If you are having business activities conducted in India, then you probably would have heard about a "Three Star Export House" or a "Four Star Export House." Such a title is derived from a Status Holder Certificate, also widely known as the Export House Certificate. The Directorate General of Foreign Trade (DGFT) issues it to exporters who have achieved a certain level of export turnover.
This certificate does not pay you. It provides you with procedural benefits such as reduced paperwork, lower bank costs, and saved time in DGFT and Customs transactions. Businesses with a high volume of shipments and authorisations stand to benefit the most from such certification. Here are the benefits and eligibility criteria under the provisions of the Foreign Trade Policy, 2023.
What is a Status Holder Certificate
DGFT certifies exporters as "Status Holders" to recognise businesses that have performed well in international trade, and expects them to guide newer exporters.
Exporters supplying goods, services, or technology, holding an Importer Exporter Code (IEC) on the date of application, can apply for a Status Holder Certificate. The certificate is awarded based on export turnover in the current and preceding three financial years, and exports are required in all three preceding financial years (the exception being the Gems and Jewellery industry, where the certificate is awarded on turnover achieved in the current and preceding two financial years). Turnover is calculated on Free on Board (FOB) value of export earnings in freely convertible foreign currency, or in Indian Rupees as permitted by FTP.
The five status tiers
As per the provisions of the Foreign Trade Policy, 2023, there are five tiers:
Export performance thresholds
| Status category | Export performance threshold (USD million) |
|---|---|
| One Star Status Holder | 3 |
| Two Star Status Holder | 15 |
| Three Star Status Holder | 50 |
| Four Star Status Holder | 200 |
| Five Star Status Holder | 800 |
The eight privileges of a status holder
Self-declaration for authorisations and clearances
Authorisations and Customs clearances, for both imports and exports, may be granted on a self-declaration basis — less pre-verification at the counter on routine transactions.
Priority norms fixation
Where input-output norms fixation is needed, the Norms Committee fixes them on priority within 60 days. This is especially relevant to Advance Authorisation applicants whose product does not have a Standard Input Output Norm (SION).
No bank guarantee
If you are a holder of a Status Holder Certificate, exporters are exempted from furnishing a bank guarantee for schemes under the Foreign Trade Policy (FTP), unless a provision says otherwise. For every Export Promotion Capital Goods (EPCG) licence or Advance Authorisation (AA) you take, a bank guarantee is otherwise required — this exemption frees up working capital.
No compulsory negotiation of documents through banks
Remittances and receipts still come through banking channels, but status holders are exempt from routing document negotiation through a bank.
Export warehouses
Exporters holding Two Star and above tiers can set up export warehouses, subject to the Revenue department's guidelines.
Priority handling of consignments
Status holders are given preferential treatment and priority in consignment handling from the agencies concerned.
Self-certification of origin
Exporters holding Three-Star, Four-Star, or Five-Star certificates (Manufacturer Exporters) are eligible to self-certify their manufactured goods as originating from India (Certificate of Origin), making them eligible to benefit under Preferential Trading Agreements (PTA), Free Trade Agreements (FTAs), Comprehensive Economic Cooperation Agreements (CECA), and Comprehensive Economic Partnership Agreements (CEPA).
Free-of-cost exports for promotion
Status Holders (also known as Star Export Houses) are eligible to export goods or services free of cost for promoting the product in international markets, subject to the specified annual limit (excluding Gems and Jewellery, and Articles of Gold and precious metals).
Double weightage: the shortcut to One Star
Some exporters are eligible to count qualifying exports twice when turnover is calculated. This benefit can be availed only by the One Star Export House category, not by Two Star and above.
Double weightage is granted to exports by exporters in these categories:
- Micro and Small Enterprises, as defined under the Micro, Small and Medium Enterprises Development (MSMED) Act, 2006.
- Manufacturing units certified by the International Organization for Standardization (ISO) or the Bureau of Indian Standards (BIS).
- Manufacturing units established in the North-Eastern States including Sikkim, and the Union Territories of Jammu, Kashmir and Ladakh.
- Export of fruits and vegetables falling under Chapters 7 and 8 of the Indian Trade Classification, ITC (HS).
Considerations for calculation of export turnover
Three limits that catch applicants out:
- Transfer of export turnover from one IEC holder to another does not qualify for turnover calculation.
- Exports made on a re-export basis are not considered for the purpose of calculation.
- Exports of items under various authorisations, including SCOMET items, are also considered for calculation purposes.
Compliances
Status holders are required to provide training in international trade each year:
Annual training requirement
| Sl No | Category | No. of trainees |
|---|---|---|
| 1 | 2 Star | 5 |
| 2 | 3 Star | 10 |
| 3 | 4 Star | 20 |
| 4 | 5 Star | 50 |
A model programme of at least six weeks is to be put in the public domain; the curriculum and selection of trainees are left to the status holder. Exporters are also expected to maintain proper accounts of exports and imports for two years from the date of grant, and to produce them for inspection on request.
DGFT can refuse, suspend, or cancel a certificate. The grounds include failure to discharge an export obligation, tampering with authorisations, misrepresentation, breach of the Foreign Trade (Development and Regulation) Act, the Customs Act 1962, the Foreign Exchange Management Act (FEMA) 1999, the COFEPOSA Act 1974, or the GST Acts, and failure to furnish information DGFT asks for. A reasonable opportunity is given before any such action, with 45 days to appeal to DGFT.
Applying, validity and moving up a category
The application is filed online in Aayat Niryat Form 1B (ANF 1B) along with the prescribed documents. It goes to the Regional Authority with jurisdiction over the registered office, or head office if the applicant is not a company, as per Appendix 1Ax.
A Status Certificate issued under FTP 2023 is valid for five years from the date the application was filed.
If exports cross a higher threshold, upgrading is possible. HBP 2023 lets a firm upgrade the certification after surrendering the previous certificate and applying again. DGFT does not revise an already issued certificate, so any change requires a fresh application.
