as a critical choke point where undocumented inputs can be detected before they are converted into yarn and fabric.
Tough Enforcement: Import Bans, Sealing and Blacklisting
After multiple missed deadlines, FBR has now signalled that it will move from persuasion to strict enforcement. Field formations have been directed to ensure full implementation of the video monitoring system and to take “extreme enforcement measures” against units that refuse to comply.
These measures may include placing an embargo on imports for non-compliant mills, sealing factory premises, suspending sales tax registration and imposing financial penalties. Spinning units can also face blacklisting and denial of clearance for goods from their production facilities if they continue to resist the installation of the digital eye system.
Electronic monitoring was initially supposed to begin on 1 November, but the first deadline passed without full compliance. FBR then extended the date to 31 December 2025. With this second deadline now expired and no legal stay in place, officials say that non-cooperating units will be treated as defaulters and dealt with under the law.
Targeting Undocumented ‘Gol Maal’ Cotton in the Supply Chain
Pakistan’s textile sector consumes around 13 million cotton bales every year. Of this, an estimated 5 to 6 million bales come from local production, while the rest are imported. Officials say that roughly 9 million bales fall inside the documented tax net, but the remaining quantity is believed to be consumed locally without payment of sales tax.
In industry slang, this untaxed quantity is called “Gol Maal” cotton. Because spinning mills are where raw cotton is first converted into yarn, they provide a natural checkpoint for documenting how much cotton is actually being used. By installing cameras and analytics tools at this stage, FBR hopes to track stock movements, detect under-reporting and plug revenue leakages.
The authority also offered tax credit facilities to help mills cover the costs of installing the monitoring equipment. A joint committee, with representatives from FBR and the All Pakistan Textile Mills Association, was formed to guide implementation and resolve operational issues, but resistance from some units has continued.
Industry Pushback and FBR’s Next Steps
According to officials, APTMA has been opposing the rollout of video analytics at the spinning stage, with some units even approaching the Lahore High Court to seek relief. However, the court has not granted any stay order against the monitoring system, removing a major legal excuse for delay.
With legal challenges cleared, FBR now appears determined to enforce the digital eye “at any cost”. Spinning units that refuse to install the system may find themselves facing import restrictions, blocked shipments and serious reputational damage if they are blacklisted.
For compliant mills, the monitoring system could eventually help level the playing field by curbing undocumented competitors who rely on untaxed cotton. For the government, the initiative is part of a broader effort to expand the tax base, recover lost revenue and bring greater transparency to one of Pakistan’s most important export industries.
For stakeholders across the textile chain, the key message is clear: the era of loosely documented “Gol Maal” cotton is closing, and digital monitoring is becoming a standard condition for doing business in the spinning sector.
