MSME Development Amendment Bill introduced in India

The Micro, Small and Medium Enterprises Development (Amendment) Bill, 2026 was introduced in the Rajya Sabha on Tuesday by Union Minister Jitan Ram Manjhi. The legislation aims to enhance cash flows for small businesses, reduce delays in payments, and simplify regulatory compliance to improve the ease of doing business for micro, small and medium enterprises (MSMEs).

Describing the Bill as a need of the present time, Minister Manjhi said, “The Micro, Small and Medium Enterprises Development Act, 2006 had laid a strong foundation for the country’s micro, small and medium enterprises. However, there have been significant changes over the past two decades.” He added, “The business environment has changed significantly, and so have digital transactions. The needs of industries have also changed. It has therefore become essential to amend this law in line with the changing times.”

The minister further explained, “The primary objective of the amendment is to ensure timely payments to Micro, Small and Medium Enterprises (MSMEs), introduce stricter penalties for violations of the law and make the penalty framework more effective.”

While tabling the Bill, Manjhi said, “The government believes these measures will ease the financial challenges faced by small businesses and make their operations more secure and transparent.”

The Bill seeks to align the Micro, Small and Medium Enterprises Development Act, 2006 with the current MSME landscape, aiming to enhance the Ease of Doing Business and to implement trust-based regulations within the MSME ecosystem.

The proposed legislation also intends to strengthen the mechanism for addressing delayed payments and provide for enforcement of arbitral awards for micro and small enterprises (MSEs). Furthermore, it introduces flexibility for states to determine the composition of the Micro and Small Enterprises Facilitation Council (MSEFC), enabling the formation of more MSEFCs to resolve disputes.

In summary, the Bill aims to facilitate easier operations for MSMEs, improve resolution of delayed payment cases, ensure arbitration awards are enforced, and grant states greater authority to constitute Facilitation Councils for dispute resolution in the micro and small enterprise sector.