The Rajya Sabha on Monday approved the Micro, Small and Medium Enterprises Development (Amendment) Bill, 2026, paving the way for stronger safeguards against delayed payments to MSMEs. The legislation seeks to ensure faster settlement of disputes, improve recovery of dues and ease the cash-flow challenges faced by small businesses.
The Bill was passed by a voice vote amid repeated interruptions by Opposition members, who continued demanding a discussion on the police action against students protesting over the alleged NEET paper leak. Soon after the legislation was cleared, the House was adjourned for the day.
Key changes proposed
A major provision of the Bill allows courts to order buyers to deposit at least 50 per cent of the amount awarded to an MSME supplier if a challenge to the award remains pending for more than six months. The government says the measure is intended to discourage prolonged litigation and ensure that small businesses are not deprived of working capital while disputes continue.
The legislation also proposes quicker enforcement of mediated settlements and arbitral awards by allowing them to be recovered as arrears of land revenue. In addition, it replaces criminal penalties for certain violations with a graded system of civil penalties, beginning with a warning for first-time offences.
Another provision enables the government to establish a national digital platform for free and voluntary registration of micro, small and medium enterprises.
Government highlights MSME contribution
Replying to the debate, Union MSME Minister Jitan Ram Manjhi said the amendments were designed to strengthen the payment ecosystem and improve the ease of doing business for MSMEs.
Describing the sector as a key driver of the economy, he said MSMEs contribute around 31 per cent to India’s GDP, 36 per cent of manufacturing output and 41 per cent of exports.
The minister also highlighted the increase in institutional lending to the sector, stating that outstanding credit to MSMEs has risen from around Rs 10 lakh crore in 2014-15 to more than Rs 38.35 lakh crore.
Manjhi expressed disappointment over the Opposition’s protests during the debate, saying he had expected bipartisan support for legislation aimed at benefiting millions of small businesses.
Protests overshadow debate
Proceedings in the Upper House remained stormy as Opposition MPs repeatedly raised slogans demanding that Home Minister Amit Shah respond to the police action against students protesting at Jantar Mantar.
The protests began even before the debate, after Leader of Opposition Mallikarjuna Kharge was not allowed to speak, prompting objections from Opposition parties. Congress MP Ajay Maken termed the decision unfortunate, while Leader of the House J P Nadda maintained that the discussion on the Bill had already commenced.
Throughout the debate, several Opposition members attempted to shift the discussion to the student protests, leading Deputy Chairman Harivansh to repeatedly urge them to restrict their remarks to the legislation.
Broad support with suggestions
Despite the disruptions, members from several parties supported the objective of strengthening the MSME sector while suggesting additional reforms. Suggestions included expanding access to credit, improving infrastructure, offering greater support during natural disasters, strengthening GST-linked financing mechanisms and introducing more incentives for small businesses.
After the Bill was passed, Nadda criticised the Opposition for disrupting the proceedings and alleged that its members had not even backed amendments moved by their own parties. The legislation will now move to the next stage before becoming law.