The Ministry of Defence (MoD) is at a fairly advanced stage of implementing Trade Receivables Discounting System (TReDS) to improve sluggish procurement payment cycles and address working capital access to the MSMEs and start-ups, with Defence Secretary RK Singh convening a meeting on Thursday to “iron out” certain issues for smooth transition to digital trade financing.
TReDS, the Reserve Bank of India regulated platform, allows MSMEs and start-ups to upload invoices approved by buyers, which in case of defence sector is mostly government. After that, banks and NBFCs convert invoices into cash. Ministries of Commerce and MSMEs have already rolled out this mode of payment for ease of doing business.
Sources said the MoD has already had a series of interactions with Government e Marketplace (GeM), the digital platform for procurement of goods and services, for integration of TReDS for easier and quicker payment to MSMEs. The MoD is one of the largest buyers on the platform, with over ₹1 lakh crore in total cumulative order value being sourced in the last financial year. The MoD is also coordinating with the Ministries of Commerce and MSME and Finance, as the tri-services — the Army, Air Force and Navy — and defence PSUs are set to be onboarded onto the platform to ensure wider adoption and enforcement of this payment mechanism.
Expansion plan
Speaking at CII Annual Business Summit 2026 on Wednesday, RK Singh expressed confidence that TReDS will be expanded to the defence sector soon. “..I had actually given a deadline of 1st April, but there are issues to be ironed out, and incidentally, this is something I review almost every week, and I have the next meeting on May 14,” the Defence Secretary stated to a poser on the subject from the audience gathered for the plenary session.
“We will make it happen not only for the defence PSU but also for the services and procurement through GeM portal,” Singh remarked acknowledging that he had promised to roll out new digitised payment earlier.
The push for TReDS is being viewed as part of the government’s larger strategy to deepen the domestic defence manufacturing base by improving liquidity across the sector’s supply chain.
For MSMEs supplying to defence projects, faster settlement of dues is particularly important because of the industry’s high capital requirements and lengthy procurement timelines.
India’s defence sector engages an estimated 16,000 MSMEs which are linked to defence manufacturing and supply chains, as per industry and government-backed assessments.
The initiative also dovetails with the Centre’s broader policy thrust on easing business operations and expanding formal credit access for small and medium enterprises.
Published on May 13, 2026