Lucknow: The central government has taken a significant step towards making the business environment for micro, small and medium enterprises (MSMEs) simpler, more transparent and more favourable. The Micro, Small and Medium Enterprises Development (Amendment) Bill, 2026, was passed by the Lok Sabha on August 7, 2026, after having already received the Rajya Sabha’s approval on August 3, 2026.
According to the government, this marks the first major overhaul of the MSME Development Act since it came into force in 2006 — nearly two decades ago. The need for amendments had been felt in light of technological advancement, the expansion of digital systems, and the rapid changes seen in the MSME sector.
Over 9.16 crore MSMEs registered
According to government data, the number of MSMEs registered on the Udyam portal has grown from 1.65 crore on April 1, 2023, to 9.16 crore now. The sector provides employment to more than 40 crore people in the country and plays a vital role as the backbone of the Indian economy.
Key highlights of the new amendments
- Change in MSME classification — The dual criteria of investment in plant and machinery and turnover have been incorporated into the law. The Udyam Registration Portal has been given permanent statutory status as a digital, free and voluntary registration platform.
- Faster resolution of payment disputes — The online dispute resolution system has been strengthened. If an application to set aside an arbitral award remains pending for more than six months, the court will be required to order payment of at least 50 percent of the awarded amount in favour of the MSME supplier. A provision has been made to complete the process within 90 days from the date of first appearance.
- Stronger powers for recovery of dues — A provision has been made for recovering dues through the district collector, deputy commissioner or a notified authority, in the same manner as arrears of land revenue.
- Digital payments in government procurement — The Trade Receivables Discounting System (TReDS) has been promoted for settling invoices for goods and services procured from MSMEs by central public sector undertakings. The value of invoices processed on TReDS has grown from around Rs 40,000 crore in 2022-23 to Rs 3.47 lakh crore in 2025-26.
- Greater powers for states — States will be able to set up more than one MSME Facilitation Council at their level, enabling faster resolution of disputes locally.
- Reduced criminalisation — In certain provisions, civil penalties and a graded warning system have replaced conviction and fines. For violations related to registration or furnishing of information, a first-time warning, a penalty on the second instance, and a fine thereafter have been prescribed.
The central government has linked these amendments to the vision of “Viksit Bharat/2047,” saying a strong, vibrant and sustainable MSME sector can play a decisive role in the country’s economic development.
---------------------------------------------------------------------------------------------------
