DGFT TRACE Scheme Update 2026: New MSME Reimbursement Rules

DGFT TRACE Scheme Update 2026: Higher Reimbursement for MSMEs Explained

For many Indian exporters, entering a new overseas market involves more than finding a buyer and shipping the goods. The product may need laboratory testing, inspection, quality certification, traceability systems or evidence of compliance with the importing country’s technical standards.

These requirements can create a significant cost, particularly for micro, small and medium enterprises (MSMEs). A certification that is essential for market access may be difficult to avoid, even when the exporter is still building sales in that market.

The Government’s Trade Regulations, Accreditation and Compliance Enablement (TRACE) intervention under the Export Promotion Mission (EPM) – Niryat Disha is intended to help eligible MSMEs meet certain trade-related compliance costs.

DGFT Trade Notice No. 09/2026-27, dated 1 July 2026, amends the TRACE guidelines. It introduces differentiated assistance for Micro, Small and Medium Enterprises, revises the maximum cumulative reimbursement, changes how support is disbursed, splits reimbursement claims into two stages and expands the eligible testing, inspection and certification list.

For exporters, the important question is not simply whether the assistance percentage has increased. It is whether the expense, certification and export activity qualify—and whether the business can meet the revised claim and evidence requirements.

Quick Take: What Exporters Need to Know

• New assistance rates: Micro and Small Enterprises may receive up to 95% of eligible actual costs, while Medium Enterprises may receive up to 80%, subject to the notified ceiling and applicable conditions.

• Higher annual limit: The maximum cumulative reimbursement is revised from ₹25 lakh to ₹50 lakh per IEC per financial year.

• Larger cases: Support exceeding ₹50 lakh may be considered case by case after detailed examination by the Sub-Committee. This is not an automatic entitlement.

• Two instalments: Approved assistance is disbursed in two parts—50% after successful certification and submission of the certificate, and the remaining 50% after completion of exports linked to that certification.

• Two-stage claim: The first claim is filed after certification and submission of the required supporting documents. The second follows when the linked exports and their realisation are evidenced.

• Expanded list: The eligible testing, inspection and certification list now contains 462 entries under Annexure I to the Trade Notice.

• Dynamic list: Eligible certifications may be periodically reviewed for inclusion or exclusion.

• Two-year export-evidence requirement: After the first instalment, evidence of linked exports must be submitted within two years, or the second instalment lapses and the first may be subject to recovery.

• Other rules: Provisions of Trade Notice No. 26/2025-26 dated 20 February 2026 remain unchanged except to the extent amended by this notice.

Important: The percentages are maximum assistance rates, not guaranteed reimbursement amounts. Eligibility, the notified ceiling, the eligible expense and the applicable scheme conditions still matter.

What Does DGFT Trade Notice No. 09/2026-27 Actually Say?

The notice was issued by the Directorate General of Foreign Trade (DGFT), under the Ministry of Commerce and Industry, Department of Commerce.

Subject: Amendments to the Guidelines for Trade Regulations, Accreditation and Compliance Enablement under Export Promotion Mission (EPM) – Niryat Disha.

It continues and amends the framework introduced by Trade Notice No. 26/2025-26 dated 20 February 2026, which launched TRACE prospectively.

The earlier framework provides partial reimbursement to eligible MSMEs involved in international value chains for certain eligible expenditures connected with testing, inspection, certification, audits, traceability systems and other conformity-assessment requirements. These requirements must be mandated by regulations relevant to market access or be necessary to demonstrate compliance with internationally recognised standards.

The July 2026 notice amends specific provisions in the operational and procedural guidelines and the governance structure. It also replaces the earlier positive-list references with a list of eligible testing, inspections and certifications containing 462 entries.

What this means for exporters: TRACE is a cost-support mechanism for qualifying trade-compliance expenditure. It is not a general subsidy for every business expense or every certificate an exporter chooses to obtain.

What Has Changed Under the TRACE Scheme?

1. Financial assistance now differs by MSME classification

The earlier guidelines provided a uniform level of assistance across Micro, Small and Medium Enterprises. The maximum cumulative reimbursement was ₹25 lakh per IEC per financial year.

The amended guidelines differentiate the maximum percentage by enterprise classification.

The revised percentage is applied to the actual eligible cost net of applicable taxes, duties and cess, or the notified ceiling, whichever is lower.

For example, an eligible Micro or Small Enterprise does not automatically receive 95% of every invoice. The expense must qualify under the scheme, and the applicable ceiling and other conditions must be respected.

2. The maximum cumulative reimbursement has increased

The revised ceiling of ₹50 lakh per IEC per financial year is an important change for eligible businesses that incur substantial certification and compliance costs.

However, exporters should distinguish between three separate figures:

• The assistance percentage: Up to 95% for Micro and Small Enterprises, or up to 80% for Medium Enterprises.

• The notified ceiling: The applicable limit for the relevant support item, where specified.

• The annual cumulative limit: ₹50 lakh per IEC per financial year under the amended text.

The amount approved may be lower than the percentage-based calculation if a notified ceiling or another applicable condition restricts the claim.

The notice also allows cases requiring support above ₹50 lakh to be considered individually after detailed examination by the Sub-Committee. The wording gives a route for consideration; it does not promise approval.

Exporter Tip: Do not build your budget on the assumption that the maximum rate or an amount above ₹50 lakh will be approved. Calculate the likely support only after checking the applicable eligible cost, ceiling, scheme conditions and approval process.

3. Reimbursement is now paid in two instalments

The revised guidelines divide the approved support into two equal parts.

This makes the link between certification and actual export activity particularly important.

An exporter may complete a certification and receive the first instalment, but the second instalment depends on demonstrating exports linked to that certification and providing evidence of realisation.

What this means for your business: Keep certification records connected to the products, markets and export transactions they support. Do not treat the first instalment as confirmation that the entire approved amount has been finally secured.

4. Reimbursement claims must be filed in two stages

The revised Stage II reimbursement-claim process is divided into RC-1 and RC-2.

RC-1 — First reimbursement claim

After obtaining the certification, test reports and compliance documents, the eligible entity files the first reimbursement claim online, tagging the relevant intent-to-claim (IC) and enclosing:

• A copy of the certificate, inspection report or test report.

• The invoice and proof of payment.

• Evidence that the requirement is mandatory or market-driven.

RC-2 — Second reimbursement claim

After demonstrating exports linked to the relevant certification, the eligible entity files the second reimbursement claim online, enclosing:

• Evidence of the linked exports.

• Proof of realisation linked to the relevant certification.

The exact portal fields and any additional supporting documents should be checked against the current official operational and procedural guidelines.

5. The eligible certification list has expanded to 462 entries

The notice replaces the earlier positive-list and priority-positive-list references with the List of Eligible Testing, Inspections, and Certifications in Annexure I to the Trade Notice.

The list has expanded to 462 entries. It covers certifications and compliance requirements across a wide range of geographies and sectors, including food and agriculture, textiles, electronics, machinery, medical devices, automotive products and other industrial products.

Examples appearing in the annexure include ISO 9001, ISO 14001, ISO 13485, HACCP, BRCGS, FSSC 22000 and several country-specific conformity or product-safety certifications.

These examples should not be treated as blanket approval for every expense connected with the named standard. The product coverage, nature of the requirement and applicable TRACE conditions still need to be checked.

The list is also expressly described as dynamic. It may be reviewed periodically, taking into account stakeholder consultations, changes in international standards notifications and trade-facilitation considerations.

Exporter Tip: Before committing to a testing or certification expense, verify the current list and the product coverage. A certification’s name alone is not enough to establish that a particular claim qualifies.

Why Is This Important for Indian Exporters?

For an eligible MSME, overseas market access can require significant spending before the business develops a reliable stream of export orders.

A buyer may require a particular audit. A destination market may require a product certificate. A technical standard may need to be demonstrated through testing or inspection. These expenses can affect pricing, cash flow and the commercial viability of entering a market.

The amended TRACE rules may help eligible businesses in three practical ways:

1. Potentially higher support: The revised percentages can reduce the eligible cost that an MSME ultimately bears, subject to approval and applicable limits.

2. More headroom under the annual limit: The cumulative ceiling has increased to ₹50 lakh per IEC per financial year.

3. A clearer link between certification and exports: The two-stage claim process specifies that the first and second instalments are tied to different milestones.

The new process also requires better cash-flow planning. Since half of the approved support is linked to subsequent exports and proof of realisation, businesses should not assume that the full amount will be paid as soon as certification is completed.

Who May Benefit from the Amended TRACE Guidelines?

MSMEs that may benefit

The notice is relevant to eligible Micro, Small and Medium Enterprises involved in international value chains that incur qualifying testing, inspection, certification or related conformity-assessment expenses.

Potentially relevant businesses include manufacturer-exporters and other eligible MSMEs whose products must meet technical or regulatory requirements to access overseas markets.

However, the notice does not make every MSME expense eligible. The original scheme framework and applicable operational requirements must also be satisfied.

Businesses that need to check eligibility carefully

An exporter should verify its position before claiming if:

• The certification is voluntary and it is unclear whether it is needed for market access or recognised-standard compliance.

• The expense includes taxes, duties or cess that must be excluded from the cost calculation.

• The certification or product coverage is unclear in the eligible list.

• The same IEC has already used part of its cumulative reimbursement limit for the financial year.

• The business expects to receive the second instalment but has not yet completed the linked exports.

• The requested support would exceed ₹50 lakh in a financial year.

Who is not automatically covered?

A company should not assume that it qualifies simply because it exports goods, has MSME registration or holds a certificate. Eligibility depends on the TRACE framework and the nature of the expenditure.

The July notice does not establish that every non-MSME business is eligible. Nor does it convert all testing, certification or audit costs into reimbursable expenses.

Eligibility and Conditions: What Should You Check?

Before planning a claim, work through the following points.

1. MSME and scheme eligibility

Check the enterprise’s classification and whether it meets the applicable conditions under the TRACE scheme. The July notice differentiates assistance according to Micro, Small or Medium classification but does not replace the full eligibility framework.

2. Eligible certification or compliance requirement

Check whether the relevant testing, inspection or certification is covered by the current eligible list and whether the expenditure meets the scheme’s purpose.

3. Actual eligible cost

Calculate the expense net of applicable taxes, duties and cess. Then check the notified ceiling, where applicable.

4. IEC-wise annual limit

Track the cumulative reimbursement claimed or approved against the relevant Importer Exporter Code (IEC) and financial year. The amended maximum is ₹50 lakh per IEC per financial year, with above-limit cases subject to separate consideration.

5. Evidence of payment and the market requirement

Keep the certification or test report, invoice, proof of payment and evidence that the requirement is mandatory or market-driven.

6. Evidence of exports and realisation

Prepare to establish the link between the certification and the exports, and retain proof of realisation for the second claim.

7. Time limits

Monitor the two-year time limits in the amended guidelines. Failure to act within them can have financial consequences.

Important Dates and Deadlines

The July notice does not state a separate future commencement date for these amendments. Exporters should refer to the official notice and current scheme instructions for any implementation detail applicable to their case.

Do not confuse the two-year periods. One concerns filing the reimbursement application against the intent-to-claim. The other concerns submission of export evidence after the first instalment has been paid.

How Does This Affect Advance Authorisation and EPCG?

The subject of this Trade Notice is the TRACE intervention under EPM – Niryat Disha. It does not expressly amend the Advance Authorisation or Export Promotion Capital Goods (EPCG) schemes.

Therefore, this notice should not be read as changing:

• Advance Authorisation import permissions or export-obligation conditions.

• EPCG capital-goods benefits or export-obligation requirements.

• Redemption or Export Obligation Discharge Certificate (EODC) procedures under those schemes.

An exporter using Advance Authorisation or EPCG may separately need to meet certification or market-access requirements for its products. Whether the related expense qualifies under TRACE must be examined under the TRACE rules; it does not follow automatically from holding an authorisation.

Similarly, the notice does not expressly amend RoDTEP, RoSCTL, DFIA or other DGFT schemes.

Practical Examples: How the Amended Rules May Work

The following examples are illustrative only. They do not guarantee eligibility or approval.

Example 1: A Small Enterprise obtaining an export certification

Suppose an eligible Small Enterprise incurs ₹10 lakh in qualifying certification costs, excluding applicable taxes, duties and cess. Assume the relevant certification, expense and notified ceiling satisfy the scheme conditions.

At a maximum assistance rate of 95%, the percentage-based calculation would be ₹9.5 lakh.

The amount ultimately approved may be lower if the notified ceiling or other conditions restrict it. If ₹9.5 lakh were approved, the standard two-instalment structure would mean ₹4.75 lakh in the first instalment and ₹4.75 lakh in the second, subject to the prescribed milestones.

The second instalment would depend on evidence of exports linked to the certification and proof of realisation.

Example 2: A Medium Enterprise with a larger compliance bill

Suppose an eligible Medium Enterprise incurs ₹20 lakh in qualifying expenses, net of applicable taxes, duties and cess.

At the maximum assistance rate of 80%, the percentage-based calculation would be ₹16 lakh, subject to the notified ceiling and other scheme conditions.

The business should maintain a clear audit trail connecting the certificate, invoices, payment evidence and subsequent export transactions.

Example 3: An exporter receives the first instalment but does not complete linked exports

Suppose an exporter receives the first 50% of approved support after completing certification. It then fails to submit evidence of exports linked to that certification within two years of the first instalment.

Under the amended guidelines, the second instalment lapses, and the first instalment may be subject to recovery.

This is why exporters should consider the commercial export plan before relying on the reimbursement. Certification completion alone does not secure the second half of the assistance.

What Should Exporters Do Now?

Use this practical checklist before filing or progressing a TRACE claim.

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  Confirm that your business meets the applicable TRACE eligibility conditions.

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  Verify your MSME classification and the assistance percentage applicable to it.

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  Check the current list of eligible testing, inspections and certifications, including the product coverage.

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  Confirm that the requirement is relevant to market access or compliance with internationally recognised standards, as applicable.

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  Calculate eligible costs net of applicable taxes, duties and cess.

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  Check the notified ceiling and cumulative reimbursement already used against your IEC for the financial year.

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  Retain the certificate, inspection report or test report, invoice and proof of payment.

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  Keep evidence that the certification requirement is mandatory or market-driven.

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  Tag and track the relevant intent-to-claim and record the deadline for filing RC-1.

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  Link the certification to the export transactions it supports.

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  Retain evidence of exports and proof of realisation for RC-2.

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  Set a reminder for the two-year export-evidence deadline after the first instalment.

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  If the required support exceeds ₹50 lakh, prepare for detailed case-by-case examination rather than assuming approval.

Common Mistakes Exporters Should Avoid

1. Assuming that the maximum rate is guaranteed

“Up to 95%” and “up to 80%” are maximum rates. The eligible expense, notified ceiling and scheme conditions can reduce the amount payable.

2. Treating every certificate as eligible

The current eligible list and the purpose of the certification must be checked. A certificate’s existence does not automatically make its cost reimbursable.

3. Ignoring the difference between RC-1 and RC-2

The first claim follows certification. The second requires evidence of linked exports and proof of realisation. The supporting records should be organised accordingly.

4. Forgetting the two-year export-evidence deadline

Failure to submit the required evidence within two years of the first instalment can cause the second instalment to lapse and may expose the first instalment to recovery.

5. Overlooking the IEC-wise annual limit

The ₹50 lakh limit is cumulative per IEC per financial year. Businesses should monitor their overall claims instead of assessing each certification in isolation.

6. Assuming the July notice changes other export schemes

The notice amends TRACE guidelines. It should not be treated as an amendment to Advance Authorisation, EPCG, RoDTEP, RoSCTL or DFIA unless a separate applicable provision establishes that change.

Frequently Asked Questions (FAQs)

1. What is the latest DGFT TRACE scheme update in 2026?

DGFT Trade Notice No. 09/2026-27, dated 1 July 2026, amends the TRACE guidelines under EPM – Niryat Disha. The changes include revised assistance percentages by MSME category, a higher cumulative reimbursement limit, two-instalment disbursement and a two-stage reimbursement claim.

2. What is the maximum reimbursement under the amended TRACE guidelines?

The maximum cumulative reimbursement is ₹50 lakh per IEC per financial year. Cases requiring support above ₹50 lakh may be considered individually after detailed examination by the Sub-Committee; approval is not automatic.

3. Can a Micro or Small Enterprise claim 95% of certification costs?

An eligible Micro or Small Enterprise may receive assistance of up to 95% of actual eligible cost, net of applicable taxes, duties and cess, or the notified ceiling, whichever is lower. The expense and claim must satisfy the scheme conditions.

4. What is the assistance rate for Medium Enterprises under TRACE?

The amended guidelines provide for assistance of up to 80% of actual eligible cost, net of applicable taxes, duties and cess, or the notified ceiling, whichever is lower.

5. Which certifications are eligible under the TRACE scheme?

Annexure I to Trade Notice No. 09/2026-27 contains 462 entries in the list of eligible testing, inspections and certifications. Exporters should verify the specific entry, product coverage and current list rather than assume every certification is eligible.

6. How is TRACE reimbursement paid?

Approved support is disbursed in two instalments. The first 50% is released after successful completion of certification and submission of the relevant certificate. The remaining 50% is released after exports linked to the certification are demonstrated, with the required evidence and proof of realisation.

7. What documents are required for the first TRACE reimbursement claim?

The amended guidelines specify a copy of the certificate, inspection report or test report; the invoice and proof of payment; and evidence that the requirement is mandatory or market-driven. The exporter must also follow the current online filing instructions.

8. What documents are needed for the second TRACE claim?

The second claim must include evidence of exports and proof of realisation linked to the relevant certification. The exporter should keep records that clearly connect the certification with the export activity.

9. What happens if an exporter does not submit export evidence within two years of the first instalment?

The second instalment lapses. The first instalment may also be subject to recovery under the amended guidelines.

10. What happens if the reimbursement application is not submitted within two years of the intent-to-claim?

The claim automatically lapses, and the applicant becomes ineligible for claims for the next financial-year period, as stated in the amended guidelines.

11. Does this Trade Notice change Advance Authorisation or EPCG benefits?

No such amendment is stated in this notice. It concerns TRACE under EPM – Niryat Disha. Any effect on a separate Advance Authorisation or EPCG matter would need to be assessed under the rules applicable to that scheme.

12. Where should exporters verify the TRACE scheme rules?

Exporters should consult DGFT’s official website, the original Trade Notice No. 26/2025-26 dated 20 February 2026, Trade Notice No. 09/2026-27 dated 1 July 2026 and the current TRACE operational and procedural guidelines.

Final Takeaway: Review Your Certification Costs and Claim Process

The July 2026 amendments to the DGFT TRACE guidelines create the possibility of higher financial assistance for eligible MSMEs, raise the annual cumulative reimbursement limit to ₹50 lakh per IEC and expand the list of eligible testing, inspection and certification entries to 462.

At the same time, the revised rules make it important to manage the claim process carefully. The first instalment follows certification, while the second depends on linked exports and proof of realisation. The two-year deadlines should be tracked from the correct starting point.

The most useful next step for an exporter is to review upcoming and recent certification expenses against the current eligible list, calculate the potential support using the applicable percentage and ceiling, and prepare the evidence needed for both stages of the claim.

Need Help Understanding the DGFT TRACE Scheme?

DGFT scheme updates can look straightforward, but the practical outcome depends on your enterprise classification, the certification involved, the nature of the expense, the applicable ceiling and the supporting evidence.

A V International, a Mumbai-based DGFT and Customs consultancy with more than 35 years of experience, assists businesses with DGFT-related matters and export compliance.

If your business is considering a TRACE reimbursement claim or needs help assessing its documentation and scheme requirements, professional review can help you identify the relevant provisions and avoid preventable claim errors.

Disclaimer: This article explains the amendments stated in Trade Notice No. 09/2026-27 dated 1 July 2026. It is for general information and does not guarantee eligibility, approval or payment. Refer to the official notification and current scheme guidelines for the complete requirements applicable to your case.