TRACE Scheme 2026: DGFT Doubles MSME Reimbursement Cap to ₹50 Lakh, Adds Two-Stage Claim Process
On July 1, 2026, DGFT issued Trade Notice No. 09/2026-27, which amended the Guidelines for Trade Regulations, Accreditation and Compliance Enablement (TRACE) under the Niryat Disha Export Promotion Mission.
This is a big change. Three things have changed for MSME exporters who are requesting reimbursement under TRACE for testing, inspection, or certification expenses: how much you can claim, how the money gets disbursed, and how you file for it.
Until now, the scheme treated every MSME the same way, capped total reimbursement at ₹25 lakh per IEC per year, and paid out based on a flat percentage tied to whether your certification was on the "Positive List" or "Priority Positive List." That system is no longer in place.
What Changed — Old Rule vs New Rule
| Aspect | Old Rule (Trade Notice 26/2025-26) | New Rule (From 1 July 2026) |
|---|---|---|
| Reimbursement %, Micro & Small | Uniform 60–75% based on list category | Up to 95% of actual cost (net of taxes, duties, cess) or notified ceiling, whichever is lower |
| Reimbursement %, Medium Enterprises | Same as Micro/Small — no distinction | Up to 80% of actual cost or notified ceiling, whichever is lower |
| Max Cumulative Reimbursement | ₹25 lakh per IEC per financial year | ₹50 lakh per IEC per financial year (cases above this go to Sub-Committee) |
| Eligible Certification List | Positive List + Priority Positive List (Annexure-V & VI) | Single dynamic list, expanded to 462 entries (Annexure-I) |
| Disbursement Timing | Single payout after claim approval | Two instalments — 50% on certification, 50% on proof of exports |
Issued in continuation of Trade Notice No. 26/2025-26 dated 20th February 2026, this notice inserts and revises specific paragraphs of the TRACE Operational and Procedural Guidelines.
MSME-Based Differentiation (Para 2b): Support is no longer uniform across MSME categories. Micro and Small Enterprises can now claim up to 95% of actual cost; Medium Enterprises are capped at 80%. The overall ceiling per IEC per financial year has been raised from ₹25 lakh to ₹50 lakh, with anything beyond that reviewed case-by-case by the Sub-Committee.
Two-Instalment Disbursement (Para 2c & 4b): Approved support is no longer released in one go. The first 50% is disbursed once certification is completed and the certificate is submitted. The remaining 50% is released only after exports linked to that certification are demonstrated.
Two-Stage Reimbursement Claim (Para 3c): The claim process now has two distinct stages:
— RC-1 (First Claim): Filed after obtaining certification, tagging the relevant IC(s), and enclosing the certificate/inspection/test report, invoice and proof of payment, and evidence of the mandatory or market-driven requirement.
— RC-2 (Second Claim): Filed after exports linked to that certification are completed, enclosing evidence of exports and proof of realisation.
Recovery Risk on Delayed Exports (Para 5a — new insertion): If the first instalment has been disbursed but exports linked to that certification aren't demonstrated within 2 years, the second instalment lapses automatically — and the first instalment may be subject to recovery. This is a new clause; the earlier notice didn't have it.
Certification List Overhaul: The old Positive List and Priority Positive List (Annexure-V, VI) have been merged and replaced with a single "List of Eligible Testing, Inspections, and Certifications," now running to 462 entries under Annexure-I of this Trade Notice.
Notice signed by A G Subramanian, Deputy Director General of Foreign Trade. File No. 01/02/33/AM-26/EPM.
✅ TRACE Compliance Checklist — For MSME Exporters Claiming Reimbursement
If you're claiming or planning to claim under TRACE, run through this before your next filing.
| Area | What to Verify | Why It Matters | Status |
|---|---|---|---|
| MSME Classification | Confirm current status — Micro, Small, or Medium | Reimbursement % differs: 95% vs 80% | ☐ |
| Annual Ceiling | Track cumulative claims against new ₹50 lakh/IEC/year cap | Old ₹25 lakh cap no longer applies | ☐ |
| Certification Eligibility | Check your certification is listed in the new 462-entry Annexure-I | Old Positive/Priority Lists are discontinued | ☐ |
| RC-1 Filing | File first claim only after certificate is in hand, with invoice + proof of payment | Incomplete RC-1 delays the first 50% payout | ☐ |
| RC-2 Filing | File second claim with export evidence + realisation proof | Second 50% released only after this | ☐ |
| 2-Year Export Window | Track the 2-year deadline from first disbursement to show exports | Missing it lapses instalment 2 AND risks recovery of instalment 1 | ☐ |
| Intent-to-Claim Timeline | File reimbursement application within 2 years of intent-to-claim | Missing this makes you ineligible for the next FY too | ☐ |
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