Turnover threshold reduced for TReDS
                     Turnover threshold reduced for TReDS
The Indian Union Budget 2024 has brought significant changes 
for Micro, Small, and Medium enterprises (MSMEs), focussing 
on increasing their financial accessibility and operational 
flexibility. One of the key reforms is the reduction in the 
turnover threshold for mandatory onboarding on the 
Trade Receivables Discounting System (TReDS) platform. This 
change lowers the requirement from ₹500 crore to ₹250 crore, 
allowing more businesses to participate in this digital invoice 
discounting system.
Expanding TReDS participation
The TReDS platform plays a crucial role for MSMEs as it facilitates 
easier access to working capital by enabling businesses to convert 
their trade receivables into cash without needing collateral. With 
the reduced turnover threshold, an estimated 7,000 additional 
companies and 22 public sector undertakings (PSUs) can now join 
the platform. This broader participation is expected to enhance 
liquidity for MSMEs and streamline cash flow management.
Benefits of the revised threshold
By lowering the threshold, the government aims to foster a more 
inclusive financial environment for smaller enterprises. This 
initiative will not only help MSMEs improve their cash flow but 
also reduce the financial burden of high-interest loans. Enhanced 
participation on the TReDS platform means that more businesses 
can secure timely payments, leading to better financial health and 
operational efficiency.
The impact of these changes is expected to extend beyond 
immediate financial relief. By facilitating smoother cash flow and 
more predictable payment cycles, MSMEs can plan and execute 
business strategies more effectively, contributing to overall 
economic resilience and growth. This shift aligns with the 
government’s broader objectives to enhance the operational 
landscape for MSMEs, which are vital to India’s economic 
ecosystem.
Complementary financial measures
The Union Budget also includes several other measures to 
support MSMEs. A new credit guarantee scheme has been 
proposed to help manufacturing MSMEs secure loans for 
equipment and machinery. This scheme is designed to 
reduce financial barriers and encourage investment, 
potentially driving growth in the sector.
Additionally, the budget has increased the Mudra loan limit 
from ₹10 lakh to ₹20 lakh under the ‘Tarun’ category, 
providing more substantial support for businesses looking 
to expand or undertake larger projects. This initiative 
rewards responsible borrowers and encourages financial 
discipline while supporting business growth.
Modernising credit assessment
To further support MSMEs, the budget introduces modern 
methods for credit assessment. Public sector banks will now use 
digital footprint scoring to evaluate MSME creditworthiness, 
moving away from traditional external evaluations. This change is 
expected to make it easier for a wider range of MSMEs to access 
credit, particularly those lacking formal accounting systems.
Enhancing digital infrastructure
The government has also emphasised enhancing digital 
infrastructure to support MSMEs. By investing in technology 
and digital tools, the government aims to create a more 
robust and resilient business environment. This includes 
initiatives to promote digital literacy among small business 
owners and integrate digital solutions into their operations.
Conclusion
https://www.hdfcbank.com/personal/resources/learning-cent
re/union-budget/key-highlights-for-msme-in-union-budget-20
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https://pib.gov.in/PressReleaseIframePage.aspx?PRID=203560
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https://www.hdfcbank.com/personal/resources/learning-cent
re/union-budget/key-highlights-for-msme-in-union-budget-20
24
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