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BRICS trade ministers have agreed to study the creation of an Invoice Discounting Mechanism to improve access to trade finance for micro, small and medium enterprises across member countries. The proposal, included in the Jaipur Consensus, aims to help MSMEs convert confirmed trade receivables into immediate working capital and reduce financing constraints. The ministers also backed greater use of digital trade documentation, including e-invoices and electronic bills of lading, to strengthen integration with global value chains. The move comes amid a global MSME finance gap estimated at USD 5.7 trillion, rising to USD 8 trillion when informal enterprises are included.
BRICS trade ministers have agreed to undertake a study on establishing an Invoice Discounting Mechanism for member countries to promote innovative financing systems and make trade finance more accessible to MSMEs.
The proposal assumes importance as the global MSME finance gap is estimated at around USD 5.7 trillion and rises to USD 8 trillion when informal enterprises are included. Small businesses often face difficulties in presenting viable or bankable business plans, leading to stricter lending conditions, higher borrowing costs, greater collateral requirements and limited access to markets.
The ministers committed to narrowing this financing gap and supporting a shift from collateral-based lending towards more inclusive and growth-oriented credit systems. They also discussed exploring local currency financing mechanisms to reduce exchange rate risks and strengthen intra-BRICS trade.
The Jaipur Consensus proposes studying an Invoice Discounting Mechanism for BRICS members. The mechanism would support receivables financing and invoice discounting, allowing MSMEs to convert confirmed trade receivables into immediate liquidity and unlock working capital. It would also involve banks, non-banking financial institutions, large corporates, insurers and regulatory agencies.
The ministers also proposed greater cooperation in connectivity and trade facilitation to support integration with global value chains. This would include digitising trade documentation such as e-invoices, electronic bills of lading and e-customs declarations.
They further committed to promoting a seamless and secure digital trade environment that supports MSMEs through digital services, expands intra-BRICS trade, develops digital skills and strengthens the digital economy while respecting the regulatory frameworks of individual countries. The meeting was attended by ministers or representatives from Brazil, China, Egypt, Ethiopia, Iran, Russia, South Africa and the UAE.
The outcome was issued as a Chair's Statement and Outcome Document following the 16th meeting of the BRICS trade ministers in Jaipur. Such a statement is generally issued when members do not reach consensus on a joint declaration. However, the document stated that the Chair's statement and outcome document, including its annexes, had been agreed upon by all BRICS members, while issues that did not receive consensus were not included.
Source PTI
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