The Ministry of Defence is at a fairly advanced stage of implementing the Trade Receivables Discounting System (TReDS) to improve sluggish procurement payment cycles and address working capital access for MSMEs and start-ups. According to reports from The Hindu BusinessLine, Defence Secretary RK Singh convened a meeting on Thursday to address certain issues for smooth transition to digital trade financing. The Reserve Bank of India regulated platform allows MSMEs and start-ups to upload invoices approved by buyers, with the defence sector mostly involving government procurement.
The MoD has already had series of interactions with Government e Marketplace (GeM) for integration of TReDS for easier and quicker payment to MSMEs. As reported by The Hindu BusinessLine, 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 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.
Speaking at CII Annual Business Summit 2026 on Wednesday, RK Singh expressed confidence that TReDS will be expanded to the defence sector soon. According to The Hindu BusinessLine, Singh stated he had given a deadline of 1st April, but there are issues to be ironed out, with the next meeting scheduled for May 14. The Defence Secretary remarked that the initiative will be implemented not only for defence PSUs but also for services and procurement through the GeM portal, acknowledging his promise to roll out new digitised payment. The government's broader budget initiatives, including raised VC cap limits to fuel startup growth, align with the TReDS implementation to support venture capital investment and startup ecosystem development.
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. As reported by The Hindu BusinessLine, 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, according to industry and government-backed assessments. The initiative complements the government's broader VC tax incentive boosts to facilitate venture capital investment and support the startup ecosystem that serves the defence sector.
