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A depreciating rupee fundamentally improves export economics. Most exports are invoiced in USD, while production, labor, and overheads remain Rupee-denominated. As the rupee weakens, the same dollar revenue converts into higher INR earnings, expanding margins even without an increase in volumes.

And the opportunity goes beyond exchange rate mathematics. India is now more attractive to global importers than at any time in the past decade. Why?

• Geopolitical shifts and tariffs are forcing global companies to diversify supply chains away from China to reduce risk (China + 1 Strategy). India’s large labor force, improving infrastructure, and business-friendly reforms have made it a favored alternative
• Major multinational manufacturers are expanding operations in India to serve global markets. Apple, for instance, has sharply ramped up iPhone assembly in the country, with exports crossing $10 billion in H1 FY2026, up 75 per cent year-on-year, a clear signal of India’s deeper integration into global electronics supply chains
• India’s expanding network of free trade agreements and rising export competitiveness further enhance its appeal as a sourcing hub

These trends create urgent strategic imperatives for Indian exporters: global buyers are willing to shift volumes, but only if suppliers have the capacity, liquidity, and delivery guarantees to fulfil larger contracts. Importantly, this depreciation is not a short-term anomaly.

What does this mean for CFOs?

For CFOs, this creates a more predictable USD–INR FX rate environment for pricing, contracting, and hedging decisions. With prices of goods and logistics costs relatively stable, the FX upside from Rupee weakening is not being fully offset by higher input costs, making this an unusually favorable phase for export expansion. This is your time to scale exports, lock in long-term buyer relationships, and expand market share. But opportunity alone does not convert into growth, unless it is backed by liquidity.

Let us look at a real case study (name anonymized for privacy)

When the Indian rupee began weakening against the US dollar, one of our exporter clients saw more than just a currency move- they saw an opportunity.

Peacock Engineering Pvt. Ltd., an Indian exporter of industrial valves, supplying to overseas buyers and invoicing in USD, was witnessing steady demand. With USD invoices translating into higher INR realizations, the company was keen to take larger and more frequent orders. The challenge, however, was working capital. Longer payment cycles meant cash was tied up in receivables, limiting the exporter’s ability to scale production and confidently accept incremental orders.

That’s where VTX stepped in.

By unlocking liquidity from its USD receivables through its product offerings, VTX helped Peacock Engineering strengthen its working capital position almost immediately. Early access to funds enabled it to ramp up production, service increased order volumes, and offer greater comfort to their overseas buyers without waiting for the usual 90–120 day payment cycles.

This timely liquidity proved critical as the weaker rupee amplified the value of every dollar earned. With faster realizations, the exporter was able to convert USD invoices into higher INR sooner, fully capturing the currency tailwind rather than seeing it eroded by delayed cash flows.

Factoring as a Strategic CFO Tool

Executed on open-account terms Factoring, or receivables discounting, allows exporters to convert receivables into immediate cash once goods are shipped and the invoice is raised.

• Liquidity without leverage: Factoring does not add debt to the balance sheet and improves financial ratios
• Faster monetization of FX gains: Early receipt of USD-linked cash flows improves control over conversion timing. No hedging required
• Support for export scale-up: Transaction-linked funding expands in line with sales, unlike rigid bank limits
• Risk mitigation: Combined withcredit insurance, factoring protects against buyer default and geopolitical disruptions

How VTX enables export growth

VTX enables exporters

• to convert receivables into immediate cash through post-shipment factoring.
• to scale limits dynamically with export volumes to enable CFOs access to ad-hoc liquidity to support spikes in demand, without straining working capital or adding debt to the balance sheet.
• to connect to a large and diverse pool of global financiers, ensuring coverage of a wide range of products, currencies, and geographies.
• to get the lowest available interest rates with a transparent bidding mechanism.

The CFO Takeaway

For CFOs, the decision to pursue export growth is largely settled; the critical consideration now is the pace and confidence with which it can be pursued. With the right use of factoring on the Vayana TradeXchange platform, exporters can now increase shipments, offer longer credit terms, protect cash flows, and capture FX gains, turning the current USD-INR volatility into a sustained export advantage.

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Nowadays, every conference, event, and forum across the globe seems to have some discussion on SMEs and how to resolve the challenges they face in global markets – and for good reason. SMEs contribute immensely to employment generation, manufacturing, capital formation, and trade, making them vital to any domestic economy.

When it comes to trade, one of the major challenges that SMEs face is late payments from their suppliers, which increases the need for costly working capital. Around the world, countries are taking their own approaches to tackle this: often, legally binding buyers to a specific time within which payment must be made, for the goods supplied or services rendered.

But in actuality, these laws are difficult to implement, and many prove ineffective in practice.

India turns to digital platforms

This was the case in India too – small businesses critical to the economy were struggling because they couldn’t get paid by their buyers on time, despite government legislation.

To resolve this issue, the Reserve Bank of India (RBI) proposed a digital trade receivable discounting marketplace for SMEs in March 2014: marking the beginning of the Trade Receivable Discounting System (TReDS) platforms in India.

After an elaborate evaluation process and drafted guidelines, the RBI gave three entities licenses for building and operating the TReDS. The platforms went live in 2017 and were the first instance of a digital marketplace being regulated by the financial regulator of the country.

Both the RBI and the Indian government have taken various measures to support the platforms. Some of the significant steps taken by RBI are:

• Creating a special clearing window dedicated to settling transactions that originated on the TReDS platforms.
• Ensuring that KYC and AML done by the TReDS platforms are accepted by the Banks and non-bank factors.
• Providing a transparent price discovery mechanism through a unique auction process.
• Introducing the master agreement concept between participants and the TReDS platform (which eliminates the need for bilateral agreements between participants).
• Integrating TReDS entities with the central registry for the registration of factoring units.
• Allowing TReDS platforms access to the central KYC (CKYC) registry.
• Ensuring that exposure through TReDS is considered part of priority sector lending by the banks.

The Indian government has also supported the platforms by making registration on TReDS platforms compulsory for all central public sector enterprises, and for all business entities with turnover greater than $30 million. They have also implemented appropriate changes in the Factoring Regulation Act to align with workflows on TReDS platforms.

TReDS: seven years and growing

Over the last seven years, the three TReDS platforms have experienced consistent growth.

Together, the three platforms are expected to reach a throughput (i.e. total amount discounted) of $25 billion in FY 2024-25, with around 90,000 SME sellers, 5,000 buyers, and 50 financiers. The combined short-term trade asset base is expected to exceed $6 billion.

The TReDS model has also proven to be commercially viable, with all three platforms being cash-positive. Based on market information, delinquencies sit at 0.2%. Making credit insurance available which is aligned with the TReDS workflow can more than double present volumes. This would increase liquidity and encourage financiers to invest more in short-term trade assets – ultimately benefiting SMEs.

The TReDS ecosystem has contributed significantly to the short-term working capital finance ecosystem for SMEs in India. Some of the contributions include:

• Proving how digital platforms can resolve complex financing challenges in the B2B space.
• Creating innovative auction-based price discovery, which reduces borrowing costs.
• Removing collateral and recourse to the seller to better align with the needs of SMEs.
• Minimising costs for financiers to get a granular self-liquidating portfolio.
• Extending the usance period for buyers to align their working capital cycle.
• Promoting widespread adoption of factoring as a financing tool.
• Maximising security by allowing integration with the ERP systems of all participants.
• Eliminating geographical or time constraints by making the platform accessible from anywhere at any time.
• Removing scalability constraints in terms of liquidity and volume of business.

IFSCA launches cross-border trade finance platform
in GIFT City

With TReDS’s successful implementation in the domestic market, a new digital cross-border platform is gaining traction under the watchful eyes of the International Financial Services Centres Authority (IFSCA).

IFSCA – the unified financial regulator in Gujarat International Finance Tec-City (GIFT City) special economic zone in India – calls these new digital cross-border platforms ‘International Trade Financial Services (ITFS) Platforms’.

GIFT City is being developed as a global financial and IT services hub – a first of its kind in India – and is designed to be at par with globally benchmarked financial centres worldwide. GIFT City’s master plan facilitates a multi-service special economic zone with International Financial Services Centre (IFSC) status, a domestic finance centre, and the associated social infrastructure.

ITFS is the electronic platform that provides trade finance services at the IFSC. It facilitates cross-border trade financing through a bidding mechanism to global buyers and sellers; financial institutions in India and abroad are participating.

IFSCA issued four licenses to build and operate the ITFS Platforms. Three have been commercially live as of July 2023, and the fourth has completed the regulatory sandbox.

The ITFS platforms gaining traction amongst buyers, sellers, and financial institutions: over 15 factors and banks are already transacting on the platforms.

Opportunities and challenges for ITFS platforms

Compared to TReDS, ITFS platforms have more expansive geographical coverage and more product offerings. As such, their potential for exponential growth is immense.

Trade finance professionals anticipate that the ITFS platforms will grow more successful. Some of the reasons are:

• The widespread adoption of platforms and marketplaces in all formats across the globe.
• Enabling laws passed in different countries aligning with the Model Law on Electronic Transferable Records (MLETR) to fully digitise vital trade documents (like bills of exchange, promissory notes, and bills of lading).
• Platforms and marketplaces that operate in multiple legal jurisdictions will help drive further adoption of MLETR in various countries.
• More than 80% of cross-border trade today is on an open account basis. With the implementation of MLETR, these trade transactions will become much more fundable by financial institutions than they are today.
• Platforms and marketplaces provide unparalleled convenience of access in terms of geography, timing, interoperability, and ease of operation.
• ITFS platforms are operated under strict monitoring by financial regulators, which enhances their credibility.
• Access to the central registry makes platforms safer for financiers.

Despite the optimism, a few challenges persist for the ITFS platforms, including an absence of uniform stnadards and regulations for open account transactions. Since funds are settled outside the platform, high turnaround times also pose a problem; as does awareness creation, and concerns of data privacy.

Nonetheless, it is believed that ITFS platforms will benefit from network effects, leading to value creation for participants and expansion of the market.

The adoption of MLETR, increased volumes for open account trade, interoperability, seamless integration capability, ensured liquidity, transparent regulations, the possibility of tokenisation and secondary market operations will all make platforms like ITFS the future of global trade finance. These developments will be exciting to watch in the coming years.

– Kalyan Basu is the MD & CEO of Vayana (IFSC) Pvt Ltd., the company which built and operates the Vayana TradeXchange (VTX), an ITFS (International Trade Financial Services) platform for facilitating the financing of Cross Border Trade globally, established as per the guidelines issued by IFSCA (International Financial Services Centre Authority at GIFT City, Gujarat).

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On TReDS

The proposal to lower the turnover threshold for mandatory onboarding on TReDS from ₹500 crore to ₹250 crore is a significant step towards enhancing liquidity MSMEs in India. This change is expected to bring approximately 22 Central Public Sector Enterprises (CPSEs) and around 7,000 additional companies onto the platform, thereby broadening the scope of suppliers to include medium enterprises. TReDS serves as a vital financial lifeline for MSMEs, enabling them to convert their trade receivables into immediate cash, thus mitigating the persistent cash flow challenges they face. By facilitating quicker access to working capital, this initiative not only supports the growth of MSMEs but also strengthens the overall supply chain ecosystem, allowing larger corporate buyers to negotiate better procurement terms and enhance their supplier relationships. Furthermore, the inclusion of medium enterprises in TReDS signifies a more inclusive approach to financial accessibility, allowing a wider range of businesses to benefit from reduced financing costs and improved cash flow management. This move is poised to foster a healthier financial environment, encouraging more companies to adopt TReDS.

The government has seen the targetted benefit TReDS has been able to extend to the MSME sector during the COVID days, and thus, this expansion of adding medium-sized entities to the seller’s category will further boost the platform’s adoption and usage.

Fiscal Deficit Target Reduced to 4.9%

Finance Minister Nirmala Sitharaman announced a revised fiscal deficit target of 4.9% of GDP for the financial year 2024-25, down from the earlier estimate of 5.1% set in the interim budget. This is expected to create more fiscal space to invest in infrastructure and boost domestic investment. The Economic Survey noted that India’s fiscal deficit has already dropped from 6.4% in 2022-23 to 5.6% in 2023-24, aided by resilient economic activity, increased tax compliance, and higher-than-budgeted non-tax revenue. This move demonstrates the government’s commitment to fiscal prudence and consolidation, which is crucial for India’s long-term economic growth and development.

SIDBI’s Expansion to Serve More MSME Clusters

The Small Industries Development Bank of India will be opening 24 new branches this year, expanding its service coverage to 242 MSME clusters. This initiative aims to provide better access to financial services and support for MSMEs which are the backbone of the Indian economy. This expansion will help bridge the gap between MSMEs and financial institutions, ensuring that entrepreneurs receive the necessary support and guidance to thrive.

Empowering Women in the Workforce: A Priority for Startups

The Finance Minister emphasized the importance of increasing women’s participation in the workforce, stating that it will be a priority for the government. This will be facilitated by setting up hostels and creating partnerships to organize women-specific skilling programs. By providing access to skilling programs and creating a supportive ecosystem, the government is enabling more women to pursue their entrepreneurial dreams and contribute to the startup ecosystem.

Reduction in customs duty to reduce input costs, deepen value addition, promote export competitiveness, correct inverted duty structure, boost domestic manufacturing etc

In a move to promote domestic manufacturing and reduce the cost of production, the FM outlined a strategic approach to customs duties aimed at bolstering domestic manufacturing while ensuring competitiveness in the global market. The reduction in customs duties on essential raw materials and electronic components is a significant move to lower input costs, enhance value addition, and correct the inverted duty structure. This will not only make production more cost-effective but will also foster a competitive manufacturing environment, support our green energy initiatives, and simplify our duty structure for better compliance and ease of doing business. This comprehensive approach to adjusting customs duties aims to balance the need for protecting local industries while encouraging competitiveness and aligning with international trade standards.

Incentives to IFSC

To attract global capital to India, the Finance Minister has introduced multiple incentives for financial service entities and products at GIFT-IFSC, including tax and income exemptions. Additionally, the Finance Minister has suggested that venture capital funds (VCFs) based in IFSC should not be required to disclose the source of funds when extending a loan or other amounts to an assessee.

– Mr. Kalyan Basu, MD & CEO Vayana (IFSC) Pvt. Ltd. 

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Small and medium-sized Indian exporters face numerous challenges in expanding their trade globally, from accessing affordable working capital to meeting the lengthy credit periods demanded by large buyers and navigating complex documentation requirements. These barriers can be discouraging and limit their ability to compete in the global market. However, the Vayana TradeXchange (VTX), an International Trade Financing Services (ITFS) platform, regulated by IFSCA* (International Financial Services Authority), provides a feasible solution addressing these challenges, enabling MSME exporters to compete and thrive in the global market.

Let’s look at the three major challenges faced by MSMEs and how VTX addresses them.

1. Greater choice of affordable trade credit

VTX facilitates MSME exporters to access a spectrum of financiers, increasing their chances of finding affordable financing that meets their needs. The unique feature of an auction-based dynamic rate discovery mechanism helps exporters get the best possible financing rates from multiple financiers worldwide, in a currency of their choice, with a click of a button. Additionally, the VTX platform connects the exporters directly with the financiers avoiding the intermediaries, resulting in reduced costs for the exporters. VTX uses the technology to automate and streamline the application and approval process, resulting in easier and faster financing for the exporter.

Let’s understand this with a hypothetical example An Indian exporter, Mita Private Limited, sells rubber goods to a buyer, Sayang Company, in Southeast Asia. It operated on a 90- day open account credit and the invoice is raised in Singaporean Dollars (SGD). Here, Mita Pvt. Ltd. can use VTX find the best possible pricing for credit in the currency of their invoice (SGD). With the bidding being transparent, they go through the many rates of financiers across the globe, eventually choosing Borough Financier UK. Here, VTX also supports the financier by enabling them to more easily assess the performance of the exporter, view their payment history , and come up with an appropriate pricing policy, ultimately workings in favour of both participants.

2. Mitigating financiers’ risk through transparency

When lending, it’s always the financier’s priority to mitigate risk and avoid losses. To this effect, VTX facilitates the financier by granting greater visibility on the financial standing of the exporter, their counterparty’s creditworthiness, and information about their trade transactions (a critical input in deriving credit exposure).

Going back to the example of Mita Pvt. Ltd, VTX provides Borough Financier UK with verified trade documents between the exporter and importer. The process of trade document verification is continuous and done in near real- time, even after the transaction is financed, thus also supporting credit monitoring activities. The platform shares alerts with the financier when irregularities are detected, enabling the financier to take swift action against potential losses

3. Business-friendly documentation

VTX provides a simplified and centralized platform for all trade finance documentation, making it easier and consistent for all participants to access and share necessary documents. Automation of critical tasks by the platform, such as document verification and authentication, can significantly reduce the time and effort required to process the documents, freeing up time for more productive activities for participants.

Continuing to our previous example, VTX, a user-friendly platform with intuitive capabilities allows Mita Pvt. Ltd to upload all necessary trade documents securely and Borough Financier UK can then review, bid, and finance the transaction digitally, without the need for physical copies of trade documents. This streamlined process simplified through the user interface makes it easier for all the stakeholders to track the status of the trade finance transaction, reducing administrative overheads and saving valuable time.

Vayana TradeXchange (VTX) is a transformative platform that empowers MSME exporters in India to compete and succeed in the global market. By leveraging technology, VTX has the potential to drive economic growth by providing the necessary tools and resources for MSME exporters to expand their businesses globally. VTX is well-placed to propel the country’s vision of becoming a stronger economic powerhouse.

*The unified regulator set up under IFSCA Act 2019 by the Government of India.

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The International Financial Services Centres Authority (IFSCA), established at GIFT City, Gujarat, has floated guidelines to set up International Trade Finance Service (ITFS) platforms. These platforms will facilitate trade finance between exporters and importers, through financiers from across the globe, in a currency of their choice and at the lowest possible rates discovered through a transparent, online auction mechanism.

Vayana has received the in-principle approval to set up its ITFS platform and aims to launch the service by the end of CY 2022, under the brand name – Vayana TradeXchange.

The concept of the ITFS platform is one-of-its-kind and will have a far-reaching impact on the Indian economy. It will result in ease of doing business and add India to an exclusive club of global financial hubs.

While large corporates have numerous options and large teams of financiers working towards getting the best deals, it is the mid to small businesses who struggle to access favourable terms. They are often restricted to their existing banking relationships, weighing growth opportunities against default risks.

Moreover, the process and procedures involved in executing cross-border transactions are complicated, and the information asymmetry at the financier and insurer’s end leads to higher pricing to adjust for risks.

It is here that ITFS will make a huge difference, the option of having access to multiple financiers will lead to each of them assessing risk as per their internal policies, access to information and risk appetite. The competitive bidding process too will lead to efficient price discovery. For example, with ITFS a brassware exporter from Moradabad will now be able to access finance from an MNC bank. VTX will be a game changer for small businesses and how they access cross-border trade finance. It will create a hassle-free approach while retaining Vayana’s ethos of easy, accessible and affordable finance for all sizes of businesses.

If you would like to experience any of our supply chain finance solutions or be a part of our new endeavours, fill in the form below or write to us at sales.itfs@vayana.com. See you at GIFT City

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