India Factoring Services Market Expected to Reach $48.97 Billion by 2032—Allied Market Research

 According to a recent report published by Allied Market Research, titled, “India Factoring Services Market by Provider, Enterprise Size, Application, Product Type, and Industry Vertical: Country Opportunity Analysis and Industry Forecast, 2023–2032,” The India factoring services market size was valued at $5.72 billion in 2019 and is projected to reach $48.97 billion by 2032, growing at a CAGR of 11.6% from 2024 to 2032.

Factoring services refers to the selling or discounting of invoices (receivables) by a seller of goods and services, usually micro, small and medium enterprises (MSMEs) to a factoring company or bank. The factoring agreement usually assumes that the whole credit risks as well as the collection of the accounts are taken by the factor. It offers enterprises, particularly SMEs, a means of financing their need for working capital, but also an instrument of collection of receivables and default risk hedging.

Increasing implementation of open accounts in small and medium enterprises (SMEs) in India propels the India factoring services market growth. In addition, the need for factoring services is being driven by the requirement for cash flow management. Businesses must manage their cash flow properly to maintain efficient operations. Businesses can successfully manage their cash flow by utilizing factoring services, which convert accounts receivable into cash. Furthermore, the market for factoring services is developing as a result of the growing trend of digitalization.

However, the lack of a stringent regulatory framework for debt recovery mechanisms and higher finance charges are major challenges to the expansion of the India factoring services market. On the contrary, the adoption and rapid development of blockchain technology is expected to provide lucrative opportunities for the growth of the India factoring services market.

On the basis of enterprise size, the large enterprises segment acquired the highest share in India factoring services market in 2022. This is attributed to the continuous technological advancements in factoring services, including the usage of blockchain technology, cryptocurrency, and large-scale transactions. In addition, the growing utilization of digital platforms in trade financing, along with the rise in international trade due to ease in regulations across India, is fueling the growth of large enterprises segment.

However, the small and medium-sized enterprises (SMEs) segment is expected to be the fastest growing over the forecast period. This is attributed to the fact that small and medium-sized enterprises (SMEs) are the primary adopters of this financing facility, and the interest rates for both recourse and non-recourse factoring are almost the same in India. Thus, these factors drive the India factoring services market trends.

The COVID-19 pandemic has had a negative impact on India factoring services market size, owing to the sudden lockdown in 2020. The sudden emergence of the COVID-19 pandemic has impacted the Indian economy by causing supply chain and market disruptions and has had a severe financial impact on businesses and financial markets in India. Moreover, as the pandemic situation improved and economic activities gradually resumed, the factoring services market in India also started to recover. Thus, these factors affected the India factoring services industry.

Key Findings of the Study

• By provider, the banks segment accounted for the highest India factoring services market share, in terms of revenue in 2019.
• By industry vertical, manufacturing segment accounted for the highest revenue in 2019.
• By product type, the recourse factoring segment attained the highest market share in 2019, and is expected to exhibit the fastest growth rate during the forecast period.  

The key players operating in the India factoring services market analysis include Barclays Bank PLC, BNP Paribas, SBI Global Factors Limited, TreasuryXL, FIM Bank, Tata Capital Financial Services Limited, IDBI Bank, Aditya Birla Capital Ltd., Yes Bank, and Bank of Barod. These players have adopted various strategies to increase their market penetration and strengthen their position in the industry.