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

Why in News?

The Micro, Small and Medium Enterprises Development (Amendment) Bill, 2026 was passed by Parliament in August 2026. The Bill seeks to amend the MSMED Act, 2006 to make the legal and regulatory framework more responsive to the changing needs of the MSME sector.

Key Points

The importance of the amendment arises from the growing contribution of MSMEs to India’s economy. According to the Economic Survey 2025-26, MSMEs contribute 31.1% of GDP, 35.4% of manufacturing output and 48.58% of exports.

As of August 2026, around 9.16 crore MSMEs are registered on the Udyam platform, providing employment to more than 40 crore people. Technological developments and IT-enabled systems have also expanded the presence of MSMEs across rural, semi-urban and urban areas and increased their participation in formal supply chains.

Key Provisions 

MSMEs are classified based on investment in plant and machinery or equipment and annual turnover.

Under the existing MSMED Act, 2006, medium enterprises engaged in manufacturing were required to file a memorandum with the specified authority, while filing was voluntary for other MSMEs. The amendment makes filing of the memorandum free and voluntary for all MSMEs.

To address delayed payments, the Bill requires all Central Public Sector Enterprises (CPSEs) to settle invoices for goods and services procured from MSMEs through the Trade Receivables Discounting System (TReDS) platform. This is intended to improve the cash flow and working-capital position of MSMEs.

The Central Government may establish an online mechanism for mediation or arbitration to resolve disputes involving MSMEs. The Micro and Small Enterprises Facilitation Council (MSEFC) or a mediation service provider must complete mediation within 90 days from the date fixed for the first appearance.

A mediated settlement agreement or arbitral award can be recovered as arrears of land revenue, strengthening the enforceability of settlements and awards.

The amendment also decriminalizes non-filing of registration and non-supply of information, thereby reducing the compliance burden and promoting a more business-friendly regulatory environment.

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