Delayed payments remain the Achilles' heel of Indian MSMEs. How far can integrating GeM with TReDS and collateral-free purchase-order financing solve this?

Delayed payments to MSMEs total about ₹8.1 lakh crore (Economic Survey 2025–26, cited by Parliament's Standing Committee on Industry) [1]. Linking GeM with TReDS and offering GeM SAHAY go a long way towards easing the cash shortage this causes. They only partly fix the root cause, which is that buyers pay late.

How the reforms help

• Data for lenders: Budget 2026–27 linked GeM with TReDS, so lenders can see government purchase data. GeM is now integrated with all five TReDS exchanges [2][3].
• Credit across the whole order cycle: GeM SAHAY gives collateral-free loans against the purchase order, before supply. TReDS discounts the invoice after supply [2].
• Cheaper invoice financing: CGTMSE guarantees now cover TReDS invoice discounting. CPSEs must settle their MSME purchases through TReDS [3].
• More working capital: The Caution Money deposit for sellers was abolished in July 2025 [2].

Purchase order ──► GeM SAHAY loan (pre-supply)
Invoice raised ──► TReDS discounting (CGTMSE-backed)
Buyer pays late ──► no new penalty   ◄── gap

Fig: The reforms pay for the wait; they do not shorten it.

Where the reforms fall short

• They treat the symptom: Both tools give the seller cash early. The late-paying buyer faces no new cost, and the MSE still pays the discount charge.
• Payment delays are long-standing: CAG Report No. 18 of 2020 found GeM's faster-procurement goal only partly achieved, with delays especially in payment [4].
• Complaints are not resolved: MSME Samadhaan holds 2,56,892 applications worth about ₹55,244 crore. The ODR portal settled only 17 cases in eight months [1].
• Limited reach: The tools depend on GeM orders. They do not help MSMEs whose late payers are private buyers.

Way forward

• GeM should flag overdue payments automatically to Samadhaan/ODR, so the MSE does not have to complain first [1].
• Disputes should be resolved within fixed time limits, with penalties under the MSMED Act, 2006 [1].

In short, GeM–TReDS and GeM SAHAY turn government orders into assets that banks will lend against, which softens the cash shock. But they pay for the delay rather than prevent it. They will work only if combined with automatic flagging and enforceable penalties for buyers. That would make prompt payment a right, not a favour, and support SDG 8 through a resilient MSME sector.