Government mandates TReDS for all CPSE-MSME invoices to speed up payments

The Centre has made it mandatory for all operating Central Public Sector Enterprises (CPSEs) to route the settlement of invoices raised by Micro, Small and Medium Enterprises (MSMEs) through the Trade Receivables Discounting System (TReDS), a move aimed at ensuring faster payments and improving access to working capital for millions of small businesses.

The Ministry of MSME said on Friday that the notification, issued on June 30, implements a key commitment made in the Union Budget 2026-27 and is expected to significantly reduce payment delays, one of the biggest challenges faced by MSMEs.

Under the new framework, all operating CPSEs must settle invoices for goods and services procured from MSMEs through RBI-authorised TReDS platforms. The public sector enterprises will also be required to disclose details of MSME invoices routed and settled through TReDS as prescribed by the Reserve Bank of India and obtain a statutory auditor's certificate confirming TReDS registration and compliance as part of their annual audit.

The government said the move would improve transparency and accountability while setting a benchmark for payment discipline among large corporate buyers.

MSMEs account for a significant share of India's economic activity, with more than 8.70 crore enterprises registered on the Udyam Registration Portal and Udyam Assist Platform, providing employment to over 38 crore people. However, delayed payments continue to strain their cash flows, often limiting their ability to expand operations and invest in growth.

By making TReDS the mandatory settlement channel for all CPSE procurement from MSMEs, approved invoices can now be financed through banks and non-banking financial companies before their due dates. The system enables MSMEs to convert receivables into immediate working capital without providing collateral, while financiers compete to discount invoices, helping businesses secure funds at competitive interest rates.

The ministry said the arrangement would ensure that procurement by CPSEs is captured on the TReDS platform, enabling quicker invoice financing and timely payments to suppliers.

TReDS is an RBI-regulated electronic platform that facilitates the financing and discounting of trade receivables of MSMEs from corporate buyers, government departments and public sector undertakings through competitive bidding by multiple financiers. The five authorised platforms currently operating are RXIL, M1xchange, Invoicemart, C2treds and DTX.

The platform has witnessed rapid growth in recent years, with the value of invoice discounting increasing from ₹40,000 crore in FY22 to ₹3.47 lakh crore in FY26, highlighting its growing role in improving liquidity for India's MSME sector.