The Micro,Small and Medium Enterprises Development (Amendment) Bill, 2026,could shake up the financial scene for India's MSMEs, Crisil Intelligence says. If done right, it might do for delayed payments what the Insolvency and Bankruptcy Code (IBC) did for financial discipline .
MSME Samadhaan data shows 256,892 payment delay complaints filed,totaling ₹55,244 crore. Of those, ₹20,979 crore still unresolved. Around 40,580 complaints — 16% — have dragged on for over year. A lot of working capital is tangled up.
Crisil officials note many MSMEs don't even report these delays. Current laws lack clear timelines for resolving disputes through Micro and Small Enterprises Facilitation Councils (MSEFCs),causing long waits.
The amendment aims to fix this, setting a 90-day limit for mediation. If mediation fails, arbitration kicks in within 30 days, with decisions due 90 days after pleadings wrap up. Pushan Sharma from Crisil says these deadlines could boost payment discipline and free up crucial capital for MSMEs.
“Success depends on execution and institutional capacity, like the IBC,” Sharma noted.
The IBC showed how structured,timely processes can change payment habits. The new bill not only sets deadlines but also strengthens dispute resolution by letting states form more councils. More councils could mean faster case handling.
Building infrastructure for these councils and training mediators is key to meeting deadlines. bill also gives MSMEs more protection against buyers contesting MSEFC awards. Buyers must deposit 75% of the award before challenging,with half released to MSMEs if it drags beyond six months.
Settlements and awards will be enforceable as arrears of land revenue, treated as debts under insolvency rules. These measures aim to empower MSMEs against defaulting buyers,Crisil says.
Elizabeth Master from Crisil highlights the harm of payment delays on MSME liquidity and stability. While timelines are progress,structured case management could make them more effective.
The report also notes uneven caseloads among states,pointing to a need for better institutional capacity. Karnataka’s 35 councils handle 397 cases each, while Rajasthan’s nine deal with 1,767,and Uttar Pradesh’s 19 manage 1,095. The amendment allows states to form more councils to address these gaps.
Crisil believes the bill could greatly improve payment habits, reduce recovery uncertainty, and unlock vital capital for MSMEs. With enough staff, strict timelines, enforcement, and digital oversight, this could be a landmark reform like IBC was for distressed assets.
