Rajya Sabha passes MSME Bill to address delayed payments, cash flow

Rajya Sabha passed the MSME Development (Amendment) Bill, 2026. The legislation aims to address delayed payments to MSMEs, improve their cash flow, and speed up dispute resolution through new mechanisms like the TReDS platform.

The Rajya Sabha on Monday passed the Micro, Small and Medium Enterprises Development (Amendment) Bill, 2026, aimed at addressing delayed payments to MSMEs, improving their cash flow and speeding up the resolution of payment disputes. The legislation also seeks to strengthen digital registration, improve compliance and make it easier for MSMEs to scale up.

Digital Registration and Benefits

A key provision of the Bill is the proposed national digital platform for free and voluntary registration of MSMEs. State governments may also establish their own digital platforms to facilitate registration and enable enterprises to access applicable government benefits.

Tackling Delayed Payments

The legislation seeks to tackle one of the biggest challenges faced by MSMEs -- delayed payments and liquidity constraints. It proposes that Central Public Sector Enterprises route the settlement of invoices for goods and services procured from MSMEs through a Reserve Bank-authorised Trade Receivables Discounting System (TReDS) platform. States may introduce similar provisions for State Public Sector Enterprises and other notified entities.

The Bill also provides for disclosure of invoices settled through the platform.

Faster Dispute Resolution

The Bill proposes time-bound dispute resolution, requiring mediation to be completed within 90 days from the first appearance and arbitration within 90 days from completion of pleadings. It also provides for online mediation and arbitration.

Enforcement of Settlements

Another major change is that mediated settlements and arbitral awards can be recovered as arrears of land revenue, while the amount determined would be treated as a legally enforceable debt under the Insolvency and Bankruptcy Code.

The Bill also retains the requirement for a non-supplier challenging an award or settlement to deposit 75 per cent of the amount. If proceedings remain pending for more than six months, the court would have to order payment of at least 50 per cent of the awarded amount to the MSME supplier from the deposited sum.

Decriminalisation and Penalties

The proposed legislation further decriminalises certain violations, replacing conviction-based fines with graded penalties and warnings for first-time non-compliance.

Passage Amidst Protests

The Bill was passed by voice vote, even as the House witnessed sustained sloganeering and protests from Opposition members over Union Home Minister Amit Shah's continued absence from Parliament in connection with the issue of police action against student protesters in Delhi. (ANI)

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