TRACE Scheme Application 2026: How to File, What RC-2 Really Needs, and the Clawback Nobody Mentions

The short answer, before you scroll

TRACE pays an MSME exporter back for testing, inspection, certification and audit spend. Micro and small units get up to 95 percent. Medium units get up to 80 percent. The ceiling is Rs 50 lakh per Importer Exporter Code (IEC) per financial year. The money now arrives in two instalments, and the second one only lands after your linked exports actually ship and the payment comes in.

The rule that decides everything: you must file the Intent to Claim (IC) on the DGFT portal before you begin the certification. File it after, and there is no route back. Not an appeal, not a condonation, nothing.

Verified as on 12 September 2026 against DGFT Trade Notice No. 09/2026-27 dated 1 July 2026.

Why we are publishing a second piece on TRACE

We already published the full explainer on what TRACE is. You can read our complete TRACE scheme guide covering rates, eligibility and the February to July rewrite. This page is the other half. This one is about filing.

Since that piece went live, the same three questions keep landing in our inbox. Where exactly do I file the Intent to Claim. What proof does the second instalment need. Can the government take the money back. Nobody has written those answers properly, so we have.

Fact checked against DGFT Trade Notice No. 26/2025-26 dated 20 February 2026 and DGFT Trade Notice No. 09/2026-27 dated 1 July 2026. Last regulatory review: September 2026.

Here is the number that shows the size of the gap. Inside the same 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. The interest subvention intervention under the same mission had 8,459 registered in the same window. Same government. Same portal. Same target exporter. A sixtyfold difference.

The difference is not eligibility. It is paperwork discipline and knowing which form comes first.

Rasp International is an ISO 9001:2015 certified EXIM consultancy in Agra. Our family has been in international trade since 2005 and we have handled licensing, customs and incentive recovery for over 500 export clients. We watched the identical failure happen in RoDTEP every single year, where an eligible claim dies because one declaration was not ticked on the shipping bill and cannot be added later. The Intent to Claim is that same tick, in a new scheme.

What TRACE is, in one line

TRACE is a partial reimbursement programme that pays MSME exporters back for conformity assessment spend, run by DGFT under the Niryat Disha arm of the Export Promotion Mission.

Conformity assessment is the plain word for everything a buyer or a foreign regulator makes you prove before your goods are allowed in. Lab testing, product inspection, factory audits, certification, traceability systems.

TRACE sits beside the money side of the mission. If you want the full map of all eleven interventions and which trade notice launched each one, read our Export Promotion Mission guide.

What the 462 certificate list actually covers

Trade Notice No. 09/2026-27 did something most summaries missed. It deleted the old two list structure. The Positive List at Annexure V and the Priority Positive List at Annexure VI are gone as separate things. They were replaced by a single List of Eligible Testing, Inspections and Certifications at Annexure I to that trade notice, and DGFT states it carries 462 entries.

Nobody publishes what is inside it. So we parsed it.

We resolved 457 of the 462 entries to one named country or region. The remaining five are multi country groupings, such as a Nordic ecolabel and a Gulf standards body. This is our own count from Annexure I, not a DGFT published breakdown, and we are labelling it that way deliberately.

Now the same list read by sector. These are counts of how often a sector or product word appears in the coverage column of Annexure I, again our own count.

Read those two tables together and the strategy writes itself. If you sell electronics or food, the list was built for you. If you ship to the United States, Japan or China, your coverage is far deeper than you assume. If you ship to Africa or Latin America outside the handful named, do not plan around TRACE until you have checked your exact certificate against Annexure I.

Not sure whether your certificate is one of the 462

Send us the certificate name and your target market. We check it against Annexure I and tell you yes or no before you spend anything.

WhatsApp our EXIM team or see our DGFT compliance and licensing services.

What changed on 1 July 2026, line by line

This is the table to save. The left column is what most websites are still publishing. The right column is the law.

Where the official text contradicts itself, and what to do about it

We would rather flag this than paper over it.

Annexure I of the February 2026 trade notice states that assistance is given to help an MSME show conformity with standards without conferring any entitlement linked to export performance. That wording exists for World Trade Organization subsidy discipline reasons. A subsidy tied to export performance is a problem under those rules.

The July 2026 amendment then makes 50 percent of the support payable only on completion of exports linked to the relevant certification, supported by proof of realisation. On a plain reading, those two sentences pull in opposite directions.

We are not going to pretend to know how DGFT has squared that. What we will say is what it means operationally. Build your file as if the export linkage requirement is real and strict, because that is the version that governs the money in your account.

There is a second open item. As on 12 September 2026 we cannot confirm from a public DGFT release that the TRACE application module is live and accepting Intent to Claim filings on the portal. Here is exactly how to verify it yourself.

1. Log in at dgft.gov.in with your IEC credentials.
2. Open the Services menu and look for an Export Promotion Mission or TRACE entry.
3. Take a dated screenshot of what you see, whether the module is there or not.
4. If it is not there, write to the EPM section at epm-dgft@gov.in asking for the filing route and keep the acknowledgement.

That screenshot and that email are not bureaucracy for its own sake. If the module goes live later and a question is raised about why your certification started before your Intent to Claim, dated evidence that you tried to file is the only thing you will have. Keep it.

Who qualifies for TRACE, and who does not

Four conditions, and all four must hold at the same time.

1. Active Importer Exporter Code (IEC), not listed on the Denied Entity List.
2. Valid Udyam Registration Number, which is the government registration that proves your MSME status and your category.
3. Involved in international value chains.
4. Clean status with no investigation, prosecution, debarment, blacklisting or outstanding dues under the Foreign Trade (Development and Regulation) Act 1992, the Customs Act 1962, the Central Excise Act 1944, the Foreign Exchange Management Act 1999 or the Conservation of Foreign Exchange and Prevention of Smuggling Activities Act 1974.

That fourth one is a declaration you sign. It also carries a live obligation. The declaration says any material change in that status must be promptly disclosed, failing which the application may be rendered ineligible. So if a customs matter opens after you file, that is a disclosure event, not something to sit on.

Who is excluded from TRACE

This is where most published summaries stop being useful.

• Deemed exports are out. Support is not admissible for deemed exports as defined under Chapter 7 of the Foreign Trade Policy.
• Supplies to Special Economic Zones are out.
• Merchant exporters are limited by tariff line. A merchant MSME, meaning a trading exporter who does not manufacture, is eligible only for the tariff lines notified under Annexure VII, where exports are predominantly done through aggregator based models. Check your own eight digit ITC HS code against that annexure. Do not check your chapter and assume.
• Anything before 20 February 2026 is out. Eligibility is prospective and applies only to certifications, testing, inspections or other eligible activities undertaken on or after that date.
• Double claiming is out. You sign a self declaration that the same expenditure has not been and will not be claimed under any other Central or State scheme or any third party assistance. If your state industrial policy already subsidises ISO certification, you pick one.

Four edge cases with the paragraph number attached

Your certificate landed on the wrong side of 1 July 2026. Para 2(f) of the Operational and Procedural Guidelines says revised rates apply only to testing and inspection certifications obtained on or after the date of the notification. A certificate issued on 28 June 2026 sits under the old 60 percent structure. The same certificate issued on 2 July 2026 sits under the 95 percent structure. Same lab, same invoice, a very different cheque. If you have a certificate issued in that window, get the issue date on the certificate checked before you file RC-1.

You grew out of your MSME category mid year. Para 2(h) keeps you eligible for three years from the date of re-classification, in line with Ministry of MSME Notification S.O. 4926(E) dated 18 October 2022, subject to all other conditions. This is generous and almost nobody uses it. If you are close to moving from small to medium, pull your certification plan forward instead of pushing it back.

You are asking about the FY 2025-26 ceiling. Para 2(i) says the annual ceiling for FY 2025-26 applies in full and is not pro-rated, even though the scheme only started on 20 February 2026. A five week window carried a full year ceiling.

Your certificate needs an annual surveillance audit. Many international certifications are not one and done. They carry a yearly audit to keep the certificate alive. The guidelines list recurring costs as an eligible category, which reads as though surveillance audits qualify. The trade notices do not say so in those words. Not verified as on 12 September 2026. If your certificate renews annually, get this confirmed in writing from the EPM section before you build a multi year claim plan around it. We are chasing the same confirmation.

The filing process, stage by stage

Stage one, before you touch a lab

Have all of this in place first, because every one of them blocks the next step.

• IEC active, not on the Denied Entity List and your annual IEC updation done. The updation window runs 1 April to 30 June each year and missing it deactivates the IEC.
• Udyam Registration Number valid and showing the correct category, because your category now sets your rate.
• Digital signature or Aadhaar based signing ready on the DGFT profile.
• Bank account correctly linked to the IEC, because disbursement goes there and nowhere else.
• For merchant exporters, your eight digit ITC HS code checked against Annexure VII.

Stage two, the Intent to Claim form field by field

The Intent to Claim has three parts and a declaration. Here is what each part actually asks.

Part A, basic details. Claim year. IEC number, auto-populated and not editable. Firm name. Type of exporter, auto-populated. MSME or non MSME status, auto-populated. Type of MSME, auto-populated. ITC HS code, asked only for merchant exporters.

Note what auto-populates. Your exporter type and your MSME category come straight from your IEC record. You cannot correct them on this form. If your IEC shows the wrong category, you fix the IEC first, not the claim.

Part B, the certification details. Sector. Certification name. Whether it is a priority certification, auto-populated. Certifying agency and its address. Purpose for obtaining the certification. Country of export. Amount excluding taxes. Amount including taxes. Total intended amount.

Two things matter here. The reimbursement is calculated on cost net of taxes, so the exclusive figure is the one that drives your money. And the country of export you enter should match the market that actually demanded the certificate, because that link is what you will have to evidence later.

Part C, compliance information. Type of certification. Nature of certification. Frequency of renewal. Whether accredited labs in India are adequate for your product certification. Testing period.

That fourth field is not idle curiosity. DGFT is building a national picture of where India’s testing infrastructure falls short, and it feeds the Sub-Committee that decides which certifications get added. Answer it honestly and specifically.

The declaration. Seven clauses, including the clean status clause and the no duplicate benefit clause. A false or misleading declaration exposes the applicant to penal action.

Stage three, RC-1 and RC-2

Under the July 2026 amendment the Reimbursement Claim is two separate filings.

RC-1, the first claim. Filed after you have obtained the certification. Tag the relevant Intent to Claim. Enclose the certificate or inspection report or test report. Enclose the invoice and proof of payment. Enclose evidence that the requirement was mandatory or market driven. This releases 50 percent.

The Reimbursement Claim form runs across five parts: application reference including the Unique Identification Number (UIN) and date of approval, claim details including the issuing authority and the export markets covered, expenditure details listing amount incurred against amount claimed, documents uploaded and bank details auto-populated from the IEC.

RC-2, the second claim. Filed after you can show exports linked to that certification. Enclose evidence of exports and proof of realisation. Realisation means the export payment actually arriving, evidenced the way you would evidence it for any other scheme, through your bank certificate. This releases the remaining 50 percent.

Claims are consolidated and submitted quarterly through the online system to the jurisdictional authority. Disbursement goes directly to the bank account specified in the IEC. Every applicant is subject to post disbursement verification.

The two clocks, and the clawback

Read this twice, because this is the part that turns a subsidy into a liability.

Clock one. If you file an Intent to Claim and do not submit a reimbursement application within two years, the claim lapses automatically and you become ineligible for claims for the next financial year. That is a two year loss, not one.

Clock two. Once the first instalment has been paid to you, you must submit evidence of exports linked to that certification within two years of that disbursement. If you do not, the second instalment lapses and, in the words of the amendment, the first instalment may be subject to recovery.

So an Intent to Claim is not a free option. Do not spray twelve of them across certifications you might get around to. Every one you file starts a clock, and the second clock can reverse money that is already in your account.

The one fast track worth taking

Certifications, test reports and compliance documents generated or validated through the Bharat Aayat Niryat Lab or Quality Setu platform may be prioritised for automated processing and faster disbursal, subject to system validations and post disbursement audit safeguards. If you have a choice of testing route and one of them runs through that platform, take it. Faster money, less manual scrutiny.

We file the Intent to Claim, the RC-1 and the RC-2 for you

Eligibility check, tariff line mapping, certificate matching against the 462 list, both claim filings and the export linkage file that protects your second instalment.

Start on WhatsApp or book a consultation with Rasp International.

What this looks like on real files, sector by sector

Engineering and auto components

Annexure I carries 32 entries for China, 15 for Australia, 3 for the United Arab Emirates and a dense block of international standards. An engineering unit chasing four markets used to certify one at a time because certifying for all four at once was unaffordable. At 95 percent, that constraint is gone. The correct move is one Intent to Claim covering the whole four market stack, not four reactive filings as each buyer demands something. The pitfall is the certificate issue date, because a slow notified body can push your certificate past a rate change window.

Textiles and apparel

Nine sector mentions for textiles and seven for fibre, plus REACH for chemical restrictions on dyes and finishes and social compliance audits that most European buyers now treat as a gate rather than a preference. At 95 percent a social audit becomes a very small decision. The pitfall is that a social audit is usually annual, so it lives in the unverified recurring cost question above. Plan the first one with confidence, get the renewal position confirmed in writing.

Handicrafts and home decor

Stone, marble, brass and wood lines moving into European Union and United States retail run into REACH declarations on treated or coated products, consumer product safety rules if the line touches children’s products and buyer social audits. For a micro unit in a cluster town this was a genuine capital decision. TRACE converts it into a rounding error. The pitfall is exporter type, because a large share of handicraft exporters are merchant exporters and are therefore limited to the Annexure VII tariff lines.

Food and agriculture

Food and processed food carries 45 sector mentions, agriculture 11 and organic products 12, which together make this the best covered sector on the list after electronics. A serious first time United States and European Union food programme stacks several certificates at once and can run right up against the Rs 50 lakh ceiling. That is exactly the case the Sub-Committee route was written for. The pitfall is that food certificates are renewal heavy, so your two year clocks come around fast.

Marine and seafood

Aquaculture and fisheries certifications sit inside the international block, alongside food safety systems. Annexure VII covers seafood tariff lines broadly, so merchant exporters here have wider coverage than in most sectors. Confirm your own line anyway. The pitfall is RC-2. Seafood contracts move fast but realisation can lag, and it is realisation, not shipment, that releases your second instalment.

Electronics and electrical equipment

Forty eight sector mentions, the highest on the list, spread across United States, Japan, China, Taiwan, Vietnam and Singapore approvals. If you make electricals, TRACE was effectively designed around your cost structure. The pitfall is scope. Electronic approvals attach to a product model, not to your company, so a product variant launched next year is a fresh certification and a fresh Intent to Claim.

The cautionary case we now see most

Illustrative composite, not a named client.

A small unit files the Intent to Claim correctly. Gets the certificate. Files RC-1. The first 50 percent lands in the IEC bank account. Everyone is happy.

Then the buyer programme slips. A sample round fails, the season is missed, the order moves to next year. Twenty five months after that first instalment, no shipment has gone out against that certificate.

Under the amendment, the second instalment lapses and the first instalment may be subject to recovery. The unit has spent the money. It now has an exposure it never priced in.

The point of no return here is not the certificate. It is the day the first instalment hits the bank account, because that is the day the second clock starts. If your buyer programme is uncertain, that has to be planned for before RC-1, not discovered after.

How Rasp International runs a TRACE file

Every consultancy says it will help you file. Here is our actual sequence, because the process is the product.

1. The eligibility gate. IEC active and off the Denied Entity List, Udyam valid and correctly categorised, entity clean under all five named Acts. If any of these fail, nothing downstream matters and we tell you on day one.
2. The exporter type and tariff line check. Manufacturer or merchant, and for merchants the eight digit ITC HS code checked line by line against Annexure VII. We learned this discipline the hard way on RoDTEP, where a wrong eight digit line silently zeroes a claim.
3. The certificate match against the 462 list. Your certificate name checked against Annexure I to Trade Notice 09/2026-27 before a single rupee is committed. If it is not on the list, we tell you, and we tell you how to route it through the industry body that collects inclusion requests.
4. The eighteen month certification map. Not what you need this quarter. Every certificate your target markets will demand over eighteen months, priced, sequenced and stacked against the Rs 50 lakh annual ceiling. If the stack goes over, we either split it across two financial years or build the written case for the Sub-Committee.
5. The consolidated Intent to Claim, filed before anything starts. One properly scoped filing covering the mapped stack, with Part C answered honestly.
6. The two clock calendar. Every Intent to Claim gets a two year expiry with reminders. Every first instalment gets its own separate two year export evidence date. Two clocks, two calendars, both tracked. This is boring and it is the single highest value item on this list.
7. The export linkage and realisation file. Shipping bills, invoices, bank realisation evidence and buyer correspondence mapped to the certificate from day one, so RC-2 is assembled, not reconstructed. This is what protects your second instalment and keeps the first one out of recovery.

Steps six and seven decide whether files are won or lost. Steps one to four are what everybody advertises.

Three things TRACE will not do for you

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

It is a reimbursement, not a grant. You pay the lab and the auditor first. The money comes back afterwards, and now only half of it comes back at certification. You need working capital to front the spend.

Half the money is conditional, and reversible. The second 50 percent depends on exports happening and payment being realised within two years of the first instalment. Miss it and the second half lapses while the first half may be recovered. Treat TRACE as export linked, not as free money.

It is still a pilot. DGFT’s own language describes TRACE as operationalised on a pilot basis for feedback, institutional learning and data driven refinements. Rates and lists are explicitly open to revision, and the February to July jump from 60 percent to 95 percent proves revisions can move fast in either direction.

Frequently asked questions on TRACE filing

What to do in the next seven days

1. Check your Udyam Registration Number today and confirm it shows the correct category, because micro and small get 95 percent and medium gets 80 percent.
2. Confirm your IEC is active, off the Denied Entity List and updated for the current year, since a deactivated IEC breaks everything downstream.
3. List every certificate your buyers and target markets will demand over the next eighteen months, not the next quarter, and price the stack against the Rs 50 lakh ceiling.
4. File the Intent to Claim before you contact a single lab, auditor or certification body. If you have already started a certification without one on file, call us today, because depending on where you are there may still be a way to structure what remains.

About Rasp International

Rasp International is an ISO 9001:2015 certified EXIM and DGFT advisory firm based in Agra, Uttar Pradesh, with a family legacy in international trade since 2005. We have served over 500 export clients across food and agriculture, engineering, textiles, handicrafts, leather, chemicals and consumer goods.

We run TRACE end to end. Eligibility verification, exporter type and tariff line mapping, certificate matching against the 462 entry list, the certification roadmap, Intent to Claim filing, RC-1 documentation and the export linkage and realisation file that protects your second instalment.

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

WhatsApp Rasp International or book a consultation. You can also browse our export incentive advisory services and our complete export toolkit in the Rasp store.

Sources

Tier one, primary government documents

• DGFT Trade Notice No. 26/2025-26 dated 20 February 2026, Launch of Trade Regulations, Accreditation and Compliance Enablement (TRACE) under Export Promotion Mission, 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 Trade Notice No. 09/2026-27 dated 1 July 2026, Amendments to the Guidelines for Trade Regulations, Accreditation and Compliance Enablement under Export Promotion Mission, Niryat Disha, issued from File No. 01/02/33/AM-26/EPM, including Annexure I, the 462 entry List of Eligible Testing, Inspections and Certifications. Verified against the trade notice document. Available through the DGFT trade notice listing at dgft.gov.in.
• DGFT scheme guidelines listing on the DGFT portal.
• Ministry of Micro, Small and Medium Enterprises Notification S.O. 4926(E) dated 18 October 2022 on MSME re-classification.

Tier three, context only

• Business Standard, reporting on Export Promotion Mission uptake, July 2026, for the 140 versus 8,459 registration figures. Used for context, not for any rate or date.

Rasp International original analysis

• Market and sector breakdown of Annexure I, counted by Rasp International from the 462 entry list in Trade Notice 09/2026-27, September 2026. Not a DGFT published breakdown.

Before you act on this

This page is general guidance, not advice on your specific file. Scheme parameters are revised by DGFT from time to time and TRACE is explicitly running as a pilot. Verify current rates, the eligible list and the filing route against the operative trade notice before you commit expenditure. Government fees and third party certification costs are billed at actuals.

If you are still at the planning stage, start with our free 23 step export checklist.

Related reading from Rasp International

• DGFT TRACE Scheme 2026: the full explainer on rates, eligibility and the July rewrite
• Export Promotion Mission 2026: every scheme, trade notice and deadline
• RoDTEP and RoSCTL end on 30 September 2026: what to file before the window shuts