Dynamic liquidity: Why supply chain finance is now core to regional trade

Regional trade is redrawing the world’s supply chains. But without flexible liquidity, the global $2.5 trillion trade finance gap will only widen, hitting MSMEs the hardest. Traditional financing frameworks, designed for centralised and slow-moving trade routes, are struggling to support the rapid, decentralised growth of new regional corridors.

Across Africa, Asia, Latin America, and the Middle East, this challenge is unfolding in real time. And for India, it’s particularly urgent. As supply chains diversify, India is emerging as a regional manufacturing and export hub, with MSMEs contributing nearly 45% of the country’s exports. Yet, these same enterprises continue to face a deep credit gap, limiting their ability to scale and participate in global demand.

If liquidity does not reach where and when it’s needed, India’s trade ambitions risk being throttled at the source. At this point, Supply Chain Finance (SCF) can no longer function as a static, one-size-fits-all product. It must evolve into a dynamic liquidity infrastructure, one that moves with trade, not behind it.

The rise of dynamic liquidity

Dynamic liquidity refers to financing that adapts in real-time to trade flows, enabling capital to move in sync with goods, services, and invoices across the value chain.

Regionalised trade has revealed the growing mismatch between the pace of commerce and the pace of credit. Traditional underwriting models—built for predictable, long-haul trade cycles—struggle to serve supply chains that operate with overnight shifts in orders, currencies, and payment terms.

For Indian MSMEs in sectors like auto components, textiles, pharmaceuticals, and electronics, access to timely working capital determines whether they remain peripheral vendors or grow into core regional suppliers.

Imagine a Tier II auto-parts manufacturer in Pune using SCF to plug into ASEAN automotive networks, scaling from a local player to a regional contributor. Yet, many such enterprises remain stalled due to limited financing reach and rigid eligibility criteria.

Technology is reshaping access

Conventional credit evaluation, reliant on balance sheets and collateral, excludes millions of otherwise viable MSMEs. Technology is closing that gap.

• AI-driven credit scoring now assesses businesses through transaction histories and real-time supply flows, bypassing the traditional rating bottleneck.
• Blockchain-based smart contracts are streamlining cross-border payments, reducing friction and enhancing transparency as India strengthens its Indo-Pacific linkages.
• Deep-tier financing is extending liquidity to second- and third-tier suppliers—the small workshops and vendors who form the backbone of India’s manufacturing base.
• Policy shifts like MLETR adoption and India’s digitised customs ecosystem are accelerating invoice verification and cash flows.

Meanwhile, the mandatory onboarding of large corporates onto TReDS by March 2025 will further democratise liquidity, compressing invoice-to-cash cycles and opening MSME access to multiple financiers at competitive rates. Together, these shifts are reducing dependency on costly informal credit and enabling businesses to accept larger export orders without straining their working capital.

Coupled with dynamic discounting and sustainability-linked financing models, MSMEs are no longer passive recipients of funds; they are becoming active participants in a more intelligent, responsive financing network.

Reframing SCF as trade infrastructure

For too long, supply chain finance in India has been viewed as a stopgap for cash flow challenges. That perception must change.

Each regional hub—from ASEAN’s electronics and South Asia’s textiles to Africa’s commodities—has its own financing realities shaped by regulations, currencies, and local liquidity access. India, positioned at the crossroads of these networks, must solve its capital mobility puzzle to cement its role in the evolving trade order.

If trade is fragmenting into regional ecosystems, liquidity must become the glue that binds them together. Without it, resilient supply chains will crumble under fragmented financing.

SCF must now be treated as core infrastructure, just like logistics or payments—the foundation that keeps goods, data, and capital in motion. MSMEs don’t just need faster invoice clearance; they need financing that grows with them, anticipates their cycles, and empowers them to lead in global supply chains.

As trade corridors shift, India’s competitive edge will depend not just on what it manufactures but on how swiftly liquidity reaches those who make it possible.

Arun Poojari is the Co-founder and CEO of Cashinvoice.