New ‘Status Holder’ Certificates Based on a System to Reduce Exporters’ Compliance Burden

In a meeting with the Export Promotion Councils on October 9, 2023, Union Minister of Commerce & Industry, Consumer Affairs, Food & Public Distribution, and Textiles Shri Piyush Goyal announced a significant initiative under the Foreign Trade Policy (FTP) 2023 to issue system-based automatic ‘Status Holder’ certificates.

The exporter will no longer be required to apply to the Directorate General of Foreign Trade (DGFT) office for a Status Certificate, and the export recognition will be provided by the IT system based on available Directorate General of Commercial Intelligence and Statistics (DGCIS) merchandise export electronic data and other risk parameters.

This viewpoint represents a paradigm shift in how things are done since it not only decreases compliance load and promotes ease of doing business, but it also recognizes the need for and importance of collaboration within the government.

For the time being, the exporter must submit an online application together with an export certificate from a Chartered Accountant in order to be granted Status. According to the timeframes, the DGFT Regional Offices are meant to issue the certificate in three days.

The new agreement will result in a simpler regime in which no applications will be accepted from exporters and certification will be provided annually in August based on annual export numbers available with the partner government agency, DGCIS.

Exporters who are eligible for a higher status based on additional export data such as services export, deemed exports, or double weightage to some entities such as MSME, etc., which is not currently captured in disaggregated form, can apply online for a Status modification at a later date.

The Status Holder certification scheme gives Indian exporters legitimacy in international markets. Furthermore, it gives some other benefits such as streamlined procedures under FTP 2023 and priority custom clearances on a self-declaration basis, exemption from mandatory document negotiation through banks, exemption from filing Bank Guarantee for FTP schemes, and so on.

With the inauguration of this new system, the Department of Commerce, Ministry of Commerce and Industry will recognize about 20,000 exporters as Status Holders under FTP 2023, a significant increase over the previous figure of 12,518 exporters.

The greatest growth in Status certification is found in the 1 Star category, which is the lowest category and requires at least US$ 3 million in export performance in the previous three fiscal years plus the first three months of the current fiscal year. This would allow the government to support a greater number of small exporting firms, establish a thriving export environment, and contribute to our US$ 2 trillion export target by 2030.

In summary, the initiative will reduce compliance burden and paperwork; the system-based approach simplifies and streamlines the certification process; the automated system will grant status certificates using available data from DGCIS merchandise export electronic data and other risk parameters; and exporters will receive status certification automatically every August based on their annual export figures. This eliminates the need for exporters to reapply each time; Status Holder accreditation will boost Indian exporters’ credibility in international markets, potentially leading to greater commercial prospects; Status holders are eligible for a variety of privileges, including simplified FTP 2023 procedures, priority customs clearances via self-declaration, freedom from necessary document talks with banks, and exemption from filing Bank Guarantees for FTP schemes, among others.

In line with the digital India ethos, various e-initiatives have already been implemented, and various permissions/authorisations are issued under FTP 2023 based on a risk management system and self-declarations of the exporter, including 24X7 online issue of Importer Exporter Code number (IEC), issue and renewal of Advance Authorisations.

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