Brief Overview:
Trade Receivables Discounting System (“TReDS”) may soon move from a Central Public Sector Enterprise (“CPSE”) focused payment tool to a wider Micro, Small and Medium Enterprises (“MSME”) payment compliance framework. The Micro, Small and Medium Enterprises Development (Amendment) Bill, 2026 proposes to amend the MSMED Act by requiring CPSEs to settle MSME invoices through TReDS and by introducing a broad notification power that may enable the Government of India (“GoI”)/ State Governments to extend this requirement to other notified entities, including private businesses.
Technical Details:
Key Highlights
1) CPSEs first in line: Section 15A(1) requires CPSEs procuring goods or services from MSMEs to settle invoices through RBI-authorised TReDS platforms.
2) Expansion power goes wider: Section 15A(2) uses the phrase “any other authority, body or entity”, allowing the GoI / State Governments to notify additional participants.
3) Private sector risk is the key watch-out: Since “entity” is not limited to government-owned or government-controlled bodies, notified private businesses may also be compelled to route MSME invoice settlements through TReDS.
4) Drafting contrast is important: The move from CPSE-specific wording in section 15A(1) to the broader language in section 15A(2) suggests that the expansion power may not be confined to public sector entities.
5) Practical compliance impact: Notified entities may need to onboard onto TReDS, route MSME invoices through the platform and make related disclosures.
Takeaways:
The key issue is not only the immediate CPSE mandate, but the possibility of a wider rollout. Businesses with significant MSME vendor exposure should track future notifications closely, as TReDS onboarding, invoice routing and related disclosures could become part of their compliance checklist if they are notified under section 15A(2).
For further details, please see:
Micro, Small and Medium Enterprises Development (Amendment) Bill, 2026
For any queries/clarifications, please feel free to ping us and we will be happy to chat:
- Mr. Jayesh H (jayesh.h@juriscorp.in)
● Ms. Mahak Saboo (mahak.saboo@juriscorp.in)
