After 20 years, the MSMED Act, 2006 has been significantly amended. The Bill was passed by the Rajya Sabha on 3 August 2026 and by the Lok Sabha on 7 August 2026.
Key highlights of the amendments:
- Udyam Registration is now permanently embedded in the law — digital, free, and voluntary
- MSME classification is based on the twin criteria of Investment + Turnover
- Introduction of Online Dispute Resolution for delayed payments
- Strict timelines: Mediation must be completed within 90 days; arbitral award within 90 days
- Mediated settlements and arbitral awards can now be recovered as arrears of land revenue
- All Central Public Sector Enterprises (CPSEs) must route MSME invoice payments through the TReDS platform
- States given greater flexibility to form more Micro and Small Enterprises Facilitation Councils (MSEFCs)
- Decriminalisation of several provisions — conviction-based penalties replaced with a graded system of warning → civil penalty → fine
The number of MSMEs registered on Udyam has grown from 1.65 crore (as on 1 April 2023) to 9.16 crore. The sector currently employs over 40 crore people and remains a critical backbone of the Indian economy.
The government says these changes will improve ease of doing business, accelerate payments to MSMEs, strengthen the legal framework, and help enterprises scale up — in line with the vision of Viksit Bharat @2047.
Full press release: PIB Delhi (Release ID: 2296358)
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