Rajya Sabha passes Bill on MSMEs amid Opposition protests, Pg10

Key Highlights:

• The Rajya Sabha recently passed the Micro, Small and Medium Enterprises Development (Amendment) Bill, 2026, amidst Opposition protests.
• The Bill aims to replace the existing Micro, Small and Medium Enterprises Development Act, 2006, to address liquidity issues and enhance the competitiveness of MSMEs.
• A key provision mandates the establishment of a national digital platform for the free and voluntary registration of MSMEs.
• It also makes it compulsory for all Central Public Sector Enterprises (CPSEs) to route invoice settlements for goods and services procured from MSMEs through the Trade Receivables Discounting System (TReDS).
• Union MSME Minister Jitan Ram Manjhi highlighted that MSMEs contribute 31% to India’s GDP, 36% to manufacturing output, and 41% to exports.

Detailed Insights:

• The passage of the Bill occurred during a session marked by Opposition uproar, leading to limited functioning of the Rajya Sabha.
• The Micro, Small and Medium Enterprises Development Act, 2006, which this amendment replaces, was enacted to promote and develop the MSME sector in India.
• The new legislation is designed to improve cash flow for MSMEs by ensuring timely payments, thereby addressing a significant challenge faced by the sector.
• The Trade Receivables Discounting System (TReDS) is an RBI-regulated electronic platform that facilitates the financing of MSME trade receivables through multiple financiers, offering collateral-free working capital.
• The Bill also includes provisions for time-bound dispute resolution, including mediation and arbitration, to further support MSMEs.
• Outstanding credit disbursed to MSMEs has seen substantial growth, increasing from ₹10 lakh crore in 2014-15 to over ₹38.35 lakh crore.
• The MSME sector is a crucial pillar of the Indian economy, contributing significantly to employment generation and inclusive growth.

Key Concepts Involved:

• Micro, Small and Medium Enterprises (MSMEs): Enterprises classified based on investment in plant and machinery/equipment and turnover, vital for economic growth and employment.
• Trade Receivables Discounting System (TReDS): An electronic platform regulated by the Reserve Bank of India for financing trade receivables of MSMEs by discounting invoices.
• Central Public Sector Enterprises (CPSEs): Government-owned corporations where the central government holds a majority stake, playing a significant role in the economy.
• Rajya Sabha: The upper house of the Parliament of India, representing the states and union territories.