Parliament passes MSME Amendment Bill

Parliament has approved the Micro, Small and Medium Enterprises Development (Amendment) Bill, 2026, aimed at improving cash flow for MSMEs, speeding up dispute resolution and easing compliance requirements for small businesses.

The Lok Sabha passed the Bill on Friday amid Opposition protests, a few days after the Rajya Sabha cleared it on Monday. The legislation was introduced in the Lower House by Union MSME Minister Jitan Ram Manjhi.

One of the key provisions requires Central Public Sector Enterprises to settle procurement invoices through the Trade Receivables Discounting System (TReDS), a move intended to help MSMEs convert their pending invoices into funds more quickly and reduce the impact of delayed payments.

The Bill also introduces a time-bound mechanism for resolving payment-related disputes. Mediation will have to be completed within 90 days. In cases where an appeal remains pending for more than six months, courts will be required to release at least 50 per cent of the disputed awarded amount to the MSME concerned.

Shift from criminal penalties to graded fines

Another significant change is the proposed decriminalisation of minor registration and reporting defaults by MSMEs.

Instead of criminal proceedings for certain minor violations, the amended framework provides for graded administrative warnings and monetary penalties ranging from Rs 1,000 to Rs 1 lakh.

The changes are aimed at reducing the compliance burden on small businesses while retaining penalties for violations that warrant regulatory action.

Bill passed amid Opposition protests

The legislation was passed amid continued disruption in the Lok Sabha by Opposition members.

Presiding Officer Dilip Saikia appealed to protesting MPs to allow the House to function and expressed concern over the repeated use of posters and banners during proceedings.

He said such disruptions hamper the functioning of Parliament and urged members to return to their seats and raise their concerns through constructive debate.

Saikia stressed that maintaining the dignity of the House was the responsibility of all members and assured the Opposition that they would be given an opportunity to raise their issues.

Parliamentary Affairs Minister Kiren Rijiju also criticised the Opposition's conduct during the session, referring to the regular presence of Union Home Minister Amit Shah in Parliament.

As the disruption continued, the Presiding Officer adjourned the Lok Sabha for the day. The House is scheduled to meet again at 11 am on Monday.

Earlier, when the House assembled at 11 am, Speaker Om Birla paid tribute to the freedom fighters and martyrs associated with the Quit India Movement, with August 9 marking its 84th anniversary.

The passage of the MSME amendment marks an attempt to address one of the long-standing concerns of India's small-business sector — delayed payments — while making the regulatory framework less punitive for minor compliance failures.

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