India Factoring Market

India Factoring Market Size and Share:

The India factoring market size was valued at USD 133.3 Billion in 2024. Looking forward, IMARC Group estimates the market to reach USD 212.2 Billion by 2033, exhibiting a CAGR of 5.3% from 2025-2033. Rising need for SME financing, delayed trade payments, and fintech-driven digital solutions are widening the market. In addition, regulatory reforms, increasing export factoring, and government initiatives are improving the efficiency of the market, helping factoring become an alternative choice over traditional loans for businesses seeking faster liquidity and reducing risks.  

India's factoring market is expanding as alternative financing attracts SMEs and exporters struggling with working capital shortages and delayed trade payments. For instance, in November 2024, bank credit to MSMEs grew 13.5% year-on-year, reaching USD 304.7 billion, reflecting increased demand for liquidity solutions. The working capital access improves for business groups as banks and non-banking financial companies (NBFCs) expand factoring services. Another significant factor behind this growth of digital lending platforms and fintech-driven invoice financing are further promoting adoption and making factoring as the next best possible solution for managing quick cash flows for businesses. Government initiatives and policies in terms of support of trade finance and supply chain finance are also fuelling market growth, especially while companies seek a cost-effective risk mitigation strategy related to credit at an economic competitiveness level.

International factoring companies in association with legislative policies are increasingly impacting the market to offer tailor-made solutions with lower costs and smooth digital processing. For instance, as per industry reports, the IFSCA released a consultation paper on the 2024 regulations for factor registration and receivables assignment, aiming to streamline and regulate international factoring operations within India’s financial centers, enhancing trade finance efficiency. Additionally, businesses have been preferring to opt for factoring over a traditional loan, as it offers reduced collateral and faster processing time. Factoring is increasingly becoming popular in the manufacturing, logistics, and retail sectors to optimize receivables. Moreover, the incorporation of blockchain and AI-powered risk assessment tools is further bolstering efficiency of operations and financial evaluation. As knowledge grows and rules evolve, so does the factoring market of India, nurturing financial stability as well as commercial growth.

India Factoring Market Trends:

Rising Adoption of Digital Factoring Platforms

The India factoring market is experiencing a strong drift towards digital factoring platforms. Fintech solutions and automation in trade finance are growing, and businesses are increasingly using AI-powered risk assessment, blockchain-based invoicing, and real-time transaction tracking to make the process of factoring more secure and transparent. Due to faster approvals, low operational costs, and efficient cash flow management, factoring has come within the reach of SMEs and exporters. The demand for paperless and automated financial services is on the rise, with banks and non-banking financial companies (NBFCs) teaming up with fintech firms to simplify invoice financing, credit evaluation, and receivables management. This would increase market efficiency and accessibility. For instance, in August 2024, ONDC launched digital credit services, offering paperless loans in six minutes. It integrates nine buyer applications and three lenders, accelerating factoring market in India.

Expansion of International Factoring

International factoring is gaining pace in India due to legislative backing and policy improvements. The foreign financial institutions and investors are attracted by this, increasing the capital inflow and service supply. For instance, in November 2024, Deutsche Bank AG invested ₹51.13 billion (USD 607.50 million) in its Indian operations to support expansion. This infusion, along with retained earnings and statutory components, increases its capital to nearly ₹300 billion, reflecting a 33% rise from 2023 levels. Additionally, export financing businesses benefit from tailored factoring arrangements with low costs and shorter processing times. International factoring also plays an important role in improving the liquidity and credit access of businesses as India becomes an integrated participant in global trade networks.

Growing Preference for Factoring Over Traditional Loans

Businesses in India are inclining towards for factoring over traditional loans due to streamlined processing, decreased collateral constraints, and better liquidity management. Factoring is also gaining popularity among SMEs, especially in the manufacturing, logistics, and retail sectors, in order to avoid credit risks and manage receivables efficiently. Contrary to conventional loans, factoring provides on-demand liquidity against outstanding invoices, thus keeping working capital stability intact. With growing awareness of alternative financing, banks and NBFCs are expanding factoring services to cater to rising demand. For instance, in November 2024, State Bank of India (SBI) sought RBI's approval to operate factoring services both within the bank and through its subsidiary, SBI Global Factors, seeking a special dispensation to expand its role in trade finance solutions. The shift toward flexible, short-term financing solutions is expected to accelerate India factoring market growth, fostering financial stability and business expansion.

India Factoring Industry Segmentation:

IMARC Group provides an analysis of the key trends in each segment of the India factoring market, along with forecasts at the country and regional levels from 2025-2033. The market has been categorized based on type, organization size, and application.

Analysis by Type:

• International
• Domestic

International factoring is expanding in India, driven by global trade growth, increased exports, and regulatory reforms. Exporters rely on factoring to mitigate payment risks, manage receivables, and ensure liquidity when dealing with international buyers. The International Financial Services Centres Authority (IFSCA) 2024 regulations have streamlined cross-border factoring, attracting global financial institutions to India. Businesses in textiles, pharmaceuticals, and engineering goods are increasingly adopting export factoring to access faster payments, reduced credit risk, and simplified trade finance solutions, enhancing their global competitiveness and financial stability.

Domestic factoring is witnessing significant growth as SMEs and large enterprises seek alternative financing solutions for managing local trade receivables. Businesses facing delayed payments from buyers use factoring to convert invoices into immediate working capital, ensuring smooth operations. Manufacturing, construction, logistics, and retail sectors are key adopters, benefiting from quicker cash flow, reduced reliance on bank loans, and enhanced credit management. The rise of digital factoring platforms and fintech-driven invoice financing is further driving domestic factoring adoption, offering cost-effective, paperless, and real-time financial solutions to businesses across India.  

Analysis by Organization Size:

• Small and Medium Enterprises
• Large Enterprises

Small and medium enterprises (SMEs) are the prominent adopters of factoring in India, driven by working capital constraints, delayed payments, and limited access to traditional bank loans. SMEs in manufacturing, logistics, and exports often face cash flow shortages due to long receivable cycles, making factoring an essential financing tool. The rise of fintech-driven digital factoring solutions has further improved access to quick, collateral-free liquidity for SMEs. Government initiatives promoting supply chain finance and trade receivables discounting (TReDS) are boosting factoring adoption, enabling SMEs to scale operations, manage receivables efficiently, and sustain business growth.

Large enterprises in India utilize factoring primarily to optimize cash flow management, reduce financial risks, and improve balance sheet efficiency. With extensive supply chain networks and global trade operations, these businesses benefit from factoring to streamline receivables and maintain liquidity. Industries such as automobile, pharmaceuticals, and infrastructure integrate domestic and international factoring solutions to mitigate credit risks and enhance working capital efficiency. Additionally, large corporations leverage structured factoring agreements and supply chain financing programs to ensure seamless financial transactions with vendors and suppliers, reinforcing their financial stability and operational efficiency.

Analysis by Application:

• Transportation
• Healthcare
• Construction
• Manufacturing
• Others

The transportation sector in India is a key adopter of factoring solutions, driven by high operational costs, delayed payments, and supply chain complexities. Logistics companies, fleet operators, and freight service providers face working capital challenges due to extended credit cycles from clients. Factoring enables them to maintain cash flow, cover fuel costs, and manage fleet expansion efficiently. With the growth of e-commerce, increased trade volumes, and demand for efficient supply chain financing, factoring is becoming a preferred solution for transport and logistics firms to sustain business operations and reduce financial bottlenecks.

The healthcare sector in India is witnessing growing factoring adoption, particularly among hospitals, pharmaceutical manufacturers, and medical equipment suppliers. The industry operates on delayed insurance reimbursements, supplier credit lines, and bulk procurement models, leading to cash flow constraints. Factoring helps healthcare providers access immediate working capital, ensuring timely procurement of medical supplies, staff payments, and infrastructure expansion. With the increasing focus on private healthcare investments and medical technology advancements, factoring is becoming an essential financial tool for businesses looking to enhance operational efficiency and maintain liquidity.

The construction industry in India relies heavily on factoring services due to long project cycles, delayed contractor payments, and high material costs. Infrastructure developers, real estate firms, and subcontractors often face cash flow shortages due to pending receivables from large-scale projects. Factoring provides immediate liquidity, enabling companies to purchase raw materials, pay labor, and complete projects on schedule. With increasing government investments in urban development, smart cities, and real estate growth, factoring is playing a crucial role in mitigating financial risks and improving working capital management in the construction sector.

The manufacturing sector is one of the largest users of factoring services in India, driven by export-oriented production, supply chain financing needs, and delayed payments from buyers. SMEs in textiles, auto components, and machinery production rely on factoring to manage receivables and sustain operational efficiency. With the rise of Make in India initiatives, industrial automation, and increased global trade partnerships, manufacturers require faster access to working capital. Factoring enables them to fund raw material procurement, streamline inventory management, and optimize supply chain efficiency, making it a critical financing tool in India’s growing manufacturing landscape.

Regional Analysis:

• North India
• West and Central India
• South India
• East and Northeast India

North India is a key region for factoring services, driven by the presence of industrial hubs, manufacturing clusters, and expanding trade activities. Cities such as Delhi, Gurugram, and Noida have a strong base of SMEs, exporters, and logistics firms, increasing demand for factoring as an alternative financing tool. The region benefits from growing fintech adoption and government-backed supply chain finance initiatives, enabling easier access to working capital. The rise of digital lending platforms and trade credit solutions is further strengthening factoring adoption, particularly in sectors such as textiles, automobiles, and electronics manufacturing.

West and Central India play a crucial role in the factoring market, with Maharashtra, Gujarat, and Madhya Pradesh emerging as major trade and industrial hubs. Mumbai, India's financial capital, is home to leading banks, NBFCs, and fintech firms, fostering a highly competitive factoring environment. Export-driven industries, including textiles, chemicals, and pharmaceuticals, are increasingly using factoring to manage receivables efficiently. The region’s rapid urbanization and infrastructure development are further driving demand for supply chain financing solutions, making it a key market for trade credit, invoice discounting, and factoring services.

South India is experiencing significant growth in factoring adoption, fueled by the expansion of IT, automotive, and textile industries. States such as Tamil Nadu, Karnataka, and Telangana house major manufacturing and export-driven businesses, making factoring a preferred financing tool. The region has a well-established fintech ecosystem, accelerating the shift toward digital factoring solutions. Additionally, government incentives for SMEs and trade finance policies are supporting factoring adoption. The growth of logistics, e-commerce, and supply chain networks is further increasing demand for invoice-based financing, positioning South India as a key market for factoring solutions.

East and Northeast India are emerging markets for factoring services, driven by increasing trade connectivity, infrastructure projects, and SME expansion. Kolkata, Assam, and Odisha are seeing rising adoption of invoice financing solutions due to their growing manufacturing, mining, and agro-based industries. The region benefits from government-led financial inclusion initiatives and export-driven industries such as tea, jute, and minerals, which require efficient trade finance solutions. While the market is still developing, factoring firms and fintech platforms are expanding their presence to provide working capital solutions to SMEs and traders in the region.

Competitive Landscape:

Indian factors have a highly competitive market with banking and non-banking financial companies (NBFCs) and fintech firms increasing their presence in invoice financing and trade credit offerings. International factors are entering the market, and efforts at regulatory reform are bringing efficiency to the markets. With faster processing, lower costs and AI-driven credit assessment through different platforms, businesses are increasingly choosing factoring over traditional loans, thus boosting competition among providers. For instance, in October 2024, Paisabazaar launched PB Assist, an AI-powered Credit Advisor, providing real-time insights on credit health, loan details, and repayment patterns. It enhances credit awareness using AI, predictive analytics, and proprietary algorithms to support responsible financial behavior. Moreover, these further shape the landscape through government initiatives on supply chain finance and export factoring. Besides this, innovations, adoption of technology, and increasing options to finance SMEs and exporters remain the mainstay of this growing market.

The report provides a comprehensive analysis of the competitive landscape in the India factoring market with detailed profiles of all major companies.

Latest News and Developments:

• In December 2024, The Indian government approved a capital infusion of ₹500 crore into Industrial Finance Corporation of India Factors (IFCI) Limited to strengthen its financial position. This initiative is part of a comprehensive restructuring strategy aimed at consolidating several subsidiaries, including IFCI Factors Limited, into a single unified entity. 
• In November 2024, Mintifi secured USD 180 million in a Series E funding round, co-led by Teachers' Venture Growth (TVG) and Prosus, with existing investor Premji Invest also participating, strengthening its position in the India factoring market.
• In August 2024, Zuron highlighted Maharashtra's initiative to bolster support for MSMEs and startups, as outlined by the state’s minister for Industries. This effort focuses on delivering "red-carpet support" to these sectors, in line with the government's vision to establish Mumbai as a global FinTech hub, fostering growth in the factoring and financial services market.
• In March 2024, Cashinvoice collaborated with SBI Global Factors to offer factoring solutions to MSMEs, targeting an additional credit disbursement of Rs 3,000 crore in the financial year 2024-2025. This strategic partnership aims to strengthen MSME growth by providing much-needed liquidity and expanding access to affordable financing options for small businesses across India.

India Factoring Market Report Scope:

Key Benefits for Stakeholders:

• IMARC’s report offers a comprehensive quantitative analysis of various market segments, historical and current market trends, market forecasts, and dynamics of the India factoring market from 2019-2033.
• The research study provides the latest information on the market drivers, challenges, and opportunities in the India factoring market.
• Porter's Five Forces analysis assists stakeholders in assessing the impact of new entrants, competitive rivalry, supplier power, buyer power, and the threat of substitution. It helps stakeholders to analyze the level of competition within the India factoring industry and its attractiveness.
• Competitive landscape allows stakeholders to understand their competitive environment and provides an insight into the current positions of key players in the market.