Parliament Passes MSME Amendment Bill to Tackle Payment Delays and Liquidity

Legislative Action Amid Parliamentary Disruption

The Lok Sabha cleared the Micro, Small and Medium Enterprises Development (Amendment) Bill, 2026, on Friday, August 7, during a session marked by opposition protests. The proceedings lasted approximately 16 minutes after the House reconvened at noon. With this approval, the legislation has officially cleared both houses of Parliament, following its earlier passage in the Rajya Sabha on August 3.

Addressing the Liquidity Crisis

The primary objective of the amendment is to resolve the persistent issue of delayed payments that affects the micro, small, and medium enterprise (MSME) sector. By establishing strict timelines for adjudicating disputes, the Bill aims to speed up the recovery of settlement agreements. One specific provision grants courts the authority to mandate a payment of at least 50% of the awarded amount to suppliers if a challenge to the order remains pending for over six months.

Economic Scale and Financial Growth

The MSME sector remains a central pillar of the Indian economy, accounting for 31% of the Gross Domestic Product. These enterprises also generate 36% of the nation's manufacturing output and facilitate 41% of total exports. According to data provided by MSME Minister Jitan Ram Manjhi, credit flow to the sector has expanded significantly, rising from ₹10 lakh crore in the 2014-15 period to more than ₹38.35 lakh crore currently.

Key Facts

• The Bill mandates faster dispute resolution to resolve MSME liquidity bottlenecks.
• Courts can now order partial payment of 50% to suppliers if appeals exceed a six-month duration.
• MSMEs contribute 41% to India's total exports and 36% to manufacturing.
• Outstanding credit to the sector has increased by more than ₹28 lakh crore since 2014-15.
• The legislation passed the Lok Sabha in a 16-minute window without active debate.

Source: The Hindu — National