The Rajya Sabha on Monday passed the Micro, Small and Medium Enterprises Development (Amendment) Bill, 2026, introducing a series of reforms aimed at addressing delayed payments to MSMEs, improving liquidity, strengthening digital registration and accelerating dispute resolution.
The proposed legislation seeks to improve the ease of doing business for MSMEs while creating a more efficient framework for payment settlements and compliance.
National Digital Registration Platform Proposed
One of the key provisions of the Bill is the creation of a national digital platform that will offer free and voluntary registration for Micro, Small and Medium Enterprises.
State governments will also be allowed to establish their own digital registration platforms, enabling MSMEs to register easily and access various government schemes and benefits.
Mandatory TReDS Route for CPSE Payments
To address one of the biggest challenges faced by MSMEs, delayed payments, the Bill proposes that Central Public Sector Enterprises (CPSEs) settle invoices for goods and services procured from MSMEs through a Reserve Bank of India-authorised Trade Receivables Discounting System (TReDS) platform.
The legislation also allows state governments to introduce similar provisions for State Public Sector Enterprises (SPSEs) and other notified entities.
Additionally, invoices settled through the TReDS platform will be subject to disclosure requirements, improving transparency.
Faster Dispute Resolution
The Bill introduces strict timelines for resolving payment disputes involving MSMEs.
Under the proposed framework:
- Mediation must be completed within 90 days from the first appearance.
- Arbitration must conclude within 90 days after completion of pleadings.
- Both online mediation and online arbitration will be permitted to speed up proceedings.
Stronger Recovery Mechanism
The legislation strengthens the legal enforceability of settlements and awards.
It proposes that:
- Mediated settlements and arbitral awards can be recovered as arrears of land revenue.
- The amount determined under such settlements or awards will be treated as a legally enforceable debt under the Insolvency and Bankruptcy Code (IBC).
Protection for MSME Suppliers
The Bill retains the existing requirement that any buyer challenging an arbitral award or settlement must deposit 75 percent of the awarded amount before filing an appeal.
It also introduces an additional safeguard for MSMEs.
If court proceedings remain pending for more than six months, the court will be required to order payment of at least 50 percent of the awarded amount to the MSME supplier from the deposited sum.
Decriminalisation of Certain Violations
The proposed amendments also seek to reduce the compliance burden by decriminalising certain offences.
Instead of conviction-based penalties, the Bill introduces a system of:
- Graded monetary penalties.
- Warnings for first-time instances of non-compliance.
The move aims to encourage voluntary compliance while reducing the fear of criminal prosecution for procedural lapses.
Bill Passed Amid Opposition Protests
The Bill was passed by voice vote in the Rajya Sabha despite continued sloganeering and protests by Opposition members over the absence of Union Home Minister Amit Shah from Parliament in connection with the issue of police action against student protesters in Delhi.
