Status Holder Certification Under FTP 2023: Fast-Track Your Export Success

Recognizing Export Excellence

India’s Foreign Trade Policy (FTP) 2023 recognizes top-performing exporters by granting them Status Holder Certification. This designation highlights businesses that have significantly contributed to India’s global trade. This certification not only rewards high-performing exporters but also expects them to mentor and support new entrants in international trade.

Besides earning recognition, these exporters enjoy a range of benefits, including procedural relaxations, priority clearances, and financial incentives. If you’re an exporter, achieving Status Holder Certification can help elevate your business and streamline various trade-related processes. But what does it take to qualify, and how has the system changed? Let’s break it down.

Who Qualifies for Status Holder Certification?

If you're an exporter of goods, services, or technology and hold a valid Import Export Code (IEC) at the time of application, you can be recognized as a Status Holder under Para 1.25 of FTP 2023-provided you meet the required export performance.

Export Performance Criteria

As per Para 1.25 of FTP 2023, to qualify as a Status Holder, you must achieve a certain level of exports (“export threshold”), measured in Free on Board (FOB) value. Your export earnings may be in freely convertible foreign currency or Indian Rupees, as outlined in Para 2.53 of FTP. The certification is categorized into different status levels, each determined by specific export thresholds. Once an exporter meets the required threshold, they are classified into the corresponding category of Status Holder.

• For most sectors: You need to meet the export threshold for the current and previous three financial years.

• For the Gems & Jewelry sector: The required timeframe is the current and previous two financial years.

• For deemed exports: The Free on Rail (FOR) value in Indian Rupees is converted into USD based on the exchange rate notified by CBIC on April 1 of each financial year.

Export performance must be continuous-you must qualify in all three preceding years (or all two years for Gems & Jewelry).

Status Holder Categories & Required Export Thresholds

As per Para 1.26 of FTP 2023, your level of recognition depends on your cumulative exports. The export performance thresholds for different categories are:

The higher your exports, the greater the benefits you unlock!

Special Boost for Small and Recognized Units

As per Para 1.27 of FTP 2023, to encourage small and niche exporters, certain categories receive double weightage for One Star Export House status. This means your export performance is considered twice its actual value if you fall under these categories:

• Micro and Small Enterprises (MSMEs)

• ISO/BIS-certified manufacturing units

• Units located in North Eastern States including Sikkim, and Union Territories of Jammu & Kashmir, and Ladakh

• Exporters of fruits and vegetables (ITC HS Chapters 7 & 8)

This benefit is available only for One Star Export House and not for higher categories. Further each shipment or service can receive this benefit only once, even if it qualifies under multiple categories.

Important Conditions for Status Recognition [Para 1.28 of FTP 2023]

Before applying, be aware of these key restrictions:

1. No Transfer of Export Performance: An exporter’s export performance cannot be transferred to another IEC holder. Sharing of export credits through disclaimer certificates is not permitted.

2. Re-Exports Don’t Count: If you import and re-export goods, these transactions won’t be considered in your export performance.

3. Authorized & SCOMET Exports Are Included: Items exported under an authorization (including SCOMET-listed items) do count towards your status eligibility.

Automatic e-SHC: A Game Changer

As per Para 1.08 of the Handbook of Procedures (HBP) 2023, the Directorate General of Foreign Trade (DGFT) has introduced an automated system for the issuance of Status Holder Certificates (e-SHCs). Under Trade Notice No. 28/2023-24, dated 9th October 2023, exporters no longer need to submit applications manually-eligibility is determined based on government export data, and certificates are generated automatically.

How Does It Work?

• The Directorate General of Foreign Trade (DGFT) now generates e-SHCs using export data from DGCI&S (Directorate General of Commercial Intelligence & Statistics).

• Exporters are classified into five status categories, based on merchandise export figures from EDI, non-EDI, and SEZ ports, as per FTP 2023 eligibility norms.

• Classification is based on export data from the last three financial years, except for gems and jewelry, where the last two financial years plus April–June of the current year are considered.

• No more applications, supporting documents, or CA-certified export performance certificates-the IT system generates e-SHCs automatically.

• Exporters can access their e-SHC via registered email and customer dashboard on the DGFT portal (https://www.dgft.gov.in/CP/) by August 15 each year, after system updates.

Who Still Needs to Apply?

Although most exporters will receive their e-SHCs automatically, some will need to apply manually:

• Service exports, deemed exports, and double-weighted exports are not captured in DGCI&S data. If the e-SHC is not issued within 48 hours of the Trade Notice, affected exporters must apply manually via the DGFT portal.

• If the automated system assigns a lower status than the exporter is entitled to, they can submit an amendment application. Upon approval, the upgraded certificate will be issued, and the previous one canceled.

• Exporters seeking recognition or status upgrades must submit an online application in ANF 1B, along with a Chartered Accountant certificate. Applications must be filed with the regional DGFT office (RA) based on the company’s registered office or, for others, their head office, as per Appendix 1A.

Validity of Status Certificate [Para 1.09 of HBP 2023]

(a) Any Status Certificate issued under FTP 2015-20 shall remain valid only until September 30, 2023.

(b) Status Certificates issued under FTP 2023 will be valid for five years from the date the application for recognition was filed.

(c) If an exporter achieves a higher status threshold as per Para 1.26 of FTP 2023, they may apply for an upgrade by surrendering the previous certificate and submitting a new application under Para 1.08 of HBP 2023.

Compliance & Record-Keeping [Para 1.10 of HBP 2023]

To maintain your status, you must keep detailed export and import records for at least two years from the date of certification. These records must be readily available for inspection by the concerned Regional Authority (RA) or any authority authorized by DGFT, whenever required.

Suspension & Appeal Process

Your Status Holder Certification isn’t permanent-it can be suspended or canceled if you violate trade regulations. As per Para 1.11 of HBP 2023, the DGFT may revoke your certification if you:

• Fail to meet export obligations.

• Tamper with Authorizations.

• Engage in fraudulent activities.

• Violate laws under FTP, Customs, Excise, GST, FEMA, or COFEPOSA.

• Fail to provide required information to DGFT.

However, before any action is taken under this provision, the Status Holder will be given a reasonable opportunity to present their case.

What If Your Certification Gets Suspended?

You have the right to appeal to the DGFT within 45 days under Para 1.12 of HBP 2023. The DGFT’s decision is final and binding. So, if you believe your certification was revoked unfairly, act quickly and submit a formal appeal.

What Are the Benefits of Being a Status Holder?

Earning Status Holder Certification comes with several privileges that simplify and enhance trade operations [Para 1.29 of FTP 2023]:

✓ Faster Approvals & Clearances: Status Holders can obtain import and export authorizations and customs clearances based on self-declaration, reducing procedural delays.

✓ Priority in Input-Output Norms Fixation: The Norms Committee prioritizes the fixation of Input-Output norms within 60 days, and DGFT may introduce special schemes exclusively for Status Holders.

✓ Bank Guarantee Exemption: No requirement to furnish a bank guarantee for schemes under FTP, except where explicitly mandated.

✓ Flexibility in Financial Transactions: Status Holders are not obligated to route their trade documents through banks, though payments must be processed through banking channels.

✓ Permission for Export Warehousing: Exporters with Two Star or higher Status can set up export warehouses, as per the Department of Revenue’s guidelines.

✓ Preferential Treatment for Shipments: Government agencies prioritize the handling and clearance of consignments belonging to Status Holders.

✓ Self-Certification for Preferential Trade Agreements: Manufacturers holding three Star or higher Status can self-certify their products as originating from India for availing benefits under various trade agreements (PTA, FTA, CECA, CEPA). Over time, this scheme may be expanded to cover other Status Holders as well. Additionally, manufacturer exporters who are also Status Holders can self-certify under Para 2.93(e) of the Handbook of Procedures, further simplifying their export process.

✓ Free Export of Promotional Items: Status Holders can export freely exportable items (except Gems & Jewelry) within an annual limit of Rs. 1 crore or 2% of their average annual export earnings from the past three licensing years, whichever is lower.

• For pharmaceutical exports, the limit is 2% of export earnings during past three licensing years.

• For supplies of pharmaceutical products, vaccines, and life-saving drugs to global health initiatives (e.g., UN, WHO-PAHO) and government health programs, this limit increases to 8%.

• These exports are not eligible for Duty Drawback or other export incentives.

Your Role as a Mentor in International Trade

As per Para 1.30 of FTP 2023, as a recognized Status Holder, you are expected to support India’s export ecosystem by mentoring new entrepreneurs. FTP 2023 encourages businesses to train aspiring exporters based on their category:

A model six-week training program has been published for guidance vide Trade Notice No. 14/2023-24, dated 12.07.2023, but exporters can design their own mentoring format.

Conclusion

The Status Holder Certification is a prestigious recognition that offers exporters significant advantages, including simplified compliance, priority processing, financial exemptions, and global credibility. Exporters should strive to maintain consistent export performance and comply with FTP guidelines to maximize these benefits.

Also, the automated e-SHC system is a significant step forward, reducing paperwork and expediting recognition for exporters. If you qualify, you’ll receive your certification effortlessly-and if not, you now know exactly how to secure it.

For exporters, this means less hassle, faster approvals, and greater global credibility. If you’re not yet a Status Holder, it’s time to aim higher and make the most of FTP 2023’s incentives!

Disclaimer: The information given in this article is solely for purpose of understanding the law. It is completely based on the interpretation of the author and cannot be constituted as a legal advise, the author of this article and Lawcrux team is not responsible for any legal issues if arises on the basis of the interpretation given above.