Ludhiana, July 31
The World MSME Forum has welcomed the introduction of the Micro, Small and Medium Enterprises Development (Amendment) Bill, 2026 in the Rajya Sabha. The Forum believes the proposed reforms will strengthen the MSME ecosystem by improving dispute resolution, enhancing payment discipline, increasing transparency and promoting ease of doing business. However, the Forum has expressed concern over the proposed revised amendments of definition by including the large sector within MSMEs.
In a statement issued here today, Forum president Badish Jindal said, “The Forum believes that stronger enforcement against delayed payments, better functioning of MSME Facilitation Councils and increased digitisation will reduce working capital stress and improve the competitiveness of Indian MSMEs. It has also recommended stronger deterrence against habitual payment defaulters, faster execution of Facilitation Council awards and greater integration of digital systems for monitoring payment disputes.”
“At present, thousands of cases are pending with facilitation councils. In Ludhiana alone, more than 1,500 cases are pending, with almost 50% delayed for more than two years. The new amendment seeks to resolve this issue. The World MSME Forum had long requested the government to provide teeth to this Act, and the following amendments are expected to make it more effective,” he added.
At present, thousands of cases are pending with facilitation councils. In Ludhiana alone, more than 1,500 cases are pending, with almost 50% delayed for more than two years. The new amendment seeks to resolve this issue. The World MSME Forum had long requested the government to provide teeth to this Act, and the following amendments are expected to make it more effective.
The Bill introduces faster dispute resolution through legal safeguards. Mediation by MSME Facilitation Councils must be completed within 90 days. If unresolved, cases move to arbitration, which must be filed within 30 days of mediation ending and decided within 90 days of final pleadings. If a buyer appeals an arbitral award, at least 50% of the award must be paid into escrow after six months of delay. Courts may order payments to suppliers from deposited amounts during appeal. The revised council structure requires states to create additional Micro & Small Enterprise Facilitation Councils, each with 3–5 members including a legal expert, tailored to local needs. These reforms aim to make dispute resolution more effective and consistent.
“Currently, payments of Central and State PSUs are at the mercy of departments, with public sector companies often ignoring provisions of the Delayed Payment Act for MSMEs. The new amendment will provide relief by mandating TReDS payments. All Central Public Sector Enterprises must settle MSME procurements through TReDS, with state PSUs similarly directed. By routing invoices through this electronic discounting system, MSMEs can access cash immediately rather than wait through long payment cycles. The Bill also mandates auditors’ certification of TReDS compliance by CPSEs,” asserted Jindal.
The Bill further introduces digital registration and definition updates. Filing the Udyam memorandum becomes voluntary, with a common digital portal serving as the registration platform. The MSME definition is revised, removing fixed investment thresholds and allowing the government to notify new criteria combining investment and turnover. This change could expand the formal MSME sector by including higher-turnover enterprises, widening access to MSME schemes.
The World MSME Forum has expressed serious concern over frequent revisions of investment and turnover thresholds under the MSME classification framework. While periodic rationalization may be necessary, repeated enhancements risk defeating the very objective of the MSMED Act, which was enacted to protect and promote genuinely small enterprises. Every upward revision allows progressively larger businesses to enter the MSME category, enabling them to compete for benefits originally intended for micro and small enterprises. As a result, the smallest businesses—
often struggling with limited capital, technology and market access—are forced to compete with stronger, better-resourced companies for government incentives, subsidized credit, public procurement opportunities and other policy support. The Forum believes that if this trend continues unchecked, the original spirit of the MSMED Act will gradually be diluted.
The Forum has urged the government to refrain from further increases in MSME classification thresholds and instead focus on ensuring that existing benefits reach genuine micro and small enterprises. Rather than expanding eligibility criteria, policy reforms should aim to strengthen targeted support for the most vulnerable MSMEs, which constitute the backbone of India’s manufacturing, services, employment generation and rural economy.