The Micro, Small and Medium Enterprises Development (Amendment) Bill, 2026 is a bill passed in the Parliament of India to amend the Micro, Small and Medium Enterprises Development Act, 2006. The main objective of the bill is to expedite the settlement of delayed payments relating to micro, small and medium enterprises (MSMEs), strengthen the mechanism for recovery of dues and improve the business environment for the sector.
The Bill was passed by the Rajya Sabha on 3 August 2026 and by the Lok Sabha on 7 August 2026.
Parliamentary history
Introduction The Bill was introduced in the Rajya Sabha by Union Minister for Micro, Small and Medium Enterprises, Jitan Ram Manjhi on 28 July 2026. It aimed to strengthen the system for settlement of delayed payments relating to micro, small and medium enterprises.
Passage in the Rajya Sabha The Rajya Sabha passed the Bill on 3 August 2026. The Bill provides for speedy resolution of disputes relating to delayed payments to micro, small and medium enterprises and strengthening the enforcement of arbitration awards.
Passage in the Lok Sabha The Lok Sabha passed the bill on August 7, 2026. The bill was passed without detailed discussion amid protests and sloganeering from the opposition. With this, the bill was passed by both houses of Parliament.
Provisions The bill proposes several amendments to the Micro, Small and Medium Enterprises Development Act, 2006. Its key provisions include changes to existing systems relating to classification, registration, delayed payments, and dispute resolution of micro, small, and medium enterprises.
MSME registration and classification The bill empowers the central government to classify enterprises as micro, small, or medium enterprises based on investment and turnover. It proposes to make registration voluntary for all MSMEs and establish national and state-level digital platforms for this purpose.
Delayed payments The bill provides for settlement of invoices for goods and services procured by central public sector enterprises from micro, small and medium enterprises (MSMEs) through the Trade Receivables Discounting System (TReDS). The central and state governments have been empowered to extend this system to other public sector entities.
Dispute resolution The bill establishes a time limit for resolving disputes involving delayed payments.Mediation proceedings are required to be completed within 90 days from the date set for the first appearance. If mediation is unsuccessful, the dispute must be referred to arbitration within 30 days, and an arbitration award is required to be issued within 90 days of the completion of pleadings.
Payment during pending appeals If the appeal in a case remains pending in the court for more than six months, there is a provision for the court to order the supplier to pay at least 50 per cent of the award amount. Penalties The Bill amends the existing penal system for certain offences and violations. In some cases, criminal penalties have been replaced with warnings and monetary penalties.
Reactions The Central Government described the Bill as an important step towards improving the payment system for micro, small and medium enterprises, easing cash flow and speedy resolution of disputes related to delayed payments.
Opposition members in the Lok Sabha protested and shouted slogans during the bill's passage through Parliament. The House was disrupted by the protests, and the bill was passed without detailed discussion.
The key provisions of the Bill include reducing delays in payments to MSMEs, promoting payments through TReDS and simplifying the process for speedy resolution of disputes.
Impact The bill aims to facilitate business for micro, small, and medium enterprises and mitigate cash flow problems arising from delayed payments. The proposed changes seek to expedite the resolution of disputes related to delayed payments and make the dispute resolution process more effective.
The bill is expected to promote the use of the Trade Receivables Discounting System (TReDS) to help MSMEs recover their trade dues faster. Furthermore, the timelines for dispute resolution are intended to reduce backlogs and improve the liquidity of enterprises.
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