MSME Payment Reforms Gain Momentum As TReDS Discounting Reaches Rs 3.47 Lakh Crore: CII

New Delhi, Aug 26 (KNN) Delayed payments continue to strain MSME working capital and growth, with recent measures aimed at faster invoice settlement and dispute resolution, according to Confederation of Indian Industries (CII).

With over 9.28 crore enterprises registered on the Udyam portal and employing more than 38 crore people, payment delays can lock funds needed for production, hiring and expansion.

TReDS Gains Scale

The Trade Receivables Discounting System (TReDS), operational since 2017, enables MSMEs to upload approved invoices on RBI-authorised platforms, where banks and non-banking financial companies compete to discount them.

The system allows MSMEs to receive funds before invoices become due, on a collateral-free and without-recourse basis.

Invoice discounting through TReDS platforms has expanded significantly, rising from around Rs 40,000 crore in FY22 to Rs 3.47 lakh crore in FY26.

Mandatory Onboarding Of Large Buyers

Since June 2026, the MSME Ministry has required all operating central public sector enterprises to route MSME invoice settlements through TReDS and disclose specified invoice details as per RBI norms.

Statutory auditors must also certify TReDS registration and compliance annually. The move, announced in Budget 2026-27, aims to promote timely payments by PSUs and potentially influence large private buyers.

Time-Bound Dispute Resolution

Mandatory onboarding targets the payment process, while proposed dispute-resolution reforms aim to reduce delays before facilitation councils. 

The MSME Development Amendment Bill 2026 sets 90 days for mediation, 30 days for unresolved cases to move to arbitration and 90 days for arbitral awards after pleadings.

With delayed-payment claims exceeding Rs 55,000 crore, the framework also requires buyers challenging awards to deposit 75 per cent of the amount, with half potentially released to the MSME if proceedings exceed six months.

Digital Infrastructure Supports Framework

The measures build on MSME digital infrastructure such as paperless Udyam registration, Udyam Assist for formalising informal micro-enterprises and an online dispute-resolution portal launched in June 2025.

Mandatory TReDS participation by large buyers and time-bound dispute resolution could improve MSME working-capital predictability. With TReDS discounting reaching Rs 3.47 lakh crore in FY26, wider adoption could further improve timely working-capital access.

(KNN Bureau)