TaxTMI 
TaxTMI 
DGFT Introduces Automated Issuance of Free Sale and Commerce Certificates: A Major Step Towards Faster and Paperless Export Compliance
X X X X Extracts X X X X
X X X X Extracts X X X X
....GFT Introduces Automated Issuance of Free Sale and Commerce Certificates: A Major Step Towards Faster and Paperless Export Compliance<br>By: - YAGAY and SUN<br>Customs - Import - Export - SEZ<br>Dated:- 7-9-2026<br>The DGFT has taken another significant step towards digitisation, automation and ease of doing business by introducing the automated issuance of FSC Certificates through the DGFT online portal. The change has been announced through TN No. 24/2026-2027 dtd 31-08-2026, It is addressed to exporters and members of trade and industry, Export Promotion Councils and trade and industry associations, as well as DGFT Regional Authorities. The new mechanism is intended to replace a substantial part of the existing manual verification process with a rule-based, system-driven and risk-based workflow, thereby reducing processing time, paperwork and compliance burdens for exporters. The official DGFT Trade Notice database lists TN No. 24/2026-2027 under the description "Automated Issuance of FSC Certificates". 1. What is a Free Sale and Commerce Certificate? A FSC Certificate is a certificate issued by the DGFT to exporters in respect of eligible products to establish, broadly....
X X X X Extracts X X X X
X X X X Extracts X X X X
...., that the concerned product is freely sold or commercially available in the country, subject to the applicable regulatory framework. The certificate can be relevant when an exporter is required by a foreign country, overseas regulatory authority, buyer, importer or other competent authority to demonstrate the commercial status of a product in India. The certificate is particularly relevant for products that fall outside the scope of the specific regulatory regime governing drugs and cosmetics. As stated in the Trade Notice, DGFT issues FSCs under Para 2.34 of the HBP for items not covered under the Drugs & Cosmetics Act, 1940. The HBP 2023 is the procedural framework notified under India's Foreign Trade Policy framework and lays down procedures to be followed by exporters, importers and DGFT authorities. 2. Why has DGFT introduced automated FSC issuance? Prior to the introduction of the automated mechanism, the process broadly involved the following sequence: • Exporter Online Application Concerned DGFT Regional Authority Manual Analysis/Verification Approval Certificate Although the application itself was submitted online, the subsequent processing in....
X X X X Extracts X X X X
X X X X Extracts X X X X
....volved manual scrutiny and verification by the concerned Regional Authority. According to DGFT, this resulted in substantial processing time. The Government has therefore sought to address the procedural bottleneck by introducing automation. The objective is not merely to digitise the application form. Rather, DGFT is moving towards a system-driven decision-making workflow, under which eligible applications can be processed automatically according to predefined parameters. This is consistent with the broader policy objective of reducing regulatory friction and making India's foreign trade processes increasingly digital and paperless. 3. Legal and policy foundation of the automated system The automated FSC mechanism is linked to two important provisions of India's foreign trade framework. Para 2.34 of the HBP - Paragraph 2.34 provides the procedural basis for the issuance of Free Sale and Commerce Certificates for eligible products. The Trade Notice specifically states that DGFT issues FSCs to exporters under this provision for items not covered under the Drugs & Cosmetics Act, 1940. Para 1.04(d) of the HBP, 2023 - The Trade Notice also refers to Para 1.04(d) of the....
X X X X Extracts X X X X
X X X X Extracts X X X X
.... HBP, 2023. This provision is relevant to DGFT's move towards a rule-based, system-driven workflow with a risk-based management approach. The significance of this is important. DGFT is not simply eliminating scrutiny. Instead, the system is intended to determine which applications can be processed automatically and which applications require human intervention. Therefore, the new mechanism can be understood as a transition: • Manual processing Digital processing Rule-based automation Risk-based intervention This approach is consistent with DGFT's continuing digitisation of FTP. 4. What exactly changes under TN No. 24/2026-2027? The principal change is the introduction of automated issuance of FSCs on the DGFT portal. Under the earlier system, an application submitted online could be routed to the concerned RA for manual analysis, verification and approval. Under the new system, applications that satisfy the applicable automated processing conditions can be issued automatically by the system. This means that the involvement of an officer will no longer necessarily be required for every eligible application. The system will assess applications agai....
X X X X Extracts X X X X
X X X X Extracts X X X X
....nst the applicable parameters and determine the appropriate processing route. The broad framework can therefore be represented as follows: Exporter submits application DGFT system processes application against prescribed parameters Eligible / low-risk application Automatic issuance of FSC OR Application requiring verification / not satisfying automated parameters Routing to concerned Regional Authority OR Previously auto-approved application subsequently identified under risk parameters Post-issuance / subsequent RA review This is one of the most important features of the new mechanism. 5. Key features of automated FSC issuance The Trade Notice identifies three principal features. A. Eligible applications will be automatically issued Applications that satisfy the applicable conditions and automated processing parameters will be considered for automatic issuance. This means that exporters meeting the prescribed requirements may no longer have to wait for routine manual scrutiny by an officer. The expected consequence is a reduction in turnaround time. However, automatic issuance should not be interpreted as uncondition....
X X X X Extracts X X X X
X X X X Extracts X X X X
....al approval for every application. The automated route remains subject to the prevailing regulatory framework and applicable conditions. B. Applications requiring verification may still go to the Regional Authority Automation does not completely eliminate manual processing. The Trade Notice expressly provides that applications requiring verification, or applications that do not meet the automated processing parameters, may continue to be routed to the concerned RA. Therefore, there will effectively be two processing channels: • Automated channel Applications satisfying the system's prescribed conditions. • Manual channel Applications that require additional verification or do not satisfy the parameters prescribed for automatic processing. This distinction is important for exporters. An application being routed to an RA should not necessarily be viewed as a system failure. Rather, it is part of the risk-based architecture of the new mechanism. 6. Risk-based management: the most important feature One of the most significant aspects of the new system is the use of risk management parameters. It states that certain applications which have al....
X X X X Extracts X X X X
X X X X Extracts X X X X
....ready been auto-approved may subsequently be flagged to the concerned RA for review under the system's risk-management parameters. This creates a third category: Post-issuance risk review - An FSC may initially be issued automatically, but the application can subsequently be selected for review. This means: Automatic issuance = exemption from regulatory oversight. Instead, DGFT is shifting from universal manual scrutiny towards a model where scrutiny is concentrated on applications that the system identifies as requiring attention. This is similar in principle to modern risk-based regulatory systems, where routine, low-risk transactions are processed quickly while potentially higher-risk or exceptional cases receive greater scrutiny. 7. What does "system-driven workflow" mean? A system-driven workflow means that the DGFT portal, rather than an officer manually handling every application from the outset, will determine the appropriate processing route based on predefined rules and data. The system can potentially evaluate relevant application information against established parameters. Depending on the outcome, it can: • process an application automatica....
X X X X Extracts X X X X
X X X X Extracts X X X X
....lly • issue the certificate • route the application to the appropriate RA • or flag an already issued certificate/application for subsequent review. The precise automated parameters, validation rules and risk indicators should therefore be understood as system-level controls rather than as a complete relaxation of the underlying FSC requirements. 8. Does automation mean that verification has been abolished? No. This is an important distinction. The Trade Notice does not abolish verification. Instead, it changes when and how verification is undertaken. Under the earlier approach, manual verification was part of the routine processing of applications. Under the automated mechanism: • qualifying applications can be issued automatically • applications requiring verification can still be examined by the RA • certain auto-approved applications can subsequently be selected for risk-based review. Therefore, the reform is better described as a shift from universal manual processing to selective, risk-based scrutiny. 9. Benefits for exporters The new mechanism is expected to provide several practi....
X X X X Extracts X X X X
X X X X Extracts X X X X
....cal benefits. Faster turnaround - The most immediate benefit is expected to be reduced processing time for applications that qualify for automatic issuance. Instead of waiting for routine manual processing, an eligible application may be processed by the system. This is particularly useful where an exporter requires an FSC urgently for completion of an overseas regulatory or commercial requirement. Reduced compliance burden - The system reduces dependence on manual intervention for routine cases. This can reduce: • follow-ups with RAs; • correspondence relating to routine verification; • administrative delays; • paperwork; • physical document handling; and • uncertainty surrounding processing timelines. Paperless processing The Trade Notice expressly describes the objective as seamless, paperless processing. This reinforces DGFT's broader movement towards electronic processing of foreign trade procedures. • Greater predictability - A rule-based system can potentially provide exporters with greater predictability because applications are assessed through predefined parameters r....
X X X X Extracts X X X X
X X X X Extracts X X X X
....ather than relying entirely on manual processing. • Reduced administrative costs - Faster processing and reduced manual interaction can reduce the internal administrative resources exporters need to devote to obtaining certificates. The benefit may be particularly meaningful for businesses that regularly export products requiring FSCs for overseas market access. 10. Benefits for MSMEs and smaller exporters The reform can be especially useful for small and medium-sized exporters. Large exporters may have dedicated regulatory and export-compliance teams capable of following up with authorities. Smaller exporters may not have the same resources. An automated system can reduce the need for repeated administrative follow-up and make government certification more accessible. For an MSME entering a new export market, obtaining supporting certificates quickly can be an important part of the overall export process. The move therefore fits into the broader ease-of-doing-business objective of reducing avoidable procedural friction. 11. Impact on DGFT Regional Authorities The reform is also significant from the perspective of DGFT RAs. Under the earlier system, RAs ....
X X X X Extracts X X X X
X X X X Extracts X X X X
....could be involved in the routine manual processing of applications. With automation, a greater proportion of routine and eligible applications can be processed by the system. This can allow RAs to focus their resources on: • applications requiring verification; • exceptional cases; • complex applications; • risk-flagged cases; • post-issuance reviews; and • matters requiring regulatory or factual examination. Thus, automation can potentially improve the allocation of administrative resources. 12. Role of Export Promotion Councils and Trade Associations The Trade Notice is specifically addressed to: • All exporters/Members of Trade & Industry; • All Export Promotion Councils/Trade and Industry Associations; and • All DGFT Regional Authorities. Export Promotion Councils and industry associations therefore have an important role in communicating the new procedure to their members. They can assist exporters by: • creating awareness regarding the automated mechanism; • educating members on correct application practices; •....
X X X X Extracts X X X X
X X X X Extracts X X X X
.... highlighting the continued importance of compliance; • assisting exporters in understanding cases that may require manual verification; and • communicating operational issues to the authorities. 13. What exporters should understand about automatic approval? Automatic issuance should not be confused with a relaxation of substantive requirements. An exporter remains responsible for ensuring that the information provided in the application is: • accurate; • complete; • consistent with supporting records; • legally compliant; and • capable of being substantiated if subsequently reviewed. This becomes particularly important because the Trade Notice expressly permits certain auto-approved applications to be flagged for subsequent review. Consequently, exporters should operate on the principle: Automated processing reduces processing friction; it does not reduce the underlying responsibility for compliance. 14. Possibility of post-issuance scrutiny The provision allowing subsequent review is an important compliance safeguard. Suppose an application passes the automated parameters and....
X X X X Extracts X X X X
X X X X Extracts X X X X
.... an FSC is issued. That does not necessarily mean that the application can never be examined again. If the system's risk-management mechanism identifies the application for review, the concerned RA may examine it subsequently. Accordingly, exporters should retain appropriate documentation and records supporting the application. 15. What should exporters do before applying? Exporters seeking an FSC should consider the following checklist. 1. Confirm that the product falls within the FSC framework - The T N relates to FSCs issued under Para 2.34 of the HBP for eligible items not covered under the Drugs & Cosmetics Act, 1940. Exporters should therefore first determine whether the product falls within the applicable FSC framework. 2. Verify product details - Ensure that the product description, classification and other relevant information are accurate. 3. Check the supporting documents - The exporter should ensure that relevant supporting records are available and consistent with the information submitted. 4. Ensure consistency of information - Inconsistencies between the application and underlying business records can result in additional verification or scrutin....
X X X X Extracts X X X X
X X X X Extracts X X X X
....y. 5. Maintain records after issuance - Since auto-approved applications can subsequently be flagged for review, supporting records should be retained appropriately. 6. Monitor the DGFT portal - The exporter should monitor the application status and any communication from DGFT or the concerned RA. 16. What happens if an application is not auto-approved? The Trade Notice makes it clear that applications not meeting automated processing parameters can continue to be routed to the concerned Regional Authority. Therefore, an exporter should not assume that non-automatic processing means rejection. There are three different concepts: • Automatic issuance - The application qualifies for system-driven issuance. • Manual processing - The application requires verification or does not satisfy the automated parameters. • Rejection - The application does not satisfy the applicable substantive requirements. These are not interchangeable. An application being sent to an RA simply means that human examination may be required. 17. Will every FSC application be automatically issued? No. The Trade Notice specifically states that eligible ap....
X X X X Extracts X X X X
X X X X Extracts X X X X
....plications would be considered for automatic issuance in accordance with the prevailing framework. Applications requiring verification or those that do not meet automated processing parameters may continue to be routed to the concerned RA. Accordingly, automatic issuance should be viewed as an eligibility-based processing route, rather than a universal procedure applicable to every FSC application. 18. What happens to applications selected for risk review? The Trade Notice states that certain auto-approved applications may subsequently be flagged to the concerned RA for review under the system's risk-management parameters. In practical terms, this means that the system retains the ability to identify transactions after automated processing. The RA can therefore undertake the necessary review in accordance with the applicable framework. Exporters should consequently avoid treating an automatically issued FSC as a transaction that is completely outside regulatory oversight. 19. Automation and ease of doing business The reform is part of a wider transformation in India's foreign trade administration. The FTP framework empowers DGFT to establish procedures for expor....
X X X X Extracts X X X X
X X X X Extracts X X X X
....ters and importers, while the HBP provides the operational procedures. Over time, DGFT has increasingly moved various trade-related services onto digital platforms. The automated FSC mechanism represents a further evolution: • Earlier model - Paper/manual orientation officer-centric processing longer turnaround • Digital model - Online application electronic processing reduced paperwork • Automated model - Online application rule-based system processing automatic issuance where eligible risk-based human intervention This represents a fundamental change in the architecture of trade administration. 20. Difference between digitisation and automation It is useful to distinguish the two concepts. Digitisation - Digitisation means moving a process from physical/paper-based processing to an electronic platform. For example: Paper application Online application Automation - Automation goes further. It means that the system itself can perform predefined processing steps and make a processing decision without requiring an officer to manually handle every routine application. Thus Online application System validation/rules Automatic proces....
X X X X Extracts X X X X
X X X X Extracts X X X X
....sing The FSC reform is therefore more than simply another online facility. It introduces an automated processing layer into the certificate-issuance process. 21. Risk management versus manual verification The new system reflects an important regulatory principle. Instead of treating every application as equally risky, the system can distinguish between applications based on predetermined parameters. The objective is to devote greater human attention to cases that require it while allowing routine cases to move faster. This can be described as: • Low-risk/routine cases Automation • Cases requiring verification RA scrutiny • Risk-identified cases Review Such a model can potentially improve both efficiency and regulatory oversight. 22. Implications for compliance teams Export compliance teams should update their internal SOPs in light of the new mechanism. Their processes should cover: • eligibility review; • application-data verification; • document consistency; • monitoring of automated issuance; • preservation of supporting records; • handling of RA....
X X X X Extracts X X X X
X X X X Extracts X X X X
.... queries; • post-issuance review; and • escalation of discrepancies. Businesses should also ensure that employees understand that automatic issuance does not eliminate the possibility of later verification. 23. Importance of accurate data Automation is fundamentally dependent on the information entered into the system. In a manual process, an officer may identify discrepancies during examination. In an automated environment, applications can move rapidly through system rules. This makes the quality of the underlying data particularly important. Exporters should therefore pay attention to: • correct exporter details; • accurate product information; • correct classification wherever applicable; • consistency of descriptions; • correct supporting information; and • completeness of the application. Poor-quality data can potentially result in manual intervention, additional scrutiny or other compliance consequences under the applicable framework. 24. What the Trade Notice does NOT say? It is equally important to understand what should not be inferred from the notific....
X X X X Extracts X X X X
X X X X Extracts X X X X
....ation. The Trade Notice does not state that: • every FSC application will automatically be approved; • Regional Authorities have been completely removed from the process; • verification has been abolished; • exporters no longer need supporting records; • substantive eligibility conditions have been removed; or • an automatically issued certificate can never be reviewed. Instead, the notification creates an automated route while retaining manual and risk-based controls. 25. Practical example Consider an Indian exporter of an eligible non-drug/non-cosmetic product seeking an FSC for submission to an overseas buyer or regulatory authority. Earlier process The exporter submits the application online. The application is routed to the relevant RA. An officer manually examines the application. Verification is undertaken. The FSC is approved and issued. New process The exporter submits the application online. The DGFT system evaluates the application against applicable automated parameters. If eligible: FSC is autom....
X X X X Extracts X X X X
X X X X Extracts X X X X
....atically issued. • If verification is required: Application is routed to the concerned RA. • If subsequently selected under risk parameters: The already processed application may be flagged for RA review. This demonstrates how the reform can reduce processing time without eliminating regulatory supervision. 26. Expected impact on turnaround time The Trade Notice specifically identifies expedited turnaround as one of the intended effects of the new mechanism. However, exporters should be careful about assuming a guaranteed processing time. The notification establishes an automated mechanism, but it does not, in the text provided, prescribe a universal guaranteed number of hours or days for every FSC application. Actual processing may depend upon whether the application qualifies for automatic issuance or requires manual verification. Therefore, businesses should distinguish between: Expected benefit: faster processing for eligible applications and Guaranteed timeline: a specific statutory processing deadline. The Trade Notice establishes the former, not a universal numerical guarantee. 27. Paperless trade and India's digital trad....
X X X X Extracts X X X X
X X X X Extracts X X X X
....e ecosystem The FSC reform is part of the larger movement towards paperless foreign trade administration. Paperless processing can provide several advantages: • fewer physical documents; • reduced administrative handling; • faster transmission of information; • easier tracking; • improved audit trails; • lower transaction costs; and • greater convenience for exporters located away from DGFT offices. It also supports the Government's broader objective of facilitating frictionless trade. 28. Significance for India's export ecosystem Although the FSC may appear to be a specialised certificate, improvements in such supporting procedures can have a broader impact on India's export ecosystem. International trade frequently requires exporters to provide documentation to overseas authorities, buyers and regulatory bodies. Delays in supporting documentation can affect: • shipment planning; • market-entry timelines; • buyer on boarding; • regulatory submissions; • product registration processes; and • ....
X X X X Extracts X X X X
X X X X Extracts X X X X
....commercial transactions. Reducing the time required for government certification can therefore remove one potential bottleneck in the export supply chain. 29. Compliance remains central The introduction of automation should not be interpreted as a move away from compliance. Rather, it changes the compliance environment. Under a manual system, the primary control point may be the officer's examination before issuance. Under a risk-based automated system, compliance controls are distributed across: • system rules; • automated validation; • risk parameters; • manual verification where required; and • post-issuance review. Consequently, exporters need to maintain a culture of accurate data, documentary discipline and continuing compliance. 30. Key takeaways for exporters The most important points from TN No. 24/2026-2027 can be summarised as follows: Issue Position under the new mechanism Certificate FSC Relevant provision Para 2.34 of HBP Product scope stated in notice Items not covered under the Drugs & Cosmetics Act, 1940 Application Online through DGFT portal Rout....
X X X X Extracts X X X X
X X X X Extracts X X X X
....ine manual processing Reduced through automation Automatic issuance Available for eligible applications Manual processing Continues for applications requiring verification or not meeting automated parameters Risk management Certain auto-approved applications may subsequently be flagged RA role Continues for verification and risk-based review Objective Faster, paperless and seamless processing Broader policy direction Digitisation, automation and frictionless trade *** =============<br> Scholarly articles for knowledge sharing by authors, experts, professionals ....