In a meeting with the Export Promotion Councils on 9th October 2023, the Union Minister of Commerce & Industry, Consumer Affairs, Food & Public Distribution and Textiles Piyush Goyal announced a significant initiative to issue system-based automatic ‘Status Holder’ certificates under the Foreign Trade Policy (FTP) 2023.
Going forward, the exporter will not be required to apply to the office of Directorate General of Foreign Trade (DGFT) 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 perspective is a paradigm shift in doing things as it not only reduces compliance burden and promotes ease of doing business but also recognises the need for and importance of collaboration within the Government.
At present, the exporter is required to file an online application along with an export certificate from a Chartered Accountant for grant of Status. The DGFT Regional Offices, as per the laid down timelines are supposed to issue the certificate in three days.
The new arrangement will lead to a simplified regime where no applications are invited from exporters and the certification is granted every year in August based on annual export figures available with the partner government agency i.e. DGCIS.
Exporters who are eligible for a higher status based on additional export data relating to services export, deemed exports or double weightage to some entities like MSME, etc., which is not getting captured in disaggregated form presently, can apply online for a Status modification also at a later date.
The Status Holder certification program provides credibility to the Indian exporters in the international markets. In addition, it provides certain other privileges including simplified procedures under FTP 2023 and priority custom clearances on self-declaration basis, exemption from compulsory negotiation of documents through banks, exemption from filing Bank Guarantee for FTP schemes etc.
With the launch of this new system, the Department of Commerce, Ministry of Commerce and Industry will be recognizing about 20,000 exporters under FTP 2023 as Status Holders which will be a quantum jump from the earlier number of 12,518 exporters.
The biggest increase in Status certification is seen in the 1 Star category, which is the lowest category and requires an export performance of at least US$ 3 million in the last 3 preceding financial years plus the 3 months of the current financial year. This will enable the Government to hand hold a larger number of small exporting entities and create a vibrant export ecosystem and help reach our export target of US$ 2 trillion 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 use available data from DGCIS merchandise export electronic data and other risk parameters to grant status certificates; exporters will receive status certification automatically every year in August based on their annual export figures. This eliminates the need for exporters to reapply each time; Status Holder certification will enhance the credibility of Indian exporters in international markets, potentially leading to more business opportunities; Status Holders gain access to several benefits, including simplified FTP 2023 procedures, priority custom clearances via self-declaration, exemption from mandatory document negotiations with banks, and relief from filing Bank Guarantees for FTP schemes, among others.
In line with digital India ethos, various e-initiatives have already been implemented where no manual examination or processing is required 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.