What is the average payment term in India?

According to the Atradius Payment Practices Barometer – India 2025, B2B payment terms in India now average around 47 days from invoicing. This varies significantly by industry, from about 47 days in textiles to close to 60 days in chemicals.

Which industry has the longest payment terms in India?

Among the sectors covered in the Atradius 2025 barometer, chemicals has the longest average B2B payment terms at close to 60 days from invoicing, with more than 70% of its invoices paid late.

What percentage of invoices are paid late in India?

The Atradius Payment Practices Barometer – India 2025 reports that overdue invoices affect an average of 63% of all credit-based B2B sales in India, with some sectors such as chemicals exceeding 70%.

Is there a legal limit on payment terms to MSMEs in India?

Yes. Under Section 15 of the MSMED Act, the agreed credit period for payments to a registered micro or small enterprise cannot exceed 45 days, and any contract term beyond that is void to that extent. Section 43B(h) of the Income Tax Act reinforces this by disallowing the expense deduction if payment is made late.

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Average Payment Terms by Industry in India (2026)

A data-backed look at average B2B payment terms, days sales outstanding, and overdue invoices by industry in India — with figures from the Atradius Payment Practices Barometer and the Ministry of MSME.

Published 23 June 20269 min read

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If you invoice businesses in India, your payment terms are not just a number on an invoice — they decide how long your money stays out of your bank account. This report pulls together the latest available data on average B2B payment terms, overdue invoices, and bad debts by industry in India, and what it means for freelancers and small businesses.

Sources and dates

Figures below are drawn from the Atradius Payment Practices Barometer – India 2025 (the most recent edition) and the Ministry of MSME's delayed-payment data via the MSME Samadhaan portal. These are B2B (business-to-business) figures, so they apply most directly to anyone billing companies rather than individual consumers.

Key findings

~47 days — the average B2B payment term in India from invoicing.
63% — the share of credit-based B2B invoices that are paid late, on average.
7% — the average share of B2B invoices written off as bad debt.
45 days — the legal cap on credit terms for registered micro and small enterprises under the MSMED Act.
₹47,677 crore — the value of delayed-payment claims filed by MSMEs on the MSME Samadhaan portal (216,221 applications) since launch, as of 15 December 2024.

Average payment terms by industry in India

The Atradius 2025 barometer breaks payment behaviour down by sector. The table below summarises the headline numbers for the industries it covers.

Industry	Avg payment term	Sales on credit	Invoices overdue	Avg bad debt
Textile & clothing	~47 days	53%	56%	up to 10%
Chemicals	~60 days	52%	over 70%	~5%
Agri-food	over 50 days	44%	over 60%	~7%
All industries (avg)	~47 days	—	63%	~7%

The headline number hides the risk

A "47-day average" sounds manageable, but with 63% of invoices paid late, the effective time to get paid is much longer than the agreed term. The term you write on the invoice is the best case, not the typical case.

Textile and clothing

Textiles run on credit — 53% of B2B sales are on credit terms, the highest of the three sectors here — at an average of about 47 days. The concern is bad debt: write-offs run as high as 10% of invoices, the worst in the survey. For a sector with thin margins, losing one rupee in ten to non-payment is a serious drag on cash flow.

Chemicals

Chemicals has the longest terms at close to 60 days, and the worst overdue rate — more than 70% of invoices are paid late. Bad debt is comparatively lower at around 5%, suggesting customers eventually pay, just slowly. If you supply this sector, plan your cash flow around late payment as the norm, not the exception.

Agri-food

Agri-food is the most cautious on credit, extending it on only 44% of sales — a sign that suppliers have tightened policies in response to risk. Even so, terms run beyond 50 days, more than 60% of invoices go overdue, and bad debt sits around 7%.

The bigger picture

Across all sectors, the Atradius 2025 barometer found that overdue invoices affect an average of 63% of credit-based B2B sales, and companies write off about 7% of invoices as uncollectable. A striking 72% of firms expect B2B customer insolvencies to rise, with the main causes of late payment being customer liquidity constraints, supply-chain disruptions, and slow internal payment processes.

In short: late payment in India is not an edge case. It is the default behaviour of the majority of B2B customers, across every industry measured.

The legal backdrop: the MSME 45-day rule

India is one of the few countries with a hard legal limit on how long a buyer can take to pay a small supplier.

Section 15, MSMED Act caps the agreed credit period for a registered micro or small enterprise at 45 days from acceptance of goods or services. Any contract clause beyond 45 days is void to that extent.
Section 16 requires buyers who pay late to pay compound interest at three times the RBI-notified bank rate, compounded monthly. With the RBI bank rate at 5.50% (effective December 2025), that is 16.5% per year — and it is not tax-deductible for the buyer.
Section 43B(h) of the Income Tax Act reinforces this: a buyer cannot deduct the expense of an MSME purchase in the financial year unless it is paid within the 15-day (no agreement) or 45-day (with agreement) window.

We cover this rule in depth in our guide to the MSME 45-day payment rule in India.

These protections only apply if you are registered as an MSME (via Udyam registration). If you are a freelancer or small business invoicing larger companies, registering is what gives you legal leverage on payment timelines.

The scale of the problem is visible in the official numbers: micro and small enterprises had filed 216,221 delayed-payment applications worth ₹47,677.28 crore on the MSME Samadhaan portal as of 15 December 2024, according to the Ministry of MSME.

What this means for freelancers and small businesses

The data points to a few practical conclusions:

Assume late payment is the norm. With 63% of B2B invoices overdue, build your cash flow plan around getting paid after the due date, not on it.
Pick shorter terms where you can. If your industry's average is 47–60 days, offering Net 15 or Net 30 puts you ahead of the pack. See Net 15 vs Net 30 vs Net 45.
Register as an MSME to unlock the 45-day legal cap and statutory interest on late payments.
Track your receivables and follow up relentlessly. The single biggest lever you control is consistent follow-up — see accounts receivable management for small businesses in India.

That last point is where most small businesses lose money — not because their terms are wrong, but because no one chases the invoice on day 16. An invoice follow-up platform like Foloque sends polite, scheduled reminders over email and WhatsApp automatically, so a late invoice gets a nudge the moment it slips — without you having to remember.

Methodology and sources

This report summarises published figures from third-party sources; Foloque did not collect this data. Key sources:

Atradius Payment Practices Barometer – India 2025 — payment terms, overdue rates, and bad-debt figures by industry.
Ministry of MSME — MSME Samadhaan delayed payment monitoring portal — delayed-payment claim volumes and values.
Reserve Bank of India — the bank rate used to calculate statutory interest on delayed MSME payments.

Figures are sector averages and reflect the latest editions available at the time of writing (June 2026). Always verify against the primary source for the most current numbers.

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