The Bill proposes changes to the MSME Development Act, 2006, by introducing stricter timelines for payments, mediation and arbitration.
One of the key changes is that all Central Public Sector Enterprises (CPSEs) will have to settle their payments to MSMEs through the Trade Receivables Discounting System (TReDS).
TReDS is an online platform where MSMEs can upload unpaid invoices and get them financed by banks and other financiers instead of waiting for buyers to clear dues. This helps small businesses receive money earlier and improves their cash flow.
Faster dispute resolution
The Bill also aims to reduce delays in disputes between MSMEs and buyers.
Under the proposed rules, if mediation between the parties fails, the dispute must move to arbitration within 30 days.
An arbitrator will then have to deliver the final decision within 90 days after completion of pleadings.
To provide relief to MSMEs stuck in long-running disputes, the Bill proposes that if a case remains pending for more than six months, at least 50% of the awarded amount must be paid to the supplier.MSME credit has grown, says minister
Moving the Bill, Union Minister for MSME Jitan Ram Manjhi said credit flow to the sector has increased significantly over the years.
He said outstanding credit to MSMEs, which stood at around ₹10 lakh crore in 2014-15, has now crossed ₹38 lakh crore.
The minister also highlighted the growth of the Credit Guarantee Fund Trust for Micro and Small Enterprises, saying credit guarantees provided between 2022-23 and 2025-26 exceeded ₹10.47 lakh crore, compared with ₹3.14 lakh crore between 2000 and 2022.
During the debate, TMC MP Dola Sen called MSMEs the backbone of the Indian economy but raised concerns over government support for the sector. BJD MP Santrupt Misra said a large amount of MSME money remains stuck due to delayed payments and called for stronger reforms.
The Bill was passed after a discussion involving MPs from several parties. The Rajya Sabha was later adjourned and will reconvene on Tuesday.
