The Micro, Small and Medium Enterprises Development (Amendment) Bill, 2026 has received parliamentary approval after its passage in the Lok Sabha on August 7 after clearing the Rajya Sabha on August 3. The Bill aims at tackling one of the key issues that have been affecting the MSME sector in India, the issue of delayed payments while enhancing dispute resolution and liquidity in small business enterprises. The Bill provides for the fast resolution of payment disputes and provides for the payment of at least 50% of the total awarded sum in cases in which a challenge to the decision is outstanding for six months or more.
MSME Amendment Bill 2026 Passes Lok Sabha
The Lok Sabha on Friday passed the Bill amidst protests by opposition MPs. The Bill was passed after a short sitting after the House resumed work at noon after adjourning.
The Rajya Sabha had earlier passed the Bill on August 3, therefore, passage in the Lok Sabha brings about the completion of the process of approval in Parliament.
The Bill aims at strengthening the administration and payment procedures within the MSME sector.
What are the Issues Associated with Delayed Payments for MSMEs?
Delayed payments may result in difficulties with the cash flow for small businesses.
While large corporations have adequate working capital, this is not necessarily the case with many MSMEs. Delays in receiving payments for their goods or services might affect small enterprises ability to pay for,
- Wage bills
- Cost of raw materials
- Loan repayment obligations
- Electricity and operating costs
- Suppliers
- Expenses on expanding the business
The new law will make it easier to resolve disputes concerning payment issues and recover amounts due.
Key Measure for Faster Dispute Resolution of Payment Claims
It is one of the key goals of the Bill to establish mechanisms that would ensure quick resolution of disputes related to delayed payments.
In addition, the legislation allows for recovery of amounts under settlement agreements.
These measures are expected to shorten the period for which MSME suppliers are involved in payment disputes.
This is especially important since a delay in payment may be a reason for cash flow problem for a small enterprise.
50% Payment for MSME Suppliers
Another important measure relates to situations when an order for payment awarded to an MSME supplier is subject to an application for setting it aside.
The Bill allows the court to order payment of no less than 50% of the amount awarded to an MSME supplier if the application for setting aside the order is pending for more than six months.
This measure is expected to ensure greater liquidity for MSME suppliers during the process of legal disputes.
For a small business awaiting payment, this will allow reducing financial pressure caused by the process of litigation.
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