Copyright brecorder
The Government of Pakistan’s decision to implement electronic monitoring of production in textile spinning factories via video cameras from November 1 is a significant step toward industrial transparency, production quality, and economic stability. This initiative encompasses multiple aspects that are valuable not only for the industry and the national economy but also for the tax sector. Through video monitoring, it will be possible to closely supervise every stage of operations within factories, thereby preventing waste mixing, substandard production, or other illegal activities. Consequently, industrial processes will become more transparent, and the quality of exports will improve, reinforcing confidence in Pakistani products in international markets. Implementation of this monitoring will enable timely identification of any discrepancies between registered production and actual output, fostering accountability and transparency among factory owners. For the Federal Board of Revenue (FBR), this initiative holds particular importance, as accurate and transparent production will facilitate full and timely tax collection, generating additional revenue for the national treasury and enhancing the efficiency of the tax system. This technical approach also highlights the benefits of digital monitoring in the textile sector, including accurate measurement of production performance, reduction of resource wastage, and identification of unnecessary production costs. The FBR issued this notification under S.R.O. 1963 (I)/2025) in accordance with Sections 50(1) and 40C of the Sales Tax Act, 1990, and Rule 150ZQR of the 2006 Sales Tax Rules. The move aims to strengthen the tax collection framework, as video analytics-based monitoring can prevent tax evasion and fraud. However, effective implementation requires adequate infrastructure, training, and resources to ensure that factory owners and relevant authorities can use the system efficiently. Certain segments of the textile industry have also expressed concerns regarding this initiative, citing potential technical challenges or additional costs during the initial implementation phase. For small and medium-sized units in particular, adopting modern technology can pose financial and operational challenges. Key concerns include additional costs, technical complexity, and potential disruption to production. Additional costs arise due to the installation and maintenance of video cameras, servers, and software, which can be burdensome for smaller units. Technical complexity refers to the need for staff training on advanced technology and digital monitoring systems, requiring time and resources. Moreover, during initial implementation, there is a possibility of production delays or interruptions, which is an important consideration for the industry. To address these concerns and facilitate smooth implementation, several recommendations have been proposed. Financial support or subsidies can be provided to small and medium-sized units to reduce initial hardware and software costs and maintain fair competition. Appropriate training and guidance should be offered to factory owners and staff to enable effective use of the system. A pilot project or phased implementation should be carried out initially to identify and correct issues, followed by gradual expansion to all units. Continuous monitoring and evaluation of the system post-implementation is essential to make adjustments as required. Additionally, a shared or cluster model can be employed, wherein several small units within an industrial cluster use a common system, thereby reducing costs and technical burdens while enhancing implementation effectiveness. This notification should not be perceived as a punitive or overly strict measure but rather as a positive initiative for spinning units that operate fairly and transparently. Transparent monitoring will provide a competitive advantage to compliant units while curbing practices by substandard or non-compliant entities. Textiles form a cornerstone of Pakistan’s economy, and through monitored and transparent production, not only can exports increase, but production quality in line with international standards can also be ensured. Furthermore, this initiative signals the adoption of modern technology and scientific data collection within the industrial sector. Successful implementation may pave the way for similar models in other industrial sectors, yielding positive outcomes for the national industry and economy. Overall, the notification reflects a serious and logical effort by the government and the FBR to modernize the industry in line with transparency, quality, technology, and international standards. Effective execution of this measure will reduce substandard practices and illegal activities, while ensuring fair and sustainable benefits for compliant spinning units and strengthening exports and tax revenue. Copyright Business Recorder, 2025
