Budget 2026: TReDS-anchored liquidity to drive structural shift in MSME working capital access, say stakeholders

Synopsis The Budget’s push to SMEs through equity support and TReDS-anchored liquidity signals a structural shift in MSME working capital access, say stakeholders. Union Budget 2026-27: Finance Minister Nirmala Sitharaman on Sunday, while delivering the Budget speech, said liquidity concerns of micro, small, and medium enterprises (MSMEs) will be addressed by using the Trade Receivables Discounting System (TReDS) as a pricing benchmark and mandating its use by all central public sector enterprises (CPSEs) for MSME transactions to ensure faster payments. Budget 2026 Live Budget 2026: Catch all the live action here Income Tax Budget 2026 Live Updates Stock Market Live Updates “With TReDS, more than Rs 7 lakh crore has been made available to MSMEs. To leverage its full potential, I propose 4 measures: mandate TReDS as the transaction settlement platform for all purchases from MSMEs by CPSEs, serving as a benchmark for other corporates; introduce a credit guarantee support mechanism through CGTMSE for invoice discounting on the TReDS platform; link GeM with TReDS for sharing information with financiers about government purchases from MSMEs, encouraging cheaper and quicker financing; and introduce TReDS receivables as asset-backed securities, helping develop a secondary market, enhancing liquidity and settlement of transactions,” Sitharaman said in her Budget speech. The Budget’s push to SMEs through equity support and TReDS-anchored liquidity signals a structural shift in MSME working capital access, say industry experts and stakeholders. Launched in 2014, TReDS allows MSMEs to discount receivables from large buyers through an auction-based platform, enabling quicker access to funds at competitive rates. Sundeep Mohindru, Founder and Promoter, M1xchange, says, by positioning TReDS as the settlement platform for MSME supplies to CPSEs, the government will drive wider adoption of invoice discounting and reinforce TReDS’ role in addressing delayed payments to MSMEs. “Credit guarantee support on invoice discounting on TReDS and the integration of GeM with TReDS will enable quicker and more affordable financing for suppliers. Treating TReDS receivables as asset-backed securities will deepen liquidity multifold and enhance the secondary market expansion for discounted invoices. Equally critical is the creation of corporate mitras through professional institutions, which will strengthen affordable compliance support in Tier II and Tier III towns. Together, these measures reinforce MSMEs as India’s engine of growth,” adds Mohindru. Live Events Ketan Gaikwad, MD & CEO, RXIL, says that mandating TReDS as the transaction and settlement platform for CPSEs is a welcome move, as it will ensure timely payments and competitive financing for MSMEs, while giving the government a transparent, system-driven view of MSME payment cycles and setting a benchmark for other corporates. “The proposed extension of CGTMSE credit guarantee support to invoice discounting on TReDS further deepens the availability of working capital for MSMEs and will enable TReDS platforms to onboard a wider and more diverse MSME base. Linking the GeM portal with TReDS for sharing information with the financiers will be a major enabler, allowing MSME suppliers access to quicker and cheaper financing in a seamless manner, especially when combined with CPSE participation and credit guarantees. The proposal to introduce trade receivables as asset-backed securities is a forward-looking reform that has the potential to unlock additional liquidity by attracting new classes of investors and developing a secondary market for MSME receivables. We look forward to further details on this framework and believe it can meaningfully enhance market depth, liquidity, and settlement efficiency for MSME financing in the years ahead,” adds Gaikwad. Meanwhile, TReDS bill financing crossed Rs 2 lakh crore by June 2025, driven by rising digital adoption. Under government mandates, companies with turnover above Rs 250 crore must register on TReDS to enable MSME payments. Similarly, Jay Deepak Shah, CEO & Managing Partner, Jay Wood Industry, says that the improved credit access and liquidity support through platforms like TReDS will enable manufacturers to plan expansion with greater financial confidence. Sanjay Doshi, Partner and Head, Transaction Services and Financial Services Advisory, KPMG in India, says, “Recognising TReDS receivables as asset backed securities would fundamentally elevate MSME financing by transforming verified invoices into a trusted investment asset. This shift can attract deeper institutional capital, lower the cost of working capital for MSMEs, and create a more liquid, transparent, and resilient credit ecosystem, benefiting both the financial sector and the backbone of India’s supply chain" 20 cities. Countless breakthroughs. Secure your spot at the ET Make in India SME Regional Summit.. ...moreless 20 cities. Countless breakthroughs. Secure your spot at the ET Make in India SME Regional Summit.. ...moreless Hindustan Zinc has a silver lining. But for how long? EU trade pact: Should Tata, Mahindra worry about ‘European invasion’? 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