Highlighting the huge credit gap that remains unaddressed in the MSME sector, Das said, “The TReDS is yet to become effective, I would say. It’s operational, but it’s still not effective, with hardly 10% of its potential being realised.”
The MSME secretary made these comments on November 23 while addressing the CII’s Global MSME Business Summit in New Delhi.
TReDS was introduced by the RBI in 2017 to tackle the issue of delayed payments to MSMEs. The platform’s main purpose is to create an electronic platform that enables MSMEs to secure financing for their receivables from buyers, including large corporates, PSUs, government departments, and others. This platform utilizes an auction mechanism to ensure competitive rates from multiple financiers.
Das said several provisions in the GST and taxation regime can be further used to enable faster payments, at least to the small and micro segments. “This is an area where both advocacy and formulation of the instrumentalities need to be done and we are working in this direction.”
For assisting MSMEs, Das said the ministry is currently focussing on four broad areas: finance and credit, technology infusion and adoption, access to markets and ease of doing business.According to the MSME secretary, the country’s push towards sustainability won’t be effective till the MSME sector is not fully onboard with it. He said big businesses cannot cope with the climate challenge adaptations unless the “base of the pyramid” is not suitably prepared to respond to climate challenges. “So, it’s not just only economic growth for which we have to nurture MSME, it is also for the sustainability aspect. It’s the overall equity and inclusive growth of the country. They have to be really nurtured. They have to be made very supple. They have to be resilient,” he added.Access to credit and financing is a critical issue that affects MSMEs in several developing nations. According to the International Finance Corporation (IFC), MSMEs are responsible for over 80% of job creation in developing countries. However, there is a dire need for SME finance: 40% of MSMEs in 128 countries are credit-constrained.
