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

Key Highlights:

• The Micro, Small and Medium Enterprises Development (Amendment) Bill, 2026 was passed by Parliament in August 2026.
• The amendments update the MSMED Act, 2006 to facilitate MSME growth and improve ease of doing business.
• MSME classification is now based on twin criteria of "Investment in plant/machinery" and "Turnover."
• Central Public Sector Enterprises (CPSEs) are mandated to route invoice settlements through Trade Receivables Discounting System (TReDS) for MSME procurement.
• The Bill introduces decriminalization, replacing conviction-based fines with graded civil penalties for minor offenses.
• It strengthens mechanisms for addressing delayed payments, including online dispute resolution and recovery of dues as 'arrear of land revenue'.
• The Udyam Registration Portal is made permanent, digital, free, and voluntary.

Detailed Insights:

• The amendments address the evolving MSME landscape over 20 years since the original MSMED Act, 2006 was enacted.
• Udyam Registration Portal has seen significant growth, with registrations increasing from 1.65 crore in 2023 to 9.16 crore.
• New provisions introduce strict timelines for delayed payment adjudication, requiring mediation within 90 days and arbitration awards within 90 days.
• Courts are mandated to order payment of at least 50% of the awarded amount to micro and small enterprises if appeals are pending for over six months.
• States are granted flexibility to establish more Micro and Small Enterprises Facilitation Councils (MSEFCs) and frame their own rules for these councils.
• The TReDS platform has demonstrated substantial growth, with invoice discounting volumes increasing from ₹40,000 crore in 2022-23 to ₹3.47 lakh crore in 2025-26.
• These reforms align with the Viksit Bharat @2047 vision, aiming to boost formalization, enable scaling-up of MSMEs, and enhance compliance.

Key Concepts Involved:

• Micro, Small and Medium Enterprises Development Act (MSMED Act), 2006: The primary legislation governing the promotion, development, and regulation of MSMEs in India.
• Udyam Registration Portal: A government portal for online, free, and voluntary registration of MSMEs in India, providing a unique identity number.
• Trade Receivables Discounting System (TReDS): An electronic platform facilitating the financing/discounting of trade receivables of MSMEs from corporate buyers through multiple financiers.
• Micro and Small Enterprises Facilitation Council (MSEFC): Councils established by state governments to address and resolve delayed payment issues faced by micro and small enterprises.