Lok Sabha Passes MSME Bill To Speed Up Payment Dispute Resolution

The Lok Sabha on Friday passed the Micro, Small and Medium Enterprises Development (Amendment) Bill, 2026, aimed at addressing payment delays faced by MSMEs and streamlining the resolution of disputes. The Bill was cleared by the Rajya Sabha on Monday and was moved in the Lok Sabha by Union MSME Minister Jitan Ram Manjhi. The legislation seeks to improve cash flows for small businesses and strengthen mechanisms for recovering delayed payments.

Under the amended framework, Central Public Sector Enterprises will be required to settle procurement invoices through the Trade Receivables Discounting System. The mechanism is intended to provide MSMEs with quicker access to funds against their receivables and reduce the impact of delayed payments on their working capital. Payment delays have remained a major concern for smaller businesses that depend on regular cash flows to sustain operations.

The Bill also introduces timelines for resolving payment-related disputes. Mediation in such cases will have to be completed within 90 days. It further provides that courts must release at least 50 per cent of the disputed awarded amount to an MSME if an appeal remains pending beyond six months. The measures are intended to reduce prolonged litigation and provide greater financial relief to businesses awaiting payment.

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Another provision changes the approach towards minor registration and reporting defaults by replacing criminal convictions with graded administrative warnings and monetary penalties. The fines will range from Rs 1,000 to Rs 1 lakh, depending on the nature and seriousness of the default. The government has positioned the changes as part of efforts to simplify compliance and reduce the burden of criminal proceedings for minor violations.

The Bill was passed amid protests and disruptions by Opposition members in the Lok Sabha. Presiding Officer Dilip Saikia appealed to the protesting members to return to their seats and allow the House to function, stressing that repeated use of posters and banners and disruption of proceedings affected the functioning and dignity of Parliament. Parliamentary Affairs Minister Kiren Rijiju also criticised the Opposition's conduct and defended the attendance of Union Home Minister Amit Shah during the session.

Earlier in the day, when the Lok Sabha met at 11 am, Speaker Om Birla paid tribute to freedom fighters and martyrs of the Quit India Movement, with August 9 marking the 84th anniversary of the movement. As disruptions continued after the passage of the MSME Bill, the Presiding Officer adjourned the House for the day. The Lok Sabha is scheduled to meet again at 11 am on Monday.

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