India’s MSMEs May Finally Get Paid: How the TReDS portal Mandate Could Unlock ₹8.1 Lakh Crore

In a landmark move to alleviate the liquidity crunch faced by Micro, Small, and Medium Enterprises (MSMEs), the Indian government has mandated the use of the Trade Receivables Discounting System (TReDS) portal for all Central Public Sector Enterprises (CPSEs) when procuring goods and services from MSMEs. This directive, announced in the Union Budget 2026, aims to unlock approximately ₹8.1 lakh crore in delayed payments, thereby enhancing cash flows and fostering growth within the MSME sector.

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Understanding the TReDS Portal

The TReDS portal is an electronic platform designed to facilitate the financing of trade receivables of MSMEs through multiple financiers. By enabling MSMEs to discount their invoices and receive prompt payments, TReDS addresses the critical issue of delayed payments, which often hampers the operational efficiency and growth prospects of small enterprises.

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The Liquidity Challenge for MSMEs

MSMEs contribute significantly to India’s economy, accounting for nearly 30% of the GDP and about 45% of exports. Despite their importance, these enterprises often grapple with liquidity issues, primarily due to delayed payments from buyers, including government entities. According to the Economic Survey 2025-26, delayed payments amounting to ₹8.1 lakh crore are currently stuck, choking working capital and raising borrowing costs for MSMEs.

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Government’s Mandate and Its Implications

The Union Budget 2026 has made it mandatory for all CPSEs to use the TReDS platform for settling payments with MSMEs. This move is expected to:

• Accelerate Receivables Realization: By ensuring timely payments, MSMEs can maintain healthy cash flows.
• Lower Financing Costs: Access to immediate funds through invoice discounting reduces the need for high-interest loans.
• Enhance Transparency: An electronic platform ensures clear tracking of transactions, reducing disputes and ambiguities.

Since its inception, TReDS has facilitated financing of over ₹5 lakh crore of receivables, with volumes rising 69% year-on-year to ₹2.33 lakh crore in FY25. As of October 2025, the platform had nearly 1.72 lakh registered MSME sellers and over 10,000 buyers.

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🔗 Integration with Other Initiatives

To further bolster the effectiveness of the TReDS portal, the government plans to:

• Introduce Credit Guarantee Support: Through the Credit Guarantee Fund Trust for Micro and Small Enterprises (CGTMSE), invoice discounting will be backed, encouraging more financiers to participate.
• Integrate with Government e-Marketplace (GeM): This will streamline information flow between government buyers and financiers, facilitating faster and more cost-effective financing for MSMEs supplying to public entities.
• Recognize TReDS Receivables as Asset-Backed Securities: This move is expected to optimize banks’ regulatory capital and free up lending capacity.

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Potential Impact on MSMEs

The mandatory adoption of the TReDS portal by CPSEs is poised to:

• Improve Liquidity: Timely payments will ensure that MSMEs have the necessary funds to manage operations and invest in growth.
• Enhance Creditworthiness: Regular cash flows and transparent transactions can improve the credit profiles of MSMEs, making it easier to secure loans.
• Stimulate Economic Growth: A robust MSME sector contributes to job creation, innovation, and overall economic development.

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📝 Steps for MSMEs to Leverage TReDS

1. Register on the TReDS Platform: MSMEs should enroll with any of the three licensed TReDS platforms: RXIL, M1Xchange, or Invoicemart.
2. Engage with CPSEs: Ensure that your enterprise is listed as a supplier with CPSEs and that transactions are routed through TReDS.
3. Maintain Accurate Records: Timely and precise invoicing will facilitate smoother transactions on the platform.
4. Monitor Transactions: Regularly check the status of invoices and payments on the TReDS portal to address any discrepancies promptly.

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📚 References

• Economic Times: Union Budget 2026 measures could unlock Rs 8.1 lakh cr stuck MSME capital
• Economic Times: Rs 8.1 lakh crore stuck in delayed MSME payments: Eco Survey 2026
• Livemint: Budget Highlights 2026: Finance Minister Sitharaman makes big announcements on STT, tourism, manufacturing, MSMEs
• KNN India: Budget 2026-27: Govt To Mandate TReDS For CPSE Purchases

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🔍 Frequently Asked Questions (FAQs)

Q1: What is the TReDS portal?
A1: The Trade Receivables Discounting System (TReDS) is an electronic platform that facilitates the financing of trade receivables of MSMEs through multiple financiers, ensuring timely payments and improved liquidity.

Q2: Why has the government mandated CPSEs to use TReDS?
A2: To address the issue of delayed payments to MSMEs, the government has made it mandatory for CPSEs to settle transactions with MSMEs through the TReDS platform, aiming to unlock ₹8.1 lakh crore in stuck payments.

Q3: How can an MSME register on the TReDS platform?
A3: MSMEs can register with any of the three licensed TReDS platforms: RXIL (www.rxil.in), M1Xchange (www.m1exchange.com), or Invoicemart (www.invoicemart.com), by providing necessary business and financial details.

Q4: What are the benefits of using TReDS for MSMEs?
A4: Benefits include improved cash flows through timely payments, reduced dependence on high-interest loans, enhanced creditworthiness, and access to a broader network of financiers.

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✍️ About the Author

Tabrez Khan
Tabrez Khan is a entrepreneur ,exporter and the founder of BusinessZindagi.com. With over a decade of experience covering MSMEs, startups, and exports, Tabrez is dedicated to providing insightful and actionable information to empower entrepreneurs and small business owners across India.

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