DGFT TRACE Scheme 2026: Government Now Pays Up To 95% Of Your Export Certification Cost

The short answer, before anything else

TRACE is a DGFT reimbursement programme under the Export Promotion Mission that pays back most of what an MSME exporter spends on international testing, inspection, certification and audits.

It launched on 20 February 2026 through Trade Notice No. 26/2025-26 at 60% to 75% reimbursement with a Rs 25 lakh annual cap. DGFT rewrote it on 1 July 2026. The rate is now up to 95% for micro and small enterprises and 80% for medium enterprises, the cap has doubled to Rs 50 lakh per IEC per financial year, and the eligible certification directory has been expanded to 462 entries.

One rule decides everything. You must file an Intent-to-Claim on the DGFT portal before you begin the certification process. File it after, and the money is gone. No appeal, no retrospective fix.

That single line is why we wrote this piece.

Why we are writing this instead of another scheme summary

Our family has been in international trade out of Agra since 2005. Rasp International has handled liaison, DGFT licensing, customs and incentive recovery for over 500 export clients across food and agriculture, engineering, textiles, handicrafts, leather, chemicals and consumer goods.

In that time we have watched the same pattern repeat with every new scheme.

A scheme launches. A press release goes out. Three consultancies write a 400 word blog. Eighteen months later the scheme gets quietly reviewed for “low uptake” and the exporters who needed it most never touched it.

This is not a theory. It is already happening inside the same mission TRACE sits under.

Under the Export Promotion Mission, the collateral-free export credit intervention had only 140 exporters registered since its January 2026 rollout, as reported by Business Standard in July 2026. Compare that with the interest subvention component of the same mission, where 8,459 exporters registered in the same window. Same government. Same portal. Same target audience. A sixtyfold difference in uptake.

The gap is not eligibility. The gap is awareness and paperwork discipline.

We see the identical failure mode in RoDTEP every year. Eligible product, eligible exporter, correct HS code, claim dead, because the “RoDTEP: Y” declaration was not ticked on the shipping bill checklist and it cannot be added retrospectively.

TRACE has exactly the same shape of trap. The Intent-to-Claim is the “Y” tick of this scheme.

What is the TRACE scheme?

TRACE stands for Trade Regulations, Accreditation & Compliance Enablement. It sits under NIRYAT DISHA, the non-financial enablers arm of the Export Promotion Mission (EPM).

EPM was approved by the Cabinet in November 2025 with an outlay of Rs 25,060 crore across FY 2025-26 to FY 2030-31. It consolidates older fragmented schemes such as the Interest Equalisation Scheme and the Market Access Initiative into a single digitally administered framework, with DGFT as the nodal implementing agency. The mission runs on two legs:

• NIRYAT PROTSAHAN for trade finance: interest subvention, export factoring, collateral guarantees, credit for e-commerce exporters
• NIRYAT DISHA for market readiness: quality and compliance support, branding and packaging, trade fairs, warehousing, logistics, trade intelligence

TRACE is the quality and compliance component of Niryat Disha.

The stated objective, taken directly from Annexure-I of the trade notice, is to support MSMEs in meeting internationally recognised quality, safety and technical requirements arising from compliance and quality related certificates and other mandatory or voluntary conformity-assessment requirements applicable in overseas markets.

Read that last part carefully. Voluntary certifications are included, not just mandatory ones. If a European buyer insists on a social compliance audit before they will place an order, that is a buyer-mandated voluntary certification and it is inside scope.

What TRACE actually pays for

The guidelines split eligible spend into two buckets.

One-time costs. Certification prerequisites essential for market access. Inspections, audits, factory or facility assessments, market-specific licensing requirements.

Recurring costs. Ongoing export compliance. Certifications arising from quality and compliance issues, specific health or safety certificates, and buyer-mandated voluntary certifications.

Eligible items sit on a Positive List and a Priority Positive List, both of which DGFT describes as dynamic and subject to periodic review. Under the July 2026 revision the directory was expanded to 462 entries, and FIEO has publicly asked exporters to flag any missing certification so it can be taken up with DGFT for inclusion.

Here is what the Positive List already carried, with DGFT’s own indicative cost estimates. These numbers matter, because they size the cheque you are leaving on the table.

At the top end, a single FDA facility route can run USD 50,000. At 95% reimbursement that is roughly Rs 40 lakh coming back to an IEC that would otherwise have absorbed the full cost as sunk compliance overhead.

What changed between February and July 2026

This is the section most write-ups get wrong, so we have laid it out line by line.

Three observations we have not seen made elsewhere.

First, the rate jump is not the real headline. The tiering is. The original guidelines went out of their way to state that assistance would be uniform irrespective of classification as micro, small or medium. The July revision reverses that deliberately. That tells you pilot feedback showed a flat rate was not moving the needle for the smallest exporters, who are exactly the ones for whom a USD 35,000 certification is existentially unaffordable. If you are a micro enterprise, this scheme was redesigned around you.

Second, the two-stage payout is a trade, not a gift. You now get half the money earlier, at certification, instead of waiting. In exchange DGFT has attached an export condition to the back half. You must show that shipments linked to that certification actually happened, within two years, or the second instalment lapses. Cash flow improves. Accountability tightens. Both are true at once.

Third, note the tension in the drafting. Annexure-I of the February notice stated that assistance would be provided without conferring any entitlement linked to export performance. That framing exists for WTO subsidy-discipline reasons. The revised second instalment now requires proof of exports. Whether DGFT has drafted around this, or whether the linkage is treated as transactional rather than performance-based, is not clarified in the published summaries. Worth watching in the operational circulars.

One number worth verifying before you plan around it

KNN India, reporting on 11 July 2026, states that micro and small enterprises qualify for up to 95%. Whalesbook, reporting on 3 July 2026, attributes 95% to micro enterprises only. Both agree on 80% for medium and on the Rs 50 lakh cap.

We are flagging the discrepancy rather than papering over it. If you are a small enterprise sizing a large certification programme, confirm the rate against the operative trade notice and the portal declaration before you commit spend. We run this check as standard on every TRACE file we open.

Who is eligible for the TRACE scheme?

Four conditions, all of which must hold together.

1. Active Importer-Exporter Code (IEC), not listed in the Denied Entity List
2. Valid Udyam Registration Number, proving MSME status
3. Involved in international value chains
4. No investigation, prosecution, debarment or outstanding dues under the FT(D&R) Act 1992, Customs Act 1962, Central Excise Act 1944, FEMA 1999 or COFEPOSA 1974

The fourth is a declaration you sign in the application. People skim it. Do not. A false or misleading declaration exposes the applicant to penal action, and any material change in status must be disclosed promptly or the application can be rendered ineligible.

Who is NOT eligible, and the exclusions nobody mentions

This is where most published summaries stop being useful.

Deemed exports are excluded. Support is not admissible for deemed exports as defined under Chapter 7 of the Foreign Trade Policy.

SEZ supplies are excluded. Exports to Special Economic Zones do not qualify.

Merchant exporters are restricted by tariff line. Merchant MSMEs are eligible only for tariff lines notified under Annexure-VII, covering products where exports are predominantly undertaken through aggregator-based models. If you are a trading house rather than a manufacturer, your eligibility is HS-code specific and you must confirm your own eight-digit code against that annexure before spending anything. As a guide to the shape of that list, Annexure-VII runs across chapters covering meat and edible offal, fish, crustaceans and molluscs, dairy, eggs and honey, other animal products, live plants and cut flowers, vegetables, edible fruit and nuts, coffee, tea and spices, cereals, milling products, oil seeds and algae, gums and resins, vegetable plaiting materials, animal and vegetable fats and oils, unmanufactured tobacco, raw hides, leather and leather articles, silk, wool and fine animal hair, and cotton and cotton textiles. That is a broad list. It is not a complete one, and it is not a substitute for checking your own line.

Anything before 20 February 2026 is excluded. Eligibility is prospective only and applies to certifications, testing, inspections or other eligible activities undertaken on or after that date. If you completed ISO 22000 in January 2026, that money is not coming back.

Double-dipping is excluded. You sign a self-declaration that no benefit has been claimed or will be claimed for the same expenditure under any other Central or State scheme, or any third-party assistance. If your state industrial policy already subsidises ISO certification, you pick one. Not both.

The claim process, and the exact point where claims die

TRACE runs a two-stage online process.

Stage I: Intent-to-Claim (IC)

Filed online before obtaining certifications, test reports or compliance documents.

What the IC form captures:

• Part A: claim year, IEC number, firm name, exporter type, MSME status and type, all auto-populated from IEC, plus ITC-HS code for merchant exporters
• Part B: sector, certification name, whether it is a priority certification, certifying agency and address, purpose of certification, country of export, amount exclusive of taxes, amount inclusive of taxes, total intended amount
• Part C: type of certification, nature of certification, frequency of renewal, whether accredited labs in India are adequate for your product certification, testing period

Note Part C. DGFT is quietly building a national dataset on where India’s testing infrastructure falls short. Answer it honestly. It feeds the Sub-Committee that decides which certifications get added to the priority list.

The IC is valid for two years.

Stage II: Reimbursement Claim (RC)

Filed after certification is obtained, tagging the relevant IC and enclosing:

• Copy of the certificate, inspection report or test report
• Invoice and proof of payment
• Evidence that the requirement was mandatory or market-driven
• Self-declaration on no duplicate benefit

Claims are consolidated and submitted quarterly through the online system to the jurisdictional authority. Disbursement goes directly to the bank account linked to your IEC.

The penalty clause everyone skips

Read this twice.

If you file an Intent-to-Claim and then fail to submit the reimbursement application within two years, the claim lapses and the applicant becomes ineligible for claims for the next financial year.

That is a two-year loss, not one. You lose the claim, then you lose the following year’s access entirely.

So do not treat the IC as a free option to be sprayed across twelve certifications you might get around to. Every IC you file is a commitment with a clock on it. This is the opposite of how most exporters treat government forms, and it is exactly the kind of thing that turns a subsidy into a penalty.

The one shortcut worth knowing

Certifications, test reports and compliance documents generated or validated through the Bharat Aayat Niryat Lab / Quality Setu platform may be prioritised for automated processing and expedited disbursal, subject to system validations and post-disbursement audit safeguards.

If you have a choice of testing route and one runs through Quality Setu, take it. Faster money, less manual scrutiny.

What this looks like on real files, across sectors

Percentages do not help anyone decide. Six situations of the kind that cross our desk.

Engineering and auto components chasing multiple markets

SABER/SASO for Saudi Arabia at USD 3,000 to 10,000. ECAS for UAE at USD 6,000 to 15,000. CCC for China at USD 8,000 to 19,000. RCM for Australia and New Zealand at USD 2,000 to 10,000. Four markets, four certification regimes, roughly USD 54,000 at the top end.

The strategic read here differs from the cost read. Most Indian engineering MSMEs certify for one market at a time, because certifying for four at once is unaffordable. TRACE removes the affordability constraint on breadth. The right move is to certify for all four under a single Intent-to-Claim. You stop optimising for cheapest compliance and start optimising for widest market access at near-zero marginal cost.

That is a different business strategy, not just a discount.

Textiles and apparel shipping to the EU

REACH for chemical restrictions on dyes and finishes, SMETA at Rs 50,000 for social compliance, ISO 9001 for the buyer’s vendor audit, plus TBT/SPS testing which explicitly covers textiles.

Most EU apparel buyers now treat social audit as a gate, not a preference. At 95% reimbursement a Rs 50,000 SMETA becomes a Rs 2,500 decision. We have watched units refuse that audit, lose the buyer, and never connect the two events.

Handicrafts and home decor

Stone, marble, brass and wood handicrafts moving into EU and US retail increasingly need SMETA social compliance and REACH declarations on any treated or coated product. CPSC applies if the line touches children’s products.

For a micro unit in a cluster town, a Rs 50,000 audit is a real capital decision. This scheme converts it into a rounding error.

Food and agriculture

The Positive List is unusually deep here, which reflects how sensitive food categories are to importing-country sanitary requirements. HACCP at USD 2,000 to 8,000. FSSC 22000, BRCGS, SQF and IFS at Rs 2 lakh each. GLOBALG.A.P at Rs 50,000. FDA at USD 35,000 to 50,000 if you are entering the US as a food or supplement.

A serious first-time US and EU food programme can stack past Rs 45 lakh in compliance alone. At 95% almost all of it returns, right up against the Rs 50 lakh ceiling. That single fact changes whether a small processor can attempt regulated Western markets at all.

Seafood and aquaculture

MSC at Rs 2 lakh, ASC at Rs 2 lakh, BAP at Rs 50,000, plus HACCP and the relevant SPS testing. Annexure-VII covers seafood tariff lines extensively across chapters 03 and adjacent, so merchant exporters in this category have wide coverage. Confirm your specific line.

The exporter who already paid

A processor completes an ISO audit and product testing in April 2026. Spends the money. Never heard of TRACE. Comes to us in August asking what can be recovered.

Answer: nothing. Eligibility is prospective and the Intent-to-Claim had to precede the certification. Money spent without an IC on file is money gone.

We include this case deliberately. It is the most common one we see.

How we actually run a TRACE file

Every consultancy says they will “help you file”. Here is our sequence, because the process is the product.

Step 1: The eligibility gate. IEC active and not on the Denied Entity List. Udyam valid and current. Entity clean under FT(D&R), Customs, Central Excise, FEMA and COFEPOSA. If any of these fail, nothing downstream matters.

Step 2: The tariff line check. For merchant exporters this is the whole ballgame. Your eight-digit code checked against Annexure-VII, line by line, not by assuming your chapter is covered. We learned this discipline the hard way from RoDTEP, where a wrong HS code silently reduces or zeroes the remission because rates are set against the eight-digit line. Same logic, different scheme.

Step 3: The eighteen-month certification map. Not a list of what you need this quarter. A map of every certification your target markets will demand across the next eighteen months, priced, sequenced and stacked against the Rs 50 lakh annual ceiling. This is where the ceiling becomes a planning tool rather than a limit. If your stack exceeds Rs 50 lakh, you either split it across two financial years or you build the case for the merit-based sub-committee exception.

Step 4: The consolidated IC, filed before anything starts. One properly scoped Intent-to-Claim covering the mapped stack, not a reactive drip of ICs as each buyer makes a demand. Part C answered honestly, including the question on whether Indian accredited labs are adequate for your product.

Step 5: The lapse calendar. Every IC gets a two-year expiry date in a tracked calendar with reminders at twelve and eighteen months. This exists purely to prevent the ineligible-next-financial-year penalty. It is boring. It is also the single highest-value item on this list.

Step 6: Stage II documentation discipline. Certificate, invoice, proof of payment, evidence of the mandatory or market-driven requirement, no-duplicate-benefit declaration. Assembled as the certification completes, not scrambled together at claim time.

Step 7: The export linkage file. New requirement under the revised structure. The shipments that unlock your second 50% must be traceably linked to the certification that earned it. Shipping bills, invoices and buyer correspondence mapped to the certificate from day one, not reconstructed two years later.

Steps 5 and 7 decide whether files are won or lost. Steps 1 through 4 are what everyone advertises.

What this scheme will not do for you

We are ISO 9001:2015 certified and we do not oversell government schemes. Three honest limits.

It is a reimbursement, not a grant. You pay first. The money comes back after certification, and now half of it only after linked exports. You need working capital to front the spend. If cash flow is the binding constraint, look at the Niryat Protsahan side of EPM in parallel, specifically interest subvention on pre and post-shipment credit, which is showing far stronger uptake than the credit guarantee component.

It is still a pilot. DGFT’s own language describes TRACE as operationalised on a pilot basis to enable feedback, institutional learning and data-driven refinements. Rates and lists are explicitly subject to revision. Note also that revised reimbursement rates apply only to certifications obtained on or after the date of the relevant notification, so timing your certification against a rate change window has real financial consequences. The February to July jump from 60% to 95% proves this cuts both ways.

Certification does not sell your product. We have seen exporters treat a certificate as a sales strategy. It is a gate, not a pitch. It removes a reason for the buyer to say no. It does not give them a reason to say yes. That still requires product, pricing, samples, follow-up and a buyer relationship somebody actually built.

Frequently asked questions

What you should do this week

If you export, or intend to export, and any overseas buyer or regulator has ever asked you for a certificate, do these four things.

1. Check your Udyam registration is valid and current. No Udyam, no TRACE. Ten minutes to verify.
2. Confirm your IEC is active and not on the Denied Entity List. Also confirm your annual IEC updation is done. A deactivated IEC breaks everything downstream.
3. List every certification your target markets will demand over the next eighteen months. Not the next quarter. Eighteen months.
4. File the Intent-to-Claim before you engage a single lab, auditor or certification body. This is the whole scheme in one instruction.

If you have already started a certification process without an IC on file, stop reading and call us today. Depending on exactly where you are, there may still be a way to structure what remains.

Rasp International is an ISO 9001:2015 certified EXIM consultancy based in Agra, Uttar Pradesh, with a family legacy in international trade since 2005. We handle DGFT licensing, export incentive recovery, customs clearance and trade compliance for first-time and emerging Indian exporters. We have served over 500 export clients across food and agriculture, engineering, textiles, handicrafts, leather, chemicals and consumer goods.

We manage TRACE end to end: eligibility verification, tariff line mapping, certification roadmap, Intent-to-Claim filing, documentation, Reimbursement Claim submission and the export linkage file for the second instalment.

Talk to us before you spend on certification, not after.

Contact Rasp International | WhatsApp: +91 82180 43048

Sources

• DGFT Trade Notice No. 26/2025-26 dated 20 February 2026, “Launch of Trade Regulations, Accreditation & Compliance Enablement (TRACE) under Export Promotion Mission (EPM) – NIRYAT DISHA”, including Annexure-I Policy Framework, Annexure-II Operational and Procedural Guidelines, Annexure-III Governance Structure, Annexure-IV Application Procedure, Annexure-V Positive List, Annexure-VI Priority Positive List and Annexure-VII Merchant Exporter Tariff Lines. Published at content.trade.gov.in.
• DGFT revised TRACE guidelines, trade notice dated 1 July 2026, as reported by KNN India on 11 July 2026 and Whalesbook on 3 July 2026.
• Cabinet approval of the Export Promotion Mission, outlay Rs 25,060 crore for FY 2025-26 to FY 2030-31, November 2025. PIB and PMIndia.
• Business Standard, “Limited takers for govt’s collateral-free export credit scheme under EPM”, 6 July 2026.
• Ministry of MSME Notification S.O. 4926(E) dated 18 October 2022 on MSME re-classification.

Published by Rasp International. Scheme parameters are subject to revision by DGFT. Verify current rates and eligibility against the operative trade notice before committing expenditure. Government fees and third-party certification costs are billed at actuals.