The Directorate General of Foreign Trade (DGFT) has introduced the Trade Regulations, Accreditation & Compliance Enablement (TRACE) scheme as a new policy intervention under the Export Promotion Mission (EPM) - NIRYAT DISHA. TRACE marks a structural shift in India’s export support architecture by focusing on regulatory compliance enablement, rather than export incentives.
This article explains the policy framework, objectives, scope, and design principles of TRACE, strictly based on the notified guidelines.
Policy Background and Legal Framework
The Foreign Trade (Development and Regulation) Act, 1992
The Foreign Trade Policy (FTP) 2023
Export Promotion Mission (EPM) – NIRYAT DISHA framework
The scheme is implemented prospectively with immediate effect, meaning only activities undertaken on or after 20 February 2026 are eligible.
Policy Intent Behind TRACE
The core policy intent of TRACE is to address non-tariff and technical barriers faced by Indian MSMEs in overseas markets. Increasingly, market access is determined not by tariffs but by:
Technical regulations
Quality and safety standards
Mandatory certifications
Traceability and audit requirements
TRACE seeks to reduce the cost burden of compliance, particularly for MSMEs participating in international value chains.
Core Objectives of the TRACE Scheme
The notified objectives of TRACE are:
To support MSMEs in meeting internationally recognised quality, safety and technical requirements
To facilitate compliance with mandatory and voluntary conformity assessment requirements in importing countries
To strengthen India’s export quality and technical compliance ecosystem
To enhance the capacity of MSMEs to demonstrate conformity with global standards
Importantly, TRACE does not create any entitlement linked to export performance.
Scope of Coverage Under TRACE
The scope of TRACE is strictly limited to partial reimbursement of eligible compliance-related expenditure incurred by MSMEs involved in international value chains. Covered activities include expenditure towards:
Testing
Inspection
Certification
Audits
Factory or facility assessments
Traceability systems
Other conformity assessment requirements
Such requirements must be:
Mandated by importing-country regulations, or
Necessary to demonstrate compliance with internationally recognised standards
Nature of Support: Compliance Enablement, Not Incentive
TRACE is designed as a cost reimbursement mechanism, not as an export incentive or reward. Key policy characteristics include:
Partial reimbursement only, subject to ceilings
No linkage with export value, quantity, or performance
No upfront assistance or automatic entitlement
Reimbursement admissible only after successful completion of certification or testing
This design aligns TRACE with WTO-consistent, non-trade-distorting support measures.
Prospective Application and Its Significance
TRACE applies only on a prospective basis. Certifications, tests or inspections undertaken before 20 February 2026 are not eligible. This ensures:
Policy certainty
Avoidance of retrospective claims
Clear demarcation of government liability
Prospective operation also supports pilot-based implementation and institutional learning.
Explicit Policy Exclusions
The policy framework clearly excludes certain categories from TRACE coverage:
Deemed exports as defined under FTP
Supplies made to Special Economic Zones (SEZs)
Any benefit already availed under other Central or State Government schemes for the same activity
These exclusions reinforce TRACE’s role as a targeted compliance support scheme, not a general export subsidy.
Positioning Under Export Promotion Mission (EPM)
TRACE operates as a focused intervention under EPM - NIRYAT DISHA, complementing other trade facilitation and capacity-building measures. Its role within EPM is to:
Address regulatory friction in global markets
Improve MSME readiness for international standards
Support sustainable integration into global value chains
Conclusion
The TRACE scheme represents a policy shift from traditional export promotion to compliance-led trade facilitation. By concentrating on quality, standards, and regulatory preparedness, TRACE strengthens the institutional foundation of India’s exports rather than offering performance-linked incentives.
Its carefully defined scope, prospective application, and exclusion-based design underline its character as a compliance enablement framework aligned with FTP 2023 and global trade disciplines.
Related Posts:
No comments:
Post a Comment
Your Comments