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Delayed payments continue to adversely affect the cash flow and liquidity of micro, small and medium enterprises (MSMEs), but the Trade Receivables Discounting System (TReDS) 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)
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