St. Thomas College Library

TReDS and India’s Small-scale Enterprises: Gaps between Design and Delivery

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  • Economic and Political Weekly Vol.60; No.37 - 13 Sep. 2025 pp. 17-20
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Summary: The Trade Receivables Discounting System was introduced to ease working capital constraints for India’s micro and small enterprises by enabling invoice discounting based on buyer creditworthiness. While conceptually robust, actual usage trends reveal a gap between intent and outcomes. High-value invoices, limited buyer onboarding, and mid-sized sellers dominate the platform, while smaller firms remain under-represented. This commentary revisits common explanations for low MSE participation and highlights the role of institutional and compliance gaps. It proposes a set of regulatory and operational reforms aimed at restoring the platform’s original purpose of improving financial inclusion for small enterprises.
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The Trade Receivables Discounting System was introduced to ease working capital constraints for India’s micro and small enterprises by enabling invoice discounting based on buyer creditworthiness. While conceptually robust, actual usage trends reveal a gap between intent and outcomes. High-value invoices, limited buyer onboarding, and mid-sized sellers dominate the platform, while smaller firms remain under-represented. This commentary revisits common explanations for low MSE participation and highlights the role of institutional and compliance gaps. It proposes a set of regulatory and operational reforms aimed at restoring the platform’s original purpose of improving financial inclusion for small enterprises.

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