The Trade Regulations, Accreditation & Compliance Enablement (TRACE) scheme introduced by DGFT lays down strict and clearly defined eligibility conditions. The scheme is compliance-focused and targeted, and therefore not all exporters qualify.
This article explains who is eligible, who is excluded, and the conditions that determine eligibility, strictly as per the notified guidelines.
Basic Eligibility Criteria Under TRACE
To qualify for assistance under TRACE, all conditions must be satisfied simultaneously. Partial fulfilment does not confer eligibility.
An applicant must be:
An MSME involved in international value chains
Holding a valid and active Importer–Exporter Code (IEC)
Possessing a valid MSME Udyam Registration Number
Not listed in the Denied Entity List under the Foreign Trade Policy
Eligibility is verified electronically based on IEC-linked data.
MSME Status: Mandatory Requirement
TRACE is exclusively designed for Micro, Small and Medium Enterprises.
Key points:
MSME classification is as per prevailing MSME investment and turnover criteria
Udyam Registration must be valid at the time of application
Non-MSME exporters are not eligible, except in limited cases expressly provided for merchant exporters
The scheme does not differentiate between Micro, Small or Medium enterprises for eligibility or assistance rates.
Meaning of “MSMEs Involved in International Value Chains”
The guidelines specifically restrict TRACE to MSMEs participating in international value chains.
This implies:
Direct exporters of goods or services, or
MSMEs supplying goods through structured export or aggregator-based models
Purely domestic MSMEs with no linkage to export supply chains do not qualify.
Importer-Exporter Code (IEC): Compliance Requirement
A valid IEC is a non-negotiable condition.
Important aspects:
IEC must be active at the time of filing Intent-to-Claim
IEC-linked bank account is used for reimbursement
Any suspension, cancellation or deactivation of IEC renders the applicant ineligible
IEC details are auto-populated in the TRACE portal and cannot be edited.
Denied Entity List and Legal Clean Record
An applicant must not be listed in the Denied Entity List (DEL).
Further, the applicant entity must:
Not be under investigation, prosecution, or debarment under:
Foreign Trade (Development and Regulation) Act, 1992
Customs Act, 1962
FEMA, 1999
Central Excise Act, 1944
COFEPOSA, 1974
Have no outstanding penalties or dues under the above laws
Any material change in legal status must be disclosed immediately.
Prospective Eligibility Cut-off Date
TRACE eligibility is strictly prospective.
Accordingly:
Only certifications, testing, inspections or audits undertaken on or after 20 February 2026 qualify
Past certifications or legacy compliance costs are excluded
Intent-to-Claim must also be filed in relation to prospective activities
This cut-off applies uniformly across all sectors and certifications.
Eligibility of Merchant Exporters: Limited and Conditional
Merchant exporters are not generally covered under TRACE.
Eligibility is allowed only where:
The exporter qualifies as an MSME
Exports are undertaken through aggregator-based models
The exported goods fall under notified tariff lines in Annexure-VII
Merchant exporters outside the notified HS codes are not eligible.
Continued Eligibility After MSME Graduation
Exporters graduating out of MSME status during a financial year remain eligible under TRACE:
For a period of three years from the date of reclassification
Subject to compliance with MSME Ministry Notification dated 18 October 2022
All other TRACE conditions must continue to be fulfilled
This provision ensures continuity for growing enterprises.
Explicitly Ineligible Categories
The following are not eligible under TRACE, irrespective of MSME status:
Deemed exports as defined under FTP
Supplies made to Special Economic Zones (SEZs)
Expenditure already claimed under any other Central or State Government scheme
Certifications obtained before the notified cut-off date
Duplicate benefits are expressly prohibited.
Common Disqualifiers Under TRACE
Applications may be rejected due to:
Absence of valid Udyam Registration
IEC suspension or cancellation
Non-filing of Intent-to-Claim before certification
Incorrect declarations or suppression of material facts
Attempt to claim parallel benefits
Such disqualification may also attract penal consequences.
Conclusion
Eligibility under the TRACE scheme is rule-based, narrow, and compliance-driven. The framework ensures that assistance is extended only to legitimate MSMEs engaged in export-linked value chains, with clean compliance records and prospective commitments.
Exporters must carefully assess eligibility conditions before incurring certification costs, as TRACE does not allow retrospective regularisation or discretionary relaxation.
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