The Micro, Small and Medium Enterprises Development (Amendment) Bill 2026 -- passed by Parliament -- will strengthen the institutional framework, enhance regulatory flexibility and ease operational constraints for MSMEs, an industry chamber said on Monday.

The Bill also addresses issues relating to the ease of doing business through decriminalisation, provides institutional mechanisms for promotion of MSMEs, and addresses payment delays faced by the Micro and Small Enterprises, the statement from PHDCCI said.

"The bill will strengthen the overall ecosystem for the speedier growth of Micro, Small and Medium Enterprise (MSME) sector in the country," the industry body said.

Once it becomes an Act, the bill will provide greater regulatory flexibility, with stronger mechanisms to address their various operational concerns.

"The statutory recognition of digital Udyam registration and the revised classification framework will provide a more predictable basis for enterprises to scale creating more employment opportunities through the MSME sector," it added.

These measures will support the transition of MSMEs from small operations towards more formal, productive, and scalable enterprises, the chamber said.

Further, the provision for time-bound mediation and arbitration process will help in timely realization of bills of MSMEs with a stronger recovery mechanism.

“The provision for mandatory routing of CPSEs’ invoices through TReDS will further ease the liquidity and all these measures will reduce working-capital pressures, improve cash-flow predictability and enable MSMEs to deploy more resources towards investment, employment and business expansion”, said Rajeev Juneja, President, PHDCCI.

Parliament has approved the Micro, Small and Medium Enterprises Development (Amendment) Bill 2026, with the Lok Sabha passing the Bill on Friday after the Rajya Sabha cleared it on Monday.

The new legislation makes it mandatory for Central Public Sector Enterprises to settle all procurement invoices through the Trade Receivables Discounting System to improve cash flows for MSMEs.

It mandates that in the case of disputes mediation must be completed within 90 days and requires courts to release at least 50 per cent of disputed awarded amounts to MSMEs if an appeal lingers past six months.