The Ministry of Law and Justice, on August 13, 2026, notified the Micro, Small and Medium Enterprises Development (Amendment) Act, 2026, further amending the Micro, Small and Medium Enterprises Development Act, 2006.
The following has been stated:
The amendments introduce changes relating to MSME classification, registration, receivables settlement, dispute resolution, and penalties. The Central Government may classify enterprises as micro, small or medium enterprises based on investment in plant and machinery/equipment and turnover. A national digital platform will also be notified for free and voluntary filing of MSME registration memorandums, while State Governments may establish similar platforms for accessing State-level benefits.
A key change is the introduction of mandatory settlement of MSME receivables through the Trade Receivables Discounting System (TReDS). Central Public Sector Enterprises will be required to route settlement of invoices for goods or services procured from MSMEs through RBI-authorised TReDS platforms. Similar requirements may be extended to other Central/State authorities and entities through notification.
The Act also strengthens the MSME dispute resolution mechanism by prescribing a 90-day period for mediation and a further 90-day period for making an arbitral award after completion of pleadings. Online mediation and arbitration through electronic means may also be established. Mediated settlements and arbitral awards may be recovered as arrears of land revenue and will constitute legally enforceable debt under the Insolvency and Bankruptcy Code, 2016.
A person challenging an award or mediated settlement will generally be required to deposit 75% of the awarded amount, with provisions for payment of a portion of the deposit to the supplier during the proceedings. The Act also provides for additional Facilitation Councils, specifies their composition, and requires certain public sector entities to disclose details of MSME invoices routed and settled through TReDS.
Please refer to the document attached below for more details.
