Parliament has passed the Micro, Small and Medium Enterprises Development (Amendment) Bill, 2026, aimed at eliminating delayed payments, improving working capital liquidity, and simplifying compliance for small businesses.
The Lok Sabha passed the legislation on Friday, following its approval by the Rajya Sabha earlier in the week. The Bill was introduced in the House by Union Minister of MSME, Jitan Ram Manjhi.
Key Highlights & Provisions
1. Mandatory TReDS Settlement for CPSEs
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Liquidity Boost: Central Public Sector Enterprises (CPSEs) are now mandated to settle all procurement invoices from MSMEs through the Reserve Bank of India-regulated Trade Receivables Discounting System (TReDS).
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Invoice Discounting: This ensures MSMEs receive immediate cash flow by discounting invoices through financial institutions rather than waiting for extended corporate credit cycles.
2. Time-Bound Dispute Resolution & Payment Relief
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90-Day Mediation Limit: All payment-related dispute mediations must be completed within 90 days from the date of first appearance.
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Arbitration Timelines: If mediation fails, arbitration references must be made within 30 days, and final awards must be issued within 90 days from the completion of pleadings.
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Interim Funds Release: If a buyer’s appeal against a dispute award remains pending in court for more than six months, courts are empowered to release at least 50% of the disputed amount directly to the MSME supplier.
3. Decriminalisation & Ease of Doing Business
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Shift to Civil Penalties: Minor registration or reporting defaults have been shifted from criminal convictions to graded administrative warnings and monetary fines (ranging from ₹1,000 to ₹1,00,000).
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National Digital Registration: Establishes a free, unified national digital platform for voluntary MSME registration.
Summary Table
| Provision Area | Pre-Amendment Framework | Amended Framework (2026) |
| CPSE Invoicing | Conventional billing / delayed transfers | Mandatory settlement via TReDS |
| Mediation Timeline | Open-ended / prolonged | Strict 90-day completion limit |
| Appeals & Escrow Release | Funds tied up during long court appeals | At least 50% released if appeal exceeds 6 months |
| Non-Compliance Penalties | Criminal conviction risk | Graded civil fines (₹1,000 – ₹1,00,000) |
House Proceedings
The Bill was passed in the Lok Sabha amid sustained protests and opposition sloganeering. Presiding Officer Dilip Saikia expressed concern over persistent disruptions, emphasizing that obstructing proceedings harms democratic functioning. Following the bill’s passage, the House was adjourned for the day to resume at 11:00 AM on Monday.
