Innovative Solutions Propel MSME Growth Amidst Financial Challenges

Delayed payments hinder MSMEs' cash flow, but TReDS offers relief via invoice discounting. Credit access has surged, bolstered by schemes like ECLGS. The government emphasizes public procurement from MSMEs and explores integrating TReDS with GeM. Free Trade Agreements further support MSMEs' expansion. These efforts aim to enhance liquidity and boost growth.

The persistent issue of delayed payments continues to be a major hurdle for micro, small, and medium enterprises (MSMEs), impacting their cash flow and liquidity. Nonetheless, the Trade Receivables Discounting System (TReDS) offers a promising solution via invoice discounting, according to MSME Secretary Bharat Khera during the CII's MSME Rise Summit 2026.

Khera explained that TReDS allows financial institutions to provide advance payments against invoices uploaded on the platform, recouping the funds from the buyers later. This mechanism has seen a four-fold increase in transactions and a nine-fold growth in invoice discounting value. Efforts to improve financial access have led to an increase in MSME credit from Rs 10 lakh crore in 2014 to Rs 37 lakh crore today.

Khera further highlighted the success of the Emergency Credit Line Guarantee Scheme (ECLGS) during the COVID-19 pandemic, with a similar scheme introduced after the West Asia crisis. The latest initiative designates Rs 2 lakh crore for MSMEs with full government credit guarantees, boosting working capital access. Furthermore, public procurement from MSMEs now stands at 50%, and integration of TReDS with the Government e-Marketplace is underway to expedite payments.

Free Trade Agreements (FTAs) also play a key role, benefitting not only the industry but MSMEs as well. These agreements include specific provisions for MSMEs, urging them to capitalize on FTAs for export and trade expansion.