Parliament passes MSME bill with TReDS mandate, tighter timelines

The Story in Brief

Parliament has passed the Micro, Small and Medium Enterprises Development (Amendment) Bill, 2026, which overhauls payment and dispute-resolution rules for MSMEs. The Bill makes it mandatory for Central Public Sector Enterprises to route MSME invoice settlements through the Trade Receivables Discounting System (TReDS) platform. State governments can extend this to state PSUs. The Bill also introduces a '90-30-90' timeline: 90 days for mediation after first appearance, 30 days to refer unresolved disputes to arbitration, and another 90 days to deliver an arbitral award after pleadings are completed.

A new provision requires courts to direct payment of at least 50% of the awarded amount to an MSME supplier if a buyer's challenge remains pending beyond six months. The pre-deposit requirement of 75% of the award amount to file a challenge is retained. Livelaw.reports that the existing MSMED Act's promise of speedy resolution has not translated into practice, with official data showing about 36% of about 2.57 lakh applications filed on the MSME Samadhaan portal remain pending.