The Rajya Sabha on Monday passed the Micro Small and Medium Enterprises Development (Amendment) Bill, 2026, a legislation that seeks to tackle delayed payments to micro, small and medium enterprises (MSMEs) by prescribing timelines for faster adjudication of disputes, providing recovery of settlement agreements, and addressing liquidity issues, according to PTI.
Passage amid Opposition protests
The Upper House was adjourned after the bill's passage, with Opposition members raising slogans and demanding the presence of Home Minister Amit Shah to answer questions on police action against students protesting the NEET exam paper leak, PTI reported. Union Minister for MSME Jitan Ram Manjhi, while replying to the discussion, expressed dismay at the protests.
"We expected our opposition allies to support, cooperate, and pass this bill, but today they are opposing ... I am surprised, but despite this, I propose before the House that this bill be passed by amending the 2006 Act," Manjhi said.
Leader of the House J P Nadda said after the passage: "I just want to bring to your notice that the Opposition members have not even supported the amendments moved by their party."
TReDS mandate and liquidity measures
A key provision of the bill aims to address liquidity issues of MSMEs by mandating all central public sector enterprises to route the settlement of invoices through the Trade Receivables Discounting System (TReDS) for procurement of goods and services from them. The bill also empowers states to adopt a similar provision for their public sector enterprises, according to the text of the legislation.
Another provision provides for notifying a national digital platform for free and voluntary registration of micro, small and medium enterprises.
Faster dispute resolution and recovery
The proposed legislation empowers courts to order payment of at least 50 per cent of the awarded amount to MSME suppliers if an application to set aside an order is pending for more than six months. It also seeks to provide recovery of the mediated settlement agreement or the arbitral award as arrear of land revenue.
The bill prescribes timelines to ensure faster adjudication of delayed payment disputes and facilitates state governments to establish additional Micro and Small Enterprises Facilitation Councils by rationalising their composition.
Decriminalisation and graded penalties
The bill proposes to decriminalise offences regarding contravention of certain provisions, replacing conviction-based fines with graded penalties by including a warning at the first instance.
Key provisions at a glance
| Provision | Impact |
|---|---|
| 50% interim payment to MSME suppliers | Courts can order payment if set-aside application is pending over six months |
| Recovery as land revenue arrears | Mediated settlement or arbitral award recoverable via district collector |
| TReDS mandate for central PSEs | Invoice settlement routed through receivables discounting platform |
| State PSE option | States may adopt similar TReDS provisions |
| Graded penalties | Warning at first instance; decriminalised contraventions |
| National digital registration platform | Free and voluntary MSME registration |
| Additional MSE Facilitation Councils | States can rationalise composition and add councils |
| Timelines for adjudication | Faster dispute resolution for delayed payments |
Legislative intent and economic context
Manjhi said the bill seeks to address current challenges in the MSME sector by improving the administrative structure and facilitating payment mechanisms. "Its objective is to balance the interests of all concerned parties while maintaining constitutional principles and the interests of businesses," he said, reassuring the House that the government is committed to the development of the MSME sector.
He described the MSME sector as the backbone of the economy, contributing significantly to the country's manufacturing and exports. The bill itself notes that the MSME landscape has undergone changes due to technological advancements, emergence of information technology-enabled systems and a changing legal landscape, requiring amendments to the 2006 Act to facilitate growth of MSMEs and enable them to scale up and become champions of growth, PTI reported.
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