The Trade Regulations, Accreditation & Compliance Enablement (TRACE) scheme is a key intervention under India’s evolving foreign trade framework. Introduced under the Export Promotion Mission (EPM)-NIRYAT DISHA, TRACE focuses on enabling exporters, particularly MSMEs, to meet international regulatory and quality requirements, rather than incentivising export performance.
This guide provides a consolidated explanation of the TRACE Scheme, covering its policy foundation, eligibility framework, financial assistance structure, procedural requirements, governance, compliance safeguards, digital implementation, and institutional relevance.
1. Policy Framework and Objectives of TRACE
TRACE is designed as a compliance enablement mechanism to support MSMEs in addressing non-tariff and technical barriers in overseas markets. The scheme operates prospectively and provides partial reimbursement of eligible compliance-related expenditure.
The policy intent is to strengthen India’s export quality ecosystem by facilitating access to internationally recognised standards, certifications, testing and audits.
2. Eligibility Framework Under TRACE
Eligibility under TRACE is rule-based and restrictive. Only MSMEs involved in international value chains, holding valid IEC and Udyam registration, and having a clean compliance record are eligible. Several categories are expressly excluded.
The scheme does not permit discretionary relaxation or retrospective eligibility.
3. Coverage of Merchant Exporters
Merchant exporters are not general beneficiaries under TRACE. Eligibility is permitted only in limited cases, primarily where exports are undertaken through aggregator-based models and are confined to notified tariff lines.
This calibrated inclusion reflects TRACE’s compliance-focused character.
4. Nature and Extent of Financial Assistance
TRACE provides partial reimbursement of eligible expenditure. It does not offer grants, incentives, or performance-linked benefits. Reimbursement is subject to ceilings and conditions, with a maximum limit of ₹25 lakh per IEC per financial year.
Assistance is uniform across Micro, Small and Medium enterprises.
5. Reimbursement Rates and Certification Lists
Reimbursement rates under TRACE depend on whether the certification appears in the Positive List or the Priority Positive List. This tiered structure ensures higher support for compliance-intensive and strategically important certifications.
6. Eligible Expenditure Categories
Only direct compliance-related costs are eligible under TRACE. These include one-time and recurring costs towards testing, inspection, certification, audits and traceability systems. Capital expenditure, marketing costs and taxes are excluded.
7. Intent-to-Claim: Mandatory First Step
Filing an Intent-to-Claim (IC) before incurring compliance expenditure is mandatory. The IC establishes prospective eligibility and is valid for two years. Failure to utilise it has penal consequences.
8. Reimbursement Claim Procedure
The Reimbursement Claim (RC) is filed after completion of certification or testing. It must be linked to a valid IC and supported by complete documentation and declarations. Reimbursement is not automatic.
9. Processing and Disbursement Mechanism
TRACE claims are processed on a quarterly basis through a system-driven workflow. Approved amounts are disbursed directly to IEC-linked bank accounts. No advance or provisional payments are permitted.
10. Compliance Framework and Safeguards
TRACE relies on self-declarations, automated validations and post-disbursement verification. Reimbursement does not confer immunity from audit, recovery or penal action.
11. Lapse of Claims and Penalty Provisions
If an IC is not utilised within two years, it lapses automatically and results in one financial year of ineligibility. The guidelines do not provide for extension or condonation.
12. Continued Eligibility After MSME Graduation
Exporters graduating out of MSME status remain eligible under TRACE for three years, ensuring continuity of support during growth phases, subject to compliance with all other conditions.
13. Governance Structure of TRACE
TRACE is guided by a Sub-Committee on Export Quality and Technical Compliances, which advises on certification lists, financial parameters and policy refinements. The committee plays an advisory role.
14. Role of DGFT in Implementation
The Directorate General of Foreign Trade acts as the nodal implementing authority, responsible for system development, claim processing, fund disbursement, monitoring and stakeholder interface.
15. Positive List of Certifications
The Positive List determines baseline eligibility for reimbursement and covers a wide range of internationally recognised regulatory certifications across sectors and markets.
16. Priority Certifications and Strategic Focus
The Priority Positive List identifies high-impact certifications eligible for higher reimbursement, reflecting their cost intensity and importance for market access.
17. Explicit Exclusions Under TRACE
TRACE excludes deemed exports, SEZ supplies, retrospective costs, duplicate benefits and non-notified certifications to preserve its compliance-only character.
18. TRACE as a Compliance Enablement Scheme
TRACE is not an export incentive. Its structure, exclusions and reimbursement-based design align it with WTO-consistent, non-distortionary support measures under FTP 2023.
19. Digital and Technology Framework
TRACE is implemented through a fully digital, system-driven architecture, with online filing, automated validation and integration with national quality platforms.
20. TRACE and India’s Export Quality Ecosystem
TRACE strengthens India’s export quality ecosystem by lowering compliance entry barriers for MSMEs and supporting their integration into global value chains.
Conclusion
This guide brings together all core aspects of the TRACE Scheme in a single, structured reference. For practitioners and exporters, it provides both a high-level understanding and clear pathways to detailed technical guidance.
TRACE rewards planned, prospective and disciplined compliance. Exporters should align certification strategies, timelines and documentation with the scheme’s framework to derive effective benefit.
DGFT Trade Notice 26/2025-26 dated 20/05/2026 regarding Guidelines on TRACE Scheme under EPM for 75% MSME Certification Cost Reimbursement
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