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

Key Highlights:

• The Micro, Small and Medium Enterprises Development (Amendment) Bill, 2026 was passed in August 2026, updating the MSMED Act, 2006.
• The Bill aims to facilitate MSME growth, reduce payment constraints, and simplify compliance to promote Ease of Doing Business.
• New MSME Classification is based on both investment in plant/machinery/equipment and annual turnover.
• It mandates all Central Public Sector Enterprises (CPSEs) to settle MSME invoices via the Trade Receivables Discounting System (TReDS).
• The Bill introduces specific timelines for dispute resolution by Micro and Small Enterprises Facilitation Councils (MSEFCs) and decriminalizes certain offenses.
• MSMEs contribute 31.1% to GDP, 35.4% to manufacturing output, and 48.58% to exports, employing over 40 crore people.

Detailed Insights:

• The Bill updates the MSMED Act, 2006 to reflect the MSME sector's expanded scale, diversity, and digital reach since 2006.
• MSME Classification now incorporates both investment in plant/machinery/equipment and annual turnover, providing a more comprehensive definition.
• MSME Registration is made free and voluntary for all, with a national digital platform to be notified by the Central Government.
• Central Public Sector Enterprises (CPSEs) are mandated to settle MSME invoices using the Trade Receivables Discounting System (TReDS).
• State Governments can establish multiple Micro and Small Enterprises Facilitation Councils (MSEFCs) with necessary resources for faster dispute resolution.
• Specific timelines are introduced for mediation (90 days) and arbitration (90 days from pleadings) in payment disputes.
• Courts can direct payment of at least 50% of the awarded amount to MSMEs if an application to set aside an order is pending for over six months.
• Mediated settlements or arbitral awards can now be recovered as 'arrears of land revenue' through the District Collector.
• Offenses like non-filing of registration or non-supply of information have been decriminalized.
• Non-disclosure of unpaid dues by buyers now follows a progressive penalty system, starting with a warning.
• The Udyam Registration Portal offers free, paperless, self-declaration-based online recognition for MSMEs.
• The Udyam Assist Platform formally recognizes informal micro-enterprises, including those without GST or IT registration.
• The Online Dispute Resolution (ODR) Portal provides a low-cost digital mechanism for resolving delayed payment disputes.
• The value of invoices discounted through TReDS significantly increased from ₹40,000 crore (2022-23) to ₹3.47 lakh crore (2025-26).

Key Concepts Involved:

• MSMED Act, 2006: The primary legislation governing the development and regulation of Micro, Small and Medium Enterprises in India.
• Udyam Registration Portal: An online platform for MSMEs to register themselves, providing official recognition and access to benefits.
• Trade Receivables Discounting System (TReDS): An electronic platform facilitating the financing/discounting of trade receivables for MSMEs.
• Micro and Small Enterprises Facilitation Councils (MSEFCs): Bodies established by State Governments to resolve payment-related disputes faced by Micro and Small Enterprises.