Delayed payments hurt MSME cash flow, TReDS emerges as effective solution: MSME Secy
New Delhi, June 30
Delayed payments continue to adversely affect the cash flow and liquidity of micro, small and medium enterprises, but the Trade Receivables Discounting System has emerged as an effective mechanism to address the issue through invoice discounting according to MSME Secretary Bharat Khera.
"Delayed payments have a negative impact on MSME cash flow and create liquidity problems. TReDS has been a very successful model, and invoice discounting through the platform is a very good solution for delayed payments," Khera told ANI on the sidelines of CII's MSME Rise Summit 2026 on Tuesday.
Explaining how the platform works, Khera said financial institutions make advance payments as soon as invoices are uploaded on TReDS and later recover the amount from the buyer. He said the number of transactions on the platform has increased four-fold, while the value of invoice discounting has grown nine-fold over the last few years.
Highlighting the government's efforts to improve access to finance, Khera said credit extended to the MSME sector has increased from around Rs 10 lakh crore in 2014 to Rs 37 lakh crore currently.
"Credit to the MSME sector has increased from around Rs 10 lakh crore in 2014 to Rs 37 lakh crore now," he said.
Khera said the Emergency Credit Line Guarantee Scheme (ECLGS) launched during the COVID-19 pandemic was highly successful in supporting MSMEs. On similar lines, the government introduced another emergency credit guarantee scheme in May following the West Asia crisis.
Under the latest initiative, around Rs 2 lakh crore of credit has been earmarked for the MSME sector with a 100 per cent government credit guarantee. Banks are providing more than 20 per cent of the working capital limit to eligible MSMEs under the scheme, which has witnessed encouraging uptake, Khera said.
On public procurement, Khera said the MSME Development Act mandates that 25 per cent of total public procurement should be sourced from MSMEs, including earmarked shares for enterprises owned by Scheduled Castes, Scheduled Tribes and women entrepreneurs.
"Today, 50 per cent of total public procurement is being sourced from the MSME sector. This is the figure for 2025-26, which is very encouraging," he said.
Khera said the government is working to integrate the TReDS platform with the Government e-Marketplace (GeM) so that invoices generated through public procurement can also be discounted, enabling faster payments to MSMEs.
On Free Trade Agreements (FTAs), Khera said the entire industry benefits from such agreements and MSMEs, being the backbone of the industry, also stand to gain. He noted that FTAs contain a dedicated chapter for MSMEs with enabling provisions and urged MSMEs to fully leverage these agreements to expand their exports and trade.
— ANI
Reader Comments
As a small business owner, I can vouch for the pain of delayed payments. TReDS has helped us a bit, but the real problem is large corporations who sit on invoices for 6 months. The govt should also penalize buyers who delay payments beyond 45 days, not just offer discounting solutions. MSMEs shouldn't have to pay to get their own money!
ECLGS was a lifesaver during COVID, no doubt. But the new scheme after West Asia crisis—how many MSMEs actually know about it? The uptake is "encouraging" but the application process is still too complicated for a small shopkeeper in Madurai. Simplify the forms, reduce paperwork, then we'll talk. Integration with GeM sounds promising though—hope it works in practice. 👍
Impressive numbers—50% public procurement from MSMEs is a huge jump from the mandated 25%. But the proof is in the pudding. I've seen friends with MSMEs still getting paid months late even for govt contracts. The TReDS-GeM integration could be a game-changer if implemented properly. Also, FTAs with MSME chapters are great in theory, but most small exporters I know are still figuring out customs paperwork.
Credit extended from 10 lakh crore to 37 lakh crore—great, but how much of that is actually reaching the smallest micro-enterprises? The "missing middle" in India's credit system is real. Banks prefer lending to established SMEs, not the village kirana store or the local potter. Also, why isn't there more push for cooperative or peer-to-peer lending for ultra-small businesses? Just my two paise. 🤔
J We welcome thoughtful discussions from our readers. Please keep comments respectful and on-topic.