The TRACE Scheme of DGFT reimburses up to 75% of export certification costs for eligible MSME exporters, subject to a ₹25 lakh annual cap per IEC.
The Directorate General of Foreign Trade (DGFT) introduced the Trade Regulations, Accreditation & Compliance Enablement (TRACE) Scheme under the Export Promotion Mission (EPM) – NIRYAT DISHA, effective 20 February 2026.
As per the DGFT Guidelines, the scheme reduces regulatory compliance costs for MSMEs seeking access to international markets and strengthens export readiness through structured financial assistance.
What Is the TRACE Scheme?
The TRACE Scheme provides financial reimbursement for costs incurred toward:
- International certifications
- Testing and inspection
- Regulatory approvals
- Market-specific licensing
The scheme is not linked to export turnover or performance. Its purpose is to enhance compliance capability, improve product credibility, and facilitate MSME integration into global value chains.
Key Objectives of the TRACE Scheme
The TRACE Scheme aims to:
- Enable MSMEs to meet importing-country regulatory standards
- Strengthen India’s export quality infrastructure
- Reduce upfront certification expenditure
- Improve competitiveness in regulated global markets
By lowering compliance costs, the scheme improves market access sustainability for MSMEs.
Eligibility Criteria for MSME Exporters
An applicant must satisfy all of the following conditions:
- Valid Udyam Registration confirming MSME status
- Active Importer Exporter Code (IEC)
- Not listed in the Denied Entity List
- Participation in international value chains
Eligibility remains subject to compliance with DGFT Trade Notices and operational guidelines.
Merchant Exporter Restriction
Merchant exporters qualify only for specified tariff lines listed in Annexure VII, primarily covering:
- Meat
- Poultry
- Fish
- Marine products
Merchant exporters outside these notified categories are not eligible.
Reimbursement Structure Under TRACE
Reimbursement Rates
- Positive List Certifications: Up to 60% of eligible cost
- Priority Positive List Certifications: Up to 75% of eligible cost
Reimbursement applies to cost net of GST and other indirect taxes.
Annual Ceiling
- Maximum reimbursement: ₹25 lakh per IEC per financial year
Reimbursement is restricted to the lower of:
- Actual eligible cost (excluding taxes), or
- Notified ceiling cost, where prescribed
GST and other indirect taxes are expressly excluded from reimbursement.
Eligible Certifications and Covered Costs
Reimbursement applies only to certifications included in the officially notified Positive List or Priority Positive List.
One-Time Costs Covered
- Initial certification audits
- Factory inspections
- First-time regulatory approvals
- Market-entry registrations
Recurring Costs Covered
- Surveillance audits
- Certification renewals
- Buyer-mandated voluntary certifications
Examples of Certifications (Subject to List Inclusion)
- US FDA compliance
- CE Marking (European Union)
- REACH
- ISO certifications
- HACCP
- GLOBALG.A.P
- FSSC 22000
- BRCGS
- Fairtrade certifications
Exporters must verify inclusion in the notified list before incurring certification expenses.
Mandatory Two-Stage Application Process
The TRACE Scheme operates through a structured two-stage online mechanism.
Stage 1: Intent-to-Claim (IC)
- Must be filed before initiating certification
- Valid for two years from date of filing
Failure to file IC prior to certification may result in rejection of reimbursement.
Stage 2: Reimbursement Claim (RC)
The Reimbursement Claim must be filed after:
- Certification completion
- Payment to the certifying agency
Required Documents
- Copy of certification or test report
- Invoice issued in the name of the IEC holder
- Proof of payment
- Declaration confirming no double benefit under other schemes
- Evidence of regulatory or buyer requirement
Approved reimbursement is credited directly to the bank account linked to the IEC.
Key Compliance Conditions
TRACE benefits apply only if the following conditions are satisfied:
- Certification undertaken on or after 20 February 2026
- No claim for deemed exports
- No claim for exports to SEZ units
- No duplication of Central or State subsidy benefits
- Filing of Reimbursement Claim within IC validity
Claims remain subject to post-disbursement audit and verification by authorities.
TRACE Compliance Checklist for MSME Exporters
Exporters should implement structured internal controls to ensure compliance:
1. Pre-Eligibility Verification
- Confirm active IEC
- Confirm valid Udyam Registration
- Verify entity not on Denied Entity List
- Confirm certification appears in Positive or Priority List
- Ensure certification date is on or after 20 February 2026
2. Before Certification
- File online Intent-to-Claim
- Verify certification name and issuing authority
- Confirm applicable reimbursement rate (60% or 75%)
- Review ₹25 lakh annual cap exposure
- Obtain internal financial approval
3. During Certification
- Ensure invoice reflects IEC holder’s exact legal name
- Separate GST from eligible cost
- Retain agreement with certifying body
- Maintain audit and inspection documentation
- Preserve evidence of regulatory or buyer requirement
4. After Certification
- Collect final certificate
- Retain bank transfer proof (UTR details)
- Compute eligible cost net of taxes
- Confirm no parallel benefit claimed
5. Filing the Reimbursement Claim
- File within IC validity period
- Tag corresponding Intent-to-Claim
- Upload certificate, invoice, payment proof, and declarations
- Verify IEC-linked bank details
6. Post-Disbursement Controls
- Maintain documentation for minimum 5 years
- Monitor annual ₹25 lakh cap utilisation
- Track IC validity deadlines
- Respond promptly to DGFT queries
High-Risk Compliance Errors to Avoid
Common rejection triggers include:
- Filing Intent-to-Claim after certification initiation
- Including GST in reimbursement claim
- Claiming under parallel State subsidy schemes
- Selecting certifications outside notified lists
- Merchant exporters claiming beyond eligible tariff lines
Recommendations for MSMEs
MSME exporters planning certifications in FY 2026-27 should:
- Map regulatory requirements in advance
- File Intent-to-Claim before incurring costs
- Maintain structured documentation
- Monitor reimbursement exposure against annual cap
The TRACE Scheme offers structured cost relief for export compliance. However, benefits depend entirely on procedural discipline, documentation accuracy, and timely online filing.
Source: DGFT Trade Notice 26/2025-26 dated 20/05/2026 regarding Guidelines on TRACE Scheme under EPM for 75% MSME Certification Cost Reimbursement