2 weeks ago
MSME Amendment Bill Could Be an IBC Moment for MSMEs
Small businesses in India sometimes have to wait a very long time to get paid by bigger companies.
This makes it hard for them to buy materials and pay their workers.
A new law called the MSME Development (Amendment) Bill, 2026 wants to fix this problem.
It sets time limits for solving payment arguments.
If a small business and a buyer disagree, a mediator has 90 days to help them settle.
If that does not work, an arbitrator must step in within 30 more days.
Buyers who want to fight a decision must first put 75% of the money in a safe place.
This makes it harder for buyers to delay payments on purpose.
Experts at Crisil Intelligence think this law could be as important as the Insolvency and Bankruptcy Code.
They believe it can help small businesses get their money faster and grow.
Crisil Intelligence says the MSME Development (Amendment) Bill, 2026 could be an 'IBC moment' for MSMEs by bringing discipline to delayed payments.
MSME Samadhaan data as of August 14, 2026 shows 256,892 applications involving delayed payments worth ₹55,244 crore, with ₹20,979 crore still pending.
The Bill proposes mediation to conclude within 90 days, arbitration referral within 30 days if mediation fails, and awards within 90 days of completed pleadings.
Buyers challenging MSEFC awards must deposit 75% of the award amount, with at least 50% released to the MSME if proceedings remain pending beyond six months.
The Bill gives States greater flexibility to constitute additional facilitation councils, addressing uneven caseloads seen in Karnataka, Rajasthan and Uttar Pradesh.
- Who
- Micro, small and medium enterprises (MSMEs) in India and analysts at Crisil Intelligence.
- What
- The MSME Development (Amendment) Bill, 2026 aims to speed up resolution of delayed payment disputes through time-bound mediation and arbitration.
- Where
- India.
- When
- Report published on August 17, 2026, citing MSME Samadhaan data as of August 14, 2026.
- Why
- To improve payment discipline, reduce uncertainty around recoveries and unlock working capital for the MSME sector.
Key facts
- Bill
- MSME Development (Amendment) Bill, 2026
- Applications filed
- 256,892 (as of August 14, 2026)
- Delayed payment value
- ₹55,244 crore
- Pending claims
- ₹20,979 crore
- Applications unresolved over a year
- 40,580 (16%)
- Mediation timeline
- 90 days from first appearance
- Arbitration referral
- Within 30 days if mediation fails
- Buyer deposit to challenge award
- 75% of award amount
Quotes
Elizabeth Master
Associate Director, Crisil Intelligence
“"While the proposed timelines are a significant step forward, their effectiveness can be further enhanced through structured case management, including an indicative number of hearings and minimum participation requirements for buyers during proceedings," she said.”
thehindubusinessline.com
“"Much like the IBC improved credit discipline, this framework has the potential to create a stronger culture of timely payments. Its success, however, will depend on effective implementation and institutional capacity," he said.”
thehindubusinessline.com
Sources
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