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Maharashtra government to use TReDS for payment of PWD contractors

The decision comes amid sustained protests by contractors from the PWD, Water Supply, Sanitation Department and Rural Development Department over non-payment of bills for nearly two years.

3 min readMumbaiUpdated: Jan 27, 2026 10:26 PM IST

Under the TReDS mechanism, contractors will be able to raise their invoices on the electronic platform, after which participating financial institutions will make payments to them.

Facing acute fund constraints and mounting delays in payments to contractors, the Maharashtra cabinet on Tuesday approved the use of the Trade Receivables Electronic Discounting System (TReDS) platform to clear dues of contractors engaged by the Public Works Department.

The decision comes amid sustained protests by contractors from the PWD, Water Supply, Sanitation Department and Rural Development Department over non-payment of bills for nearly two years. Contractor bodies have repeatedly warned of halting ongoing works and have also demanded waiver of GST to enable them to recover pending dues. The Maharashtra State Contractors Association, the umbrella body of contractors across the state, has estimated total outstanding payments at around ₹70,000 crore.

Under the TReDS mechanism, contractors will be able to raise their invoices on the electronic platform, after which participating financial institutions will make payments to them. The state government will repay the financier within a period of one year. While the system ensures partial and timely liquidity for contractors, it also allows the cash-strapped state government to defer immediate outflow from its own coffers.

TReDS is a joint initiative of the Government of India and the Reserve Bank of India aimed at promoting financial inclusion, Make in India and Skill India. The electronic platform facilitates financing and discounting of trade receivables of Micro, Small and Medium Enterprises (MSMEs) through multiple financiers. These receivables may be due from corporates, government departments or public sector undertakings. With the Cabinet’s approval, contractors engaged by the Maharashtra government’s PWD will now be brought under the TReDS framework.

“This system will bring transparency to the PWD billing process, helping contractors expand operations and upgrade technology. Following successful implementation, the platform will be integrated with e-tendering and e-procurement portals for seamless invoice submission and discounting,” said an official from the PWD.

How does TReDS work for MSMEs?

Broadly, the following steps take place during financing or discounting through TReDS:

Creation of a Factoring Unit (FU) — the standard nomenclature in TReDS for invoices or bills of exchange — containing details of invoices or bills evidencing sale of goods or services by MSME sellers to buyers, uploaded on the TReDS platform by the seller (in case of factoring) or the buyer (in case of reverse factoring)
Acceptance of the FU by the counterparty buyer or seller, as applicable
Bidding by financiers
Selection of the best bid by the seller or buyer, as the case may be
Payment by the financier to the MSME seller at the agreed rate of financing or discounting
Payment by the buyer to the financier on the due date

Welcoming the move, Maharashtra State Contractors Association president Milind Bhosle said the demand for adopting TReDS had been pending for over a year. “We had raised this demand in February 2025 and even submitted a proposal for the same. After that several meetings at the government level were held and finally the state cabinet has given approval for this. We hope that small contractors will be able to get some money out of it,” he said.

Alok Deshpande

Alok Deshpande is a Special Correspondent with The Indian Express' Mumbai bureau, recognized for his focused and authoritative reporting on governance, politics, and the socio-economic dynamics of Maharashtra's hinterlands. His unique academic background in Geology and early work in the water sector provides a specialized layer of Expertise to his reporting on resource and environmental issues. Expertise Current Role: Special Correspondent, The Indian Express, Mumbai. Core Authority: Alok provides detailed coverage of Maharashtra politics and governance, with a particular emphasis on how policies and power struggles affect the rural and semi-urban areas (the 'hinterlands'). Key Coverage Areas: His reports frequently focus on high-stakes administrative and political topics, including: State Assembly Proceedings: In-depth reporting on the Legislative Assembly, covering ministerial statements, legislative debates, and inter-party conflict within the ruling Mahayuti alliance. Policy & Finance: Coverage of state finances, including supplementary budget demands, fiscal deficits, and major government schemes (e.g., Jal Jeevan Mission, Ladki Bahin Yojana). Rural and Social Issues: Reports on critical health issues (e.g., child deaths in districts), human-animal conflict (leopard attacks, stray dogs), and agrarian concerns (e.g., farmer suicides). Local and Urban Governance: Covers major announcements regarding urban development (e.g., BMC's OC amnesty scheme, pagdi system push) and local body elections, including political defections and alliance splits. Unique Credentials & Trustworthiness Academic Specialization: Holds a Post-graduate degree in Geology. This background gives him a foundational understanding of natural resources, which directly informs his reporting on environment, water, and infrastructure projects. Early Professional Experience: His shift to journalism came after working with an NGO focused on the water sector. This practical experience strengthens his Expertise in critical areas like water management and rural development, as evidenced by his reporting on the Jal Jeevan Mission. Journalism Training: An alumnus of the prestigious Asian College of Journalism (ACJ), Chennai, confirming his formal training and commitment to rigorous journalistic standards. Alok Deshpande's rare combination of scientific education, non-profit sector experience, and deep political reporting makes him a highly trusted and authoritative voice on the governance and ground realities of Maharashtra. He tweets @alokdesh ... Read More

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