New Delhi, Aug 3 (PTI) The Rajya Sabha on Monday passed a bill that seeks to tackle the issue of delayed payments to MSMEs by prescribing timelines to ensure faster adjudication of disputes, provide recovery of the settlement agreement, and address their liquidity issues, even as Opposition members continued to disrupt the House.

The Upper House was adjourned after the passage of the Micro Small and Medium Enterprises Development (Amendment) Bill, 2026.

Members of the Opposition kept raising slogans during the bill's passage, demanding the presence of Home Minister Amit Shah to answer questions on police action against students protesting NEET exam paper leak.

Replying to the discussion on the bill, Union Minister for MSME Jitan Ram Manjhi outlined the advantages of the proposed legislation for the sector and various sections of society, expressing dismay at the loud protests by Opposition members.

"We expected our opposition allies to support, cooperate, and pass this bill, but today they are opposing ... I am surprised, but despite this, I propose before the House that this bill be passed by amending the 2006 Act," said the minister.

The bill seeks to address the current challenges faced by the MSME sector by improving the administrative structure and facilitating payment mechanisms, said the minister.

"Its objective is to balance the interests of all concerned parties while maintaining constitutional principles and the interests of businesses," Manjhi said, reassuring the House that the government is committed to the development of the MSME sector.

He described the MSME sector as the backbone of the economy, which contributes significantly to the country's manufacturing and exports.

Addressing Deputy Chairman Harivansh after the passage of the bill, Leader of the House J P Nadda said, "I just want to bring to your notice that the Opposition members have not even supported the amendments moved by their party." The proposed legislation seeks to empower courts to order payment of at least 50 per cent of the awarded amount to MSME suppliers, if the application to set aside an order is pending for more than six months.

It also seeks to provide recovery of the mediated settlement agreement or the arbitral award as arrear of land revenue.

The bill also proposes to decriminalise offences regarding contravention of certain provisions, replacing conviction-based fines with graded penalties by including a warning at the first instance.

It provides for notifying a national digital platform for free and voluntary registration of micro, small and medium enterprises. Another key provision of the bill aims to address liquidity issues of MSMEs by mandating all central public sector enterprises to route the settlement of invoices through the Trade Receivables Discounting System for procurement of goods and services from them.

A provision has also been made empowering states to adopt a similar provision for their public sector enterprises.

The provisions also include facilitating state governments to establish additional Micro and Small Enterprises Facilitation Council by rationalising their composition, apart from prescribing timelines to ensure faster adjudication of delayed payment disputes of MSMEs.

Over the years, the MSME landscape has undergone a change due to technological advancements, emergence of information technology enabled systems and a changing legal landscape, which requires that the Act be amended to facilitate growth of micro, small and medium enterprises, the bill stated.

It further said the proposed amendments look to incentivise the growth of MSMEs, enable them to scale up and become champions of growth.

According to the bill, the mediated settlement agreement or arbitral award may be recovered as an arrear of land revenue by the state government through the district collector or deputy commissioner or any such authority notified by the state where assets of the buyer are located.

The bill proposes that the amount determined as the mediated settlement or arbitral award shall constitute a valid and legally enforceable debt and is liable to be recognised under the provisions of the Insolvency and Bankruptcy Code, 2016. PTI RSN HVA

MSME delayed-payment reforms strengthen award recovery, faster dispute adjudication, invoice discounting, and interim supplier payment protection. MSME delayed-payment reforms seek faster adjudication, strengthened recovery and improved liquidity for enterprise suppliers. Courts may direct payment of at least half of an awarded amount where a setting-aside application remains pending beyond six months. Mediated settlements and arbitral awards may be recovered as arrears of land revenue and recognised as legally enforceable debts under the insolvency framework. The measures also provide graded penalties, voluntary digital registration, invoice settlement through the Trade Receivables Discounting System, and additional Facilitation Councils.