New Delhi: The Centre is set to introduce a key legislative reform aimed at improving the business environment for micro, small and medium enterprises (MSMEs) during the upcoming Monsoon Session of Parliament. The proposed Micro, Small and Medium Enterprises Development (Amendment) Bill, 2026 is expected to be taken up for consideration and passage after the session convenes next week.
The proposed legislation seeks to update the Micro, Small and Medium Enterprises Development Act, 2006 in line with the evolving needs of India's MSME sector, which has emerged as a major contributor to employment, manufacturing and exports over the past two decades.
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According to the sources, the amendments are intended to promote greater ease of doing business by introducing a more trust-based regulatory framework, reducing procedural hurdles and making the legal ecosystem more responsive to the requirements of MSMEs.
A major focus of the Bill is the persistent issue of delayed payments to micro and small enterprises. The proposed amendments aim to strengthen the existing mechanism for recovery of outstanding dues by enhancing the enforcement of arbitral awards in favour of micro and small businesses. The move is expected to improve payment discipline and provide faster relief to enterprises facing liquidity constraints due to delayed receivables.
The Bill also proposes to provide greater flexibility to state governments in determining the composition of the Micro and Small Enterprises Facilitation Councils (MSEFCs), which adjudicate disputes relating to delayed payments. By enabling states to constitute more such councils based on local requirements, the government aims to improve access to dispute resolution, reduce pendency and ensure quicker disposal of payment-related cases.
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The proposed amendments form part of the government's broader effort to modernise the MSME regulatory framework while strengthening institutional mechanisms to support the sector's growth and financial stability.
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