Rajya Sabha Passes New MSME Bill to Stop Payment Delays for Small Businesses

The Rajya Sabha on Monday passed the Micro, Small and Medium Enterprises Development (Amendment) Bill, 2026 by voice vote, even as Opposition members created a heavy uproar and raised slogans in the House. The Upper House operated for under twenty minutes before passing the crucial legislation aimed at protecting small business owners from long payment delays and financial stress.

The new law introduces major reforms to ensure that small factory owners, suppliers, and service providers get paid on time. A major requirement under the new rules makes it compulsory for all Central Public Sector Enterprises to settle their purchases from small units through an online RBI-regulated portal called the Trade Receivables Discounting System. To solve business disputes quickly, the bill sets strict time limits, requiring mandatory mediation to wrap up within 90 days and arbitration within another 90 days if parties cannot agree.

To help small businesses maintain their daily cash flow, the bill allows courts to order big buyers to immediately release at least 50 percent of the disputed money to the supplier if a court challenge drags on for more than six months. The legislation also decriminalizes minor clerical mistakes into small civil penalties and creates a free national digital portal to make business registration easier across India. Union Minister Jitan Ram Manjhi emphasized during the session that the MSME sector contributes over 31 percent to India's GDP and nearly 41 percent to exports, making these protections essential for small business growth.