Central PSUs to now pay MSME vendors only via approved TReDS
Manas Pimpalkhare New Delhi: The government on Friday made it compulsory for central public sector enterprises (CPSEs) to pay their micro, small and medium enterprise
Manas Pimpalkhare New Delhi: The government on Friday made it compulsory for central public sector enterprises (CPSEs) to pay their micro, small and medium enterprise (MSME) suppliers through Reserve Bank of India-approved Trade Receivables Discounting System (TReDS) platforms, strengthening efforts to curb chronic payment delays and improve access to working capital for small businesses. The notification issued by the MSME ministry gives effect to a proposal announced in the Union Budget for 2026-27. The ministry said the move is expected to make CPSEs “role models” for payment discipline among large corporate buyers. Detailing the compliance loop, the ministry said: “CPSEs shall disclose details of MSME invoices routed and settled through TReDS as specified by the RBI and obtain a statutory auditor’s certificate of TReDS registration and compliance during their annual audit.” Also Read | Govt set to bring MSME law change to ease payment delays, boost ease of biz TReDS is platforms wherein MSMEs can upload invoices of receivables, allowing lenders to finance these and provide much-needed working capital to smaller businesses.
There are five TReDS platforms approved by the RBI: RXIL, M1xchange, Invoicemart, C2treds and DTX, the government statement said. TReDS platforms say the move will support liquidity for MSMEs. “This notification marks a significant milestone in our continued efforts to strengthen the MSME ecosystem by improving timely access to working capital. It will broaden awareness and participation among CPSE suppliers, enabling more businesses to access timely, collateral-free financing," said Sundeep Mohindru, founder and promoter of M1xchange, one of the five approved platforms. "As invoice flows increase across TReDS platforms, the ecosystem will become more efficient, further supporting liquidity and growth for MSMEs.” In her FY27 Budget speech on 1 February, finance minister Nirmala Sitharaman approved the use of these receivables as asset-backed securities, a long-awaited demand from the MSME sector, which contributes to 31.1% to India’s GDP and 48% of the exports. The new mandate assumes significance for the issue of delayed payments to MSMEs by government enterprises.
According to the MSME Samadhaan portal for dispute resolution of these delayed payments, including delayed payments from corporates or any other entity, since 2017, there have been over 110,000 cases filed worth over ₹31,500 crore, claiming payments from central PSUs, state PSUs, and private sector buyers. Of these, about 62,700 cases worth ₹10,074 crore have been disposed of, as on 10 July 2026. "Routing central PSU payments to MSMEs through TReDS will not only provide the government with greater visibility into MSME payment flows but also enhance transparency, accelerate invoice financing, and promote greater financial discipline across the ecosystem," said Ketan Gaikwad, managing director and chief executive officer of RXIL, another approved platform. Under India’s public procurement policy, central public sector undertakings must buy at least 25% of their total annual requirement from micro and small enterprises. The government, in FY26, revised the definition of MSMEs, increasing the investment limits by 2.5 times and turnover limits by 2 times.
The BriefWire