Centre mandates TReDS route for CPSE purchases from MSMEs. What changes?

The Ministry of MSME said the change is intended to address the delayed payments faced by small businesses

The Centre has made it mandatory for all Central Public Sector Enterprises (CPSEs) to route payments for goods and services procured from micro, small and medium enterprises (MSMEs) through the Trade Receivables Discounting System (TReDS), an official statement said on Friday.

 

The development is viewed as a step towards reducing payment delays and improving access to working capital for small businesses.

 

The step was announced through a notification, issued on June 30, which fulfils a commitment made in the Union Budget 2026-27, the statement said.

What changes after this?

Under the notification, all operating CPSEs must route settlement of MSME invoices through RBI-authorised TReDS platforms.

   

CPSEs will also have to disclose details of invoices routed through TReDS in the format prescribed by the Reserve Bank of India and obtain a statutory auditor's certificate confirming registration and compliance with the notification during the annual audit, the notification said.

 

The Ministry of MSME said the change is intended to address delayed payments faced by small businesses.

 

According to the ministry, more than 87 million enterprises are registered on the Udyam Registration Portal and Udyam Assist Platform, employing over 380 million people. It said routing CPSE invoices through TReDS will allow MSME suppliers to receive collateral-free invoice financing from banks and financial institutions before the payment due date.

What is TReDS?

TReDS is an RBI-regulated electronic platform launched in 2017 to finance trade receivables of MSMEs from corporates, government departments and public sector undertakings.

 

Five platforms—RXIL, M1xchange, Invoicemart, C2treds and DTX—are currently operational.

 

Invoice discounting through TReDS has increased to ₹3.47 trillion in FY26 from ₹40,000 crore in FY22, according to the ministry. 

Industry body welcomes move

The Indian Industries Association (IIA) welcomed the notification, saying delayed payments have remained one of the biggest constraints on MSMEs.

 

"The Indian Industries Association (IIA) welcomes the Government's decision to mandate TReDS for all CPSE procurements from MSMEs," the association said.

 

It added that making TReDS compulsory for CPSE transactions "will help ensure timely payments, improve access to affordable working capital, and strengthen the financial health of small businesses."

What the Budget had proposed

While presenting the Union Budget 2026-27, Finance Minister Nirmala Sitharaman had proposed making TReDS "the transaction settlement platform for all purchases from MSMEs by CPSEs, serving as a benchmark for other corporates."

 

She had also announced a credit guarantee mechanism through CGTMSE for invoice discounting on TReDS, integration of the Government e-Marketplace (GeM) with TReDS to facilitate cheaper financing, and the introduction of TReDS receivables as asset-backed securities to improve liquidity.

 

Apart from that, the Budget also proposed a ₹10,000-crore SME Growth Fund to support high-growth enterprises, a ₹2,000-crore top-up for the Self-Reliant India Fund, and the creation of "Corporate Mitras" through professional institutions to help MSMEs meet compliance requirements at affordable costs.