CrackitToday App

Micro, Small and Medium Enterprises Development (Amendment) Bill, 2026

Kumari Sonali

Micro, Small and Medium Enterprises Development (Amendment) Bill, 2026:

Parliament passed the Micro, Small and Medium Enterprises Development (Amendment) Bill, 2026, after its approval by the Rajya Sabha.

  • The MSME Development (Amendment) Bill, 2026 amends the Micro, Small and Medium Enterprises Development Act, 2006 to improve the business environment for MSMEs through faster payments, streamlined dispute resolution, flexible classification, and decriminalised compliance.
  • Aim is to ensure timely payments to MSMEs, simplify business regulations, strengthen access to finance, and promote ease of doing business through digital and legal reforms.

Key Features:

Flexible Classification of MSMEs:

  • Removes fixed statutory investment thresholds.
  • Empowers the Central Government to classify MSMEs based on investment in plant & machinery/equipment and turnover through notifications.
  • Makes MSME registration voluntary for all enterprises.
  • Enables registration through a Central Government digital platform, with States also permitted to establish digital registration portals.
  • Makes it mandatory for Central Public Sector Enterprises (CPSEs) to settle all MSME procurement invoices through the Trade Receivables Discounting System (TReDS).
  • Allows Central and State Governments to extend this requirement to other public entities.
  • Mandates that payment-related mediation before MSME Facilitation Councils or mediation providers must be completed within 90 days from the first hearing.
  • Requires arbitration to commence within 30 days if mediation fails.
  • Arbitration awards must be delivered within 90 days after completion of pleadings.
  • Allows challenges against both arbitration awards and mediated settlement agreements.
  • If court proceedings exceed six months, at least 50% of the awarded amount must be paid to the MSME supplier.
  • Replaces criminal penalties with a graded system of warnings and monetary penalties for:
    • Furnishing false registration information.
    • Failure to provide information required by authorities.
    • Non-reporting of MSME dues in annual accounts.
  • Progressive Penalty Structure:
    • Introduces higher penalties for repeated violations.
    • Minimum penalty amounts will automatically increase by 10% every three years.
  • Adjudication & Appeals:
    • Appoints the Development Commissioner (MSME) as the adjudicating authority.
    • Appeals against adjudication orders will lie before the MSME Secretary.