The Rajya Sabha has passed the Micro, Small and Medium Enterprises Development (Amendment) Bill, 2026, aimed at addressing delayed payments to MSMEs, streamlining dispute resolution and improving liquidity for the sector.

Bill Mandates TReDS Settlement For CPSE Purchases Under the proposed legislation, every central public sector enterprise (CPSE) will be required to settle invoices for goods and services procured from MSMEs through the Trade Receivables Discounting System (TReDS). The Bill provides that if mediation fails, a dispute must be referred to arbitration within 30 days of termination of the mediation process. An arbitral award is required to be made within 90 days of completion of pleadings. It also proposes that where a case challenging an award has remained pending for more than six months, courts may direct the buyer to deposit at least 50 percent of the awarded amount to the MSME supplier.

The legislation further provides for recovery of mediated settlement agreements and arbitral awards as arrears of land revenue. It also proposes decriminalizing certain offences by replacing conviction-based fines with graded penalties, including warnings for first-time violations.

The government will also be empowered to notify a national digital platform for free and voluntary registration of MSMEs.

The government is committed to strengthening MSMEs, expanding their growth potential and supporting business expansion, with a focus on building 'Champion MSMEs'. The minister said MSMEs contribute around 31 percent of India's GDP, 36 percent of manufacturing output and 41 percent of exports. He also highlighted the expansion of credit guarantees, extended through the Credit Guarantee Fund Trust for Micro and Small Enterprises stood at around Rs 3.14 lakh crore between 2000 and 2022, while the figure exceeded Rs. 10.47 lakh crore during 2022-23 to 2025-26.