TReDS on GeM: How MSME Sellers Can Get Paid Faster on Government Orders
TReDS on GeM lets an MSME-verified seller discount an invoice that a government buyer has accepted, so a bank or NBFC pays early and the buyer pays it on the due date. As of 30 October 2026, GeM says it is integrated with all five TReDS exchanges, per a PIB release of 28 October 2026.
A government order is good business, but it can be slow money. A micro or small supplier delivers to a ministry, a department or a Central Public Sector Enterprise (CPSE), raises the bill, and then waits. While it waits, the cash credit line carries the gap.
On 28 October 2026, at GeM Samvad 2026, the Government e Marketplace (GeM) set out what it now offers sellers on that problem. GeM said it is integrated with all five Trade Receivables Discounting System (TReDS) exchanges, in line with the Union Budget 2026-27 announcement. It also pointed sellers to GeM Sahay, its route to unsecured loans against GeM purchase orders, and restated lower transaction charges.
None of these tools is brand new. The fee cuts were already in place by August 2026, and CPSEs have had to route MSME invoices through TReDS since 15 October 2026. What the 28 October release does is put the pieces side by side, and with the CPSE rule now in force, this is a good time for GeM sellers to set them up. This guide explains how TReDS works on GeM, who can use it, what it costs, how it differs from GeM Sahay, and what it does to your working capital.
TReDS on GeM: what GeM said on 28 October 2026
TReDS is an RBI-regulated online system where an MSME's invoice, once the buyer accepts it, is auctioned to banks and NBFCs. The winning financier pays the seller early, and the buyer pays the financier on the due date.
As of 30 October 2026, GeM says it is integrated with all five TReDS exchanges, so MSME sellers can opt for TReDS on eligible government orders, according to the Press Information Bureau release of 28 October 2026.
The same release listed GeM's seller fee changes:
| Item | Earlier | Now (as stated by PIB, 28 October 2026) |
|---|---|---|
| Transaction charge | 0.50% of order value | 0.30% of order value |
| Orders exempt from the charge | Up to ₹5 lakh | Up to ₹10 lakh |
| Maximum charge on orders above ₹10 crore | ₹72.50 lakh | ₹3 lakh |
| Caution money deposit at onboarding | Required | Dropped in July 2025 |
| Vendor assessment charges for OEMs | Earlier levels | Cut by 66% to 92% since January 2024 |
GeM says nearly 97% of orders on the platform now carry no transaction charge. A PIB release of 7 August 2026 already described the 0.30% rate, the ₹10 lakh exemption and the ₹3 lakh cap, so read these as current terms, not a fresh cut.
Why government orders tie up working capital
GeM is a large market for small firms. As of 7 August 2026, 12.25 lakh micro and small enterprises were registered on GeM, and they had fulfilled orders worth more than ₹9.07 lakh crore, 45.6% of the platform's cumulative order value, according to PIB.
The law sets a ceiling on how long a buyer can take. Under section 15 of the MSMED Act, 2006, a buyer must pay a micro or small supplier by the agreed date, and that date cannot be more than 45 days from acceptance of the goods or services. If the buyer pays late, section 16 makes it owe compound interest with monthly rests at three times the RBI Bank Rate.
With the RBI Bank Rate at 5.75% since 7 October 2026, that statutory interest works out to 17.25% a year, compounded monthly. In practice, few suppliers claim it from a government customer they want to keep. So the real fix is to get paid on time, or to get paid early by someone else.
GeM's own TReDS training guide, updated 22 April 2026, describes the problem plainly: sellers would otherwise wait 30 to 90 days for buyer payments.
How TReDS works on GeM, step by step
GeM's seller guide sets out the flow. The buyer side is built around CPSEs, which can keep their normal payment dates while the seller gets cash earlier.
- Get MSME-verified on GeM. Only MSME-verified sellers can use TReDS. Complete business PAN validation, office location and GST details, and your Udyam Registration Number in your GeM profile.
- Give TReDS consent. In your profile's additional details, consent to share your name, PAN, GST and Udyam details with the TReDS exchanges.
- Register on an exchange your buyer uses. At order processing, GeM shows which TReDS exchanges the buyer is registered on. If you are not on a common exchange, GeM prompts you to register.
- Opt for TReDS on the invoice. When you generate the invoice on GeM, choose TReDS. The option appears only if the buyer is registered and active.
- Let financiers bid. Once the buyer accepts the invoice on the exchange, banks and NBFCs bid. You choose the offer, and the money comes to you. The buyer pays the financier on the due date.
Under RBI's TReDS Directions, 2026, invoices discounted on TReDS are without recourse to the MSME seller, and a buyer that has accepted an invoice must pay on the due date without any set-off for quality. That is the key difference from a bank loan against your receivables. Read more in our guide to invoice discounting with and without recourse.
The law now pushes CPSEs the same way. From 15 October 2026, section 15A of the amended MSMED Act requires every CPSE to settle invoices for goods and services bought from MSMEs through an RBI-authorised TReDS platform. Routing through TReDS does not force you to discount. You can let the invoice run to its due date and take payment directly. See our explainer on the MSMED Amendment Act 2026.
Worked example 1: discounting a CPSE invoice on TReDS
Illustrative example, assuming a ₹20 lakh invoice accepted by a CPSE buyer, payable in 45 days, discounted on TReDS at 9% a year, before any exchange or financier fees:
| Item | Amount |
|---|---|
| Invoice value | ₹20,00,000 |
| Discount (₹20 lakh x 9% x 45 / 365) | ₹22,192 |
| Cash to the seller now, before fees | ₹19,77,808 |
| Cost as a share of the invoice | About 1.11% |
The discount rate on TReDS depends on the buyer's credit, not mainly on yours, because the buyer is the one who pays the financier. A CPSE buyer can attract keen bids. Actual rates vary by buyer, tenor and financier.
TReDS vs GeM Sahay: two different tools
GeM Sahay is easy to confuse with TReDS. It works differently, and the risk sits with you.
| Point | TReDS | GeM Sahay |
|---|---|---|
| What is financed | An invoice the buyer has accepted | A GeM purchase order, before you invoice |
| Who you rely on | The buyer's promise to pay on the due date | Your own GeM track record and data |
| If the buyer pays late or cancels | Without recourse to the MSME seller under RBI's TReDS Directions | Recourse is on the seller, who repays with interest |
| Security | The accepted invoice | Unsecured, without collateral |
| How you are repaid from | Buyer pays the financier on the due date | Buyer's payment goes to a virtual escrow account, the lender is paid first, the balance comes to you |
GeM's participation terms describe Sahay as an unsecured, short-tenure loan from a bank or NBFC against GeM purchase orders. GeM's Sahay FAQ adds that it is not a factoring product and involves no buyer. It suits a seller who needs cash to fulfil an order, for raw material or labour, before there is an invoice to discount. TReDS suits the stage after delivery and acceptance.
Many sellers will use both: Sahay or a working capital limit to build and deliver, then TReDS to turn the accepted invoice into cash.
What the GeM fee changes mean for your margins
Transaction charges come out of your order value, so they matter on thin government margins.
Worked example 2: transaction charges on three orders
Illustrative example, assuming the charge applies to the full order value of any order above the exemption limit, as the PIB release describes it, comparing the earlier terms (0.50%, exemption up to ₹5 lakh, cap ₹72.50 lakh) with the current terms (0.30%, exemption up to ₹10 lakh, cap ₹3 lakh):
| Order value | Earlier charge | Current charge | Difference |
|---|---|---|---|
| ₹8,00,000 | ₹4,000 | Nil (exempt) | ₹4,000 |
| ₹50,00,000 | ₹25,000 | ₹15,000 | ₹10,000 |
| ₹25,00,00,000 | ₹12,50,000 | ₹3,00,000 (cap) | ₹9,50,000 |
The ₹3 lakh cap equals 0.30% of ₹10 crore, so every order above ₹10 crore pays the same ₹3 lakh. Check the charge schedule on GeM for your category before you bid, because GeM's own terms decide the final amount.
What faster payment does to your working capital limit
Lenders size a working capital limit around your cash cycle. The longer your receivables sit unpaid, the more working capital you need. Our guide on how banks calculate a working capital limit explains the method.
Worked example 3: cutting collection time from 90 to 45 days
Illustrative example, assuming ₹1.2 crore of annual sales to government buyers through GeM, spread evenly through the year, and a cash credit line at 11% a year:
| Item | Paid in 90 days | Paid in 45 days |
|---|---|---|
| Average receivables (sales x days / 365) | ₹29,58,904 | ₹14,79,452 |
| Cash released | Nil | ₹14,79,452 |
| Cash credit interest saved a year on the released cash | Nil | ₹1,62,740 |
On these assumptions, getting paid in 45 days instead of 90 halves the money tied up in government receivables. Compare that saving with the TReDS discount from example 1 before you decide which invoices to discount.
One caution. Under the TReDS Directions, the seller declares that a discounted invoice has not been financed by any other lender, and the exchange informs the banks holding the seller's working capital accounts. If your cash credit limit counts those receivables for drawing power, tell your bank before you discount, so the same invoice is not financed twice. Our drawing power and cash credit renewal guide covers how lenders treat receivables.
Worked example 4: what late payment costs a buyer
Illustrative example, assuming a ₹20 lakh invoice to a micro supplier paid after the agreed date, with section 16 interest at 17.25% a year compounded monthly (three times the 5.75% Bank Rate):
| Months paid late | Statutory interest owed |
|---|---|
| 1 | ₹28,750 |
| 2 | ₹57,913 |
Formula: ₹20,00,000 x ((1 + 0.1725 / 12) ^ months minus 1). This is the buyer's liability, not a payment you should plan your cash flow around.
TReDS keeps growing
TReDS has grown fast. Invoice discounting on TReDS rose from ₹40,000 crore in FY 2021-22 to ₹3.5 lakh crore in FY 2025-26, according to a Ministry of MSME release on PIB dated 25 September 2026.
The same release said CGTMSE credit guarantee cover is now available on three TReDS platforms, covering 75% of the amount in default. That cover applies only when both the buyer and the seller are micro or small enterprises, so it will not usually apply to CPSE orders on GeM. For MSME credit without collateral more broadly, see our guide on MSME loans under CGTMSE.
What GeM sellers should do now
- Complete MSME verification on GeM. Udyam number, business PAN and GST details are the entry ticket to TReDS.
- Give TReDS consent and register on your buyers' exchanges. Check which exchanges your regular CPSE buyers use and register there first.
- Price the discount into your bid. Use the current GeM transaction charge and a realistic TReDS discount when you set your price.
- Choose the right tool for the stage. Purchase order finance or a working capital limit before delivery, TReDS after acceptance.
- Tell your working capital bank. Agree how discounted invoices will be treated in your drawing power before you start.
- Keep a record of every late payment. Section 16 interest and the buyer's disclosure duties depend on dates you can prove.
Interest rates: the backdrop
RBI raised the repo rate by 25 basis points to 5.50% on 7 October 2026, and said policy action ahead "can only be a rate hike or a pause". The next Monetary Policy Committee meeting is on 2 to 4 December 2026. When borrowing costs are rising, shortening your cash cycle is one of the cheaper ways to fund growth. See our guide on business loan interest rates.
How MoneyKarma helps
MoneyKarma is a loan distribution platform for Indian businesses and real estate developers, with 90+ lenders. Not a lender. We help MSME suppliers compare invoice discounting and working capital options from public sector banks, private banks, NBFCs and financial institutions, and prepare the receivables data and documents each lender asks for. Every credit decision is made by the lender. Our team responds within 24 hours on average, with ₹2,500+ Cr facilitated to date. Apply here to start.