In a move that is expected to benefit MSMEs, GeM has signed an MoU with TReDS platform RXIL and Arteria Technologies. The MoU will enable CPSEs, PSUs, and government departments to finance their payments to MSMEs through RXIL.
Ketan Gaikwad, CEO, RXIL, said, “Close to 53 per cent of transactions on GeM are initiated by MSMEs. The Finance Minister has announced during this year’s union budget to increase the turnover of GeM from the current levels of Rs 50,000 crore to Rs 3 lakh crore. For the proposed turnover mandate, it is necessary to have the alternate financing mechanism in place, the integration between Trade Receivables Discounting System (TReDS), and GeM as suggested in the UK Sinha Committee report will allow PSUs/ government departments to do procurement without blocking their own funds, while ensuring timely payments to MSMEs. The MoU will immensely benefit, MSMEs and CPSEs, PSUs, and govt departments while achieving the proposed goal of Rs 3 lakh crore throughput.”
The Economic Survey 2019-2020 stated that currently 57,531 MSME sellers and service providers are registered on the GeM portal. Central PSUs are required to procure at last 25 per cent of their total purchases from MSMEs and PSUs have procured 28.26 per cent of total procurement from MSMEs, crossing the minimum threshold of 25 per cent.
Gaikwad added, “TReDS has become a stable payment system with over Rs 15,000 crore worth of throughput across the platforms. The government has seen the effectiveness of TReDS in ensuring a stable supply of credit to MSMEs, the MoU is a step in the direction of extending its benefit to a larger universe of MSMEs.”
Sriram Kanuri, CEO, Arteria Technologies, said, “We are excited to extend the expertise and the existing association with TReDs by deploying FinessArt for GeM as well and support the Digital India journey and further the cause for MSME sector.”