Centre Plans To Extend Treds To Defence Procurement To Support Msmes

(MENAFN- KNN India) New Delhi, Apr 11 (KNN) The Centre is exploring the extension of the Trade Receivables Discounting System (TReDS) to defence procurement in a move aimed at improving payment cycles for micro, small and medium enterprises (MSMEs).

Move To Ease MSME Payment Delays

The proposal seeks to integrate defence procurement transactions with TReDS platforms, enabling MSMEs supplying to defence public sector units and government departments to access faster invoice financing, reported by Business Standard.

TReDS, introduced by the Reserve Bank of India, facilitates the discounting of trade receivables of MSMEs through a transparent online mechanism involving multiple financiers.

Extending the platform to defence procurement is expected to address persistent delays in payments faced by MSMEs engaged in the sector, thereby improving their liquidity position and working capital management.

Boost To Defence Supply Chain

The move is also seen as part of broader efforts to strengthen the domestic defence manufacturing ecosystem by ensuring smoother financial flows across the supply chain.

Timely payments are critical for MSMEs involved in defence production, particularly given the capital-intensive nature of the sector and long procurement cycles.

Policy Alignment With MSME Support Measures

The initiative aligns with the government's ongoing focus on improving ease of doing business and enhancing credit access for MSMEs.

In recent years, the scope of TReDS has been expanded to include additional participants such as insurance companies, with regulators also taking steps to simplify onboarding processes and encourage wider adoption.

If implemented, the extension to defence procurement could further deepen the reach of the platform and support MSME participation in strategic sectors.

(KNN Bureau)

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