Tamil Nadu’s push for timely MSME payments has hit a roadblock. Only 22 of over 60 state PSUs actively use the TReDS platform. This comes despite a government order making participation mandatory for all entities.
The Trade Receivables Discounting System, or TReDS, was designed to ease cash-flow pressures. It allows MSMEs to channel invoices and payments through banks and financiers. Yet adoption remains disappointingly low among state-owned organizations.
Alarmed by the slow uptake, the Finance Department has issued a circular. It directs all PSUs, statutory boards, apex cooperatives, and municipal corporations to operationalize TReDS immediately. This move aims to enforce compliance across the board.
The circular was signed by Expenditure Secretary Prashant M Wadnere. It instructs departments to appoint a senior officer as nodal officer. This officer must be at least of general manager rank to oversee invoice processes.
Their responsibilities include uploading, settling, and monitoring MSME invoices. Departments are also required to submit monthly reports. These reports go to the industries commissioner, director of industries and commerce, and finance department.
Many PSUs are struggling with financial constraints. Losses and fund shortages affect their ability to comply with TReDS mandates. This situation highlights deeper systemic issues.
CK Mohan, president of Tamil Nadu Small and Tiny Industries Association, voiced concerns. He emphasized the need for a stronger TReDS framework. Widening its reach is crucial for MSME support.
Mohan also urged the central government to lower participation thresholds. The current mandatory turnover is set at Rs 250 crore annually. He recommends reducing it to Rs 50 crore to include more entities.
This adjustment could significantly boost TReDS adoption. More organizations would fall under the mandatory usage rule. It would provide broader support for MSMEs across the state.
The sluggish implementation affects countless small businesses. They rely on timely payments to maintain operations. Delays can cripple their cash flow and growth prospects.
State authorities are now monitoring compliance closely. Monthly reporting ensures transparency and accountability. It puts pressure on PSUs to prioritize TReDS integration.
Without widespread adoption, MSMEs continue to face financial hurdles. The TReDS platform remains underutilized despite its potential benefits. This gap between policy and practice needs urgent addressing.
Financial health of PSUs plays a key role in compliance. Struggling entities find it hard to invest in new systems. Support and incentives may be necessary to drive change.
The focus remains on streamlining payment processes for MSMEs. Effective use of TReDS can transform their financial landscape. It promises faster settlements and improved liquidity.
As the state pushes forward, all eyes are on PSU responses. Will they step up to meet their obligations? The future of MSME payments in Tamil Nadu depends on it.