In short: A notification dated 12 October 2026 (S.O. 5575(E)) brought most of the Micro, Small and Medium Enterprises Development (Amendment) Act, 2026 into force on 15 October 2026. One more section starts on 15 December 2026. The parts that change how delayed-payment disputes are mediated and enforced have not started yet.
What took effect on 15 October
- Free, voluntary registration: MSME registration is now set out in law as free and voluntary, done through a national digital platform. States can also notify their own platforms. In practice, keep using Udyam. Don’t pay agents for registration.
- Classification: enterprises are classified by investment in plant, machinery or equipment, together with turnover.
- TReDS for public-sector buyers: a new Section 15A requires central public sector enterprises (CPSEs) to settle MSME invoices through RBI-authorised TReDS platforms, where invoices can be discounted for early payment. A new Section 22A makes CPSEs and other notified bodies disclose details of MSME invoices settled through TReDS.
- More facilitation councils: states can now set up additional Micro and Small Enterprises Facilitation Councils (MSEFCs), the bodies that hear delayed-payment cases. That should mean shorter queues in busy states.
- Penalties: penalties are revised, with a new adjudication and appeal process.
- Administration: a Development Commissioner role is defined, the National Board is updated, and central and state rule-making powers are expanded.
What starts on 15 December
The new Section 21 sets the make-up of facilitation councils. Each will have three to five members, chaired by an officer not below the rank of Joint Director, with at least one member from the legal field. The aim is better-quality decisions on payment disputes.
What hasn’t started
Sections 8, 9 and 10 of the amending Act have no start date yet. They cover mediation and arbitration under Section 18, a new enforcement provision (Section 18A) and changes to how awards are challenged under Section 19. Until they are notified, delayed-payment cases follow the existing process.
The basic rule hasn’t changed: a buyer must pay a micro or small supplier by the agreed date, which can’t be more than 45 days, or within 15 days if there’s no agreement. Late payments carry compound interest at three times the RBI bank rate.
What it means for you
- If you supply PSUs or big companies, register on a TReDS platform. Public-sector buyers are now being pushed to pay through it, and you can get paid early at a discount instead of waiting months.
- Keep your Udyam certificate current and quote your Udyam number on every invoice. It’s what makes the 45-day rule and the facilitation council available to you.
- If a buyer is already late, you can still file on the MSME Samadhaan portal. More councils should mean faster hearings.
How TReDS works, in four steps
- Onboard: register as a seller on an RBI-authorised TReDS platform such as RXIL, M1xchange or Invoicemart. You’ll need KYC, Udyam and bank details. Your buyer must also be on the platform.
- Upload: after you deliver, you upload the invoice and the buyer accepts it on the platform.
- Get bids: banks and NBFCs bid to discount the accepted invoice. The rate depends on the buyer’s credit rating, not yours, which is why it’s often cheaper than a working-capital loan.
- Get paid: you accept a bid and receive the money, usually within a day or two. On the due date, the buyer pays the financier, not you. The financier has no claim on you if the buyer pays late.
Quick answers
Do I have to register as an MSME now? No, registration stays voluntary. But you need it to use the 45-day rule, the facilitation councils, TReDS and most schemes, so it’s worth doing. It’s free on Udyam.
Does TReDS help if my buyers are private companies? The new rule covers CPSEs. Large private companies can still choose to use TReDS, and many already do. Ask your buyer.
Related: Your rights on delayed payments: the 45-day rule · Udyam registration: the benefits that matter
Sakhi Sangini News Desk · 31 October 2026. Section summaries are condensed; check the Act and the Gazette notification before relying on them. General information, not legal, tax or financial advice.
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