THE MICRO SMALL AND MEDIUM ENTERPRISES DEVELOPMENT AMENDMENT ACT 2026

jftLVªh lañ Mhñ ,yñ—¼,u½04@0007@2003—26 REGISTERED NO. DL—(N)04/0007/2003—26 सी.जी.-डी.xएxलx.G-अI.D-1H30x8x2x026-275448 CG-DL-E-13082026-275448 xxxGIDExxx vlk/kkj.k EXTRAORDINARY Hkkx II — [k.M 1 PART II — Section 1 izkf/kdkj ls izdkf'kr PUBLISHED BY AUTHORITY lañ 32] ubZ fnYyh] c`gLifrokj] vxLr 13] 2026@Jko.k 22] 1948 ¼'kd½ No. 32] NEW DELHI, THURSDAY, AUGUST 13, 2026/SRAVANA 22, 1948 (Saka) bl Hkkx esa fHkUu i`"B la[;k nh tkrh gS ftlls fd ;g vyx ladyu ds :i esa j[kk tk ldsA Separate paging is given to this Part in order that it may be filed as a separate compilation.

MINISTRY OF LAW AND JUSTICE (Legislative Department) New Delhi, the 13th August, 2026/Sravana 22, 1948 (Saka) The following Act of Parliament received the assent of the President on the 13th August, 2026 and is hereby published for generBali liln Nfoorm. LatiXonX:—II-F of 2026 THE MICRO, SMALL AND MEDIUM ENTERPRISES THED MEVICERLOO,P SMMEANLTL ( AANMDE NMDEMDEIUNMT) E ANCTTE, R20P2R6ISES DEVELOPMENNTo(.A 1M6 oEfN 2D0M26ENT) BILL, 2026 (AS PASSED BY THE HOUSES OF PARLIAMENT)[13th August, 2026.] A An Act further to amend the MBicIrLoL, Small and Medium Enterprises Development Act, 2006.

furthertoamendtheMicro,SmallandMediumEnterprisesDevelopmentAct,2006.

BE it enacted by Parliament in the Seventy-seventh Year of the Republic of

India as follows:—

1. (1) This Act may be called the Micro, Small and Medium Enterprises Short title and Development(Amendment)Act, 2026. commencement.

(2) It shall come intoforceon suchdateastheCentralGovernment may,by

notification in the Official Gazette, appoint:

Provided that different dates may be appointed for different provisions of this Act and any reference in any such provision to the commencement of this Act, shall be construed as a reference to the coming into force of that provision.2 THE GAZETTE OF IND2IA EXTRAORDINARY [Part II— Amendment of 2. In the Micro, Small and Medium Enterprises Development Act, 2006 27 of 2006.

section 2. (hereinafter referred to as the principal Act),in section 2,—

(i)after clause (d), the following clause shall be inserted, namely:— ‘(da) “Development Commissioner” means the administrative head of the office of Development Commissioner of the Government of India in the Ministry of Micro, Small and Medium Enterprises;’;

(ii)in clause (g), the words, brackets, figures and letters “sub-clause (iii) of clause (a) or sub-clause (iii) of clause (b) of” shall be omitted;

(iii)in clause (h), the words, brackets, figures and letters “sub-clause (i) of clause (a) or sub-clause (i) of clause (b) of” shall be omitted;

(iv)in clause (j), after the word “Gazette”, the words ‘and the expression “notify”shall be construed accordingly’shall be inserted;

(v)in clause (m), the words, brackets, figures and letters “sub-clause (ii) of clause (a) or sub-clause (ii) of clause (b) of” shall be omitted.

Amendment of 3. In section 3 of the principal Act, in sub-section (3), in clause (o), for the

section 3. words “one officer not below the rank of Joint Secretary to the Government of India”, the words “the Development Commissioner” shall be substituted.

Amendment of 4. In section 7 of the principal Act, for sub-section (1), the following

section 7. sub-section shall be substituted, namely:–– “(1) Notwithstanding anything contained in section 11B of the Industries (Development and Regulation) Act, 1951, the Central Government may, by 65 of 1951.

notification, classify the enterprises as micro, small and medium enterprises, having regard to the provisions of sub-sections (4) and (5), and subject to such limits as it may consider necessary as to both of the following criteria,

namely:—

(a)investment in plant and machinery or equipment; and

(b)turnover.

Explanation1.––For the removal of doubts, it is herebyclarified that in calculating the investment in plant and machinery, the cost of pollution control, research and development, industrial safety devices and such other items as may be specified, by notification, shall be excluded.

Explanation 2.––It is clarified that the provisions of section 29B of the Industries (Development and Regulation) Act, 1951 shall be applicable to the 65 of 1951. enterprises specified inthissub-section.”.

Substitution of 5.For section 8 of the principal Act, the following section shall be substituted,

new section for namely:—

section 8.

Memorandum of “8. (1) The Central Government shall notify a national digital platform micro, small and for free and voluntary filing of memorandum for registration of micro, small medium and medium enterprises, to empower and enable them to avail the benefits enterprises.

from the Central Government under the provisions of this Act in such form and manner as may be prescribedby the Central Government.

(2) The State Government may notify a State digital platform for free and voluntary filing of memorandum for registration of micro, small and medium enterprises in the State, to avail the applicable benefits from the State Government in such form and manner as may be prescribed by the State Government.Sec. 1] THE GAZETTE OF IND3IA EXTRAORDINARY 3

Explanation.—For the purposes of this section, it is hereby clarified that the State Government may also provide to micro, small and medium enterprises registered under sub-section (1), applicable benefits under their Schemes.”.

6. In section 14 of the principal Act, in sub-section (2), the words, brackets Amendment of andfigure “sub-section (1) of” shall be omitted. section 14.

7.After section 15 of the principal Act, the following section shall be inserted, Insertion of new

section 15A.

namely:— ‘15A. (1) Notwithstanding anything contained in this Act or any other Mandatory law for the time being in force, every Central Public Sector Enterprise shall, settlement of receivables in respect of procurement of goods or services from micro, small and medium through Trade enterprises, route the settlement of invoices through a Trade Receivables Receivables Discounting System platform, authorised by the Reserve Bank, in such form Discounting System.

and manner as may be prescribedby the Central Government.

(2) The Central Government may, by notification, specify any other authority, body, or entity other than Central Public Sector Enterprise, in respect of procurement of goodsor services from micro, small and medium enterprises, who shall thereafter route the settlement of invoices as provided for in sub-section (1), in such form and manner as may be prescribedby the Central Government.

(3) The State Government may, by notification, specify such State Public Sector Enterprise, any other authority, body, or entity, in respect of procurement of goods or services from micro, small and medium enterprises, who shall thereafter route the settlement of invoices as provided for in sub-section (1), in such form and manner as may be prescribedby the State Government.

Explanation.––For the purposes of this section, the expression “Trade Receivables Discounting System” means an electronic platform for facilitating the financing or discounting of trade receivables of micro, small and medium enterprises in accordance with the guidelines issued by the Reserve Bank from time to time.’.

8.In section 18 of the principal Act (as substituted by section 62 read with the Amendment of 32 of 2023. Seventh Schedule of theMediation Act, 2023),— section 18.

(a) in sub-section (3), after the words and figures “the Mediation 32 of 2023. Act, 2023”, the words, figures, brackets and letter “except the time-limit for completion of mediation provided under section 18 of that Act, and for the purposes of this Act, such time-limit shall be as per sub-section (3A)” shall be inserted;

(b) after sub-section (3), the following sub-section shall be inserted,

namely:–– “(3A) The Micro and Small Enterprises Facilitation Council or mediation service provider, as the case may be, shall complete the mediation within a period of ninety days from the date fixed for first appearance.”;

(c) in sub-section (4), after the words “the Council shall”, the words “within a period of thirty days from the date of termination of mediation” shall be inserted;4 THE GAZETTE OF IND4IA EXTRAORDINARY [Part II—

(d) after sub-section (4), the following sub-section shall be inserted,

namely:–– “(4A) Notwithstanding anything contained in any other law for the time being in force, the Micro and Small Enterprises Facilitation Council or any institution or centre providing alternative dispute resolution services, as the case may be, shall make the award within a period of ninety days from the date of completion of pleadings.”;

(e) for sub-section (5), the following sub-sections shall be substituted,

namely:— ‘(5) Notwithstanding anything contained in any other law for the time being in force, the Micro and Small Enterprises Facilitation Council or mediation service provider or any institution or centre providing alternative dispute resolution services shall have jurisdiction to act as a mediator or arbitrator under this section in a dispute between the supplier, whose official address as per the registration made under

section 8, is located within its jurisdiction and a buyer located anywhere in India.

(6) The Central Government may, by notification, establish an online mechanism for conducting online mediation or arbitration through audio-video and other electronic means, under this section.

(7)The procedure and manner of online mechanism referredto in sub-section (6) shall be such as may be prescribed by the Central Government.

Explanation.––For the purposes of this Act, the expression “audio-video and other electronic means” shall include use of any communication device for video conferencing, filing of pleadings, communication, recording of evidence, transmission of electronic communication, for the purposes of conduct of arbitral proceedings and any other matters incidental thereto.’.

Insertion of new 9.After section 18 of the principal Act (as substituted by section 62 read with

section 18A. the Seventh Schedule of the Mediation Act, 2023), the following section shall be 32 of 2023. inserted, namely:— Enforcement of “18A. (1) The mediated settlement agreement or arbitral award made by mediated the Micro and Small Enterprises Facilitation Council itself or mediation settlement service provider or any institution or centre providing alternative dispute agreements and arbitral awards. resolution services to which a reference is made under section 18, may be recovered as an arrear of land revenue by the State Government through District Collector or Deputy Commissioner or any such authority notified by the State in this behalf, where the assets of the buyer is located.

(2) The amount determined by the mediated settlement agreement or arbitral award shall constitute a valid and legally enforceable debt and is liable to be recognised under the provisions of the Insolvency and Bankruptcy Code, 2016.”. 31 of 2016.

Substitution of 10. For section 19 of the principal Act, the following section shall be new section for substituted, namely:—

section 19.

Application for “19. (1) No application for setting aside any decree, award, other order setting aside or mediated settlement agreement made under section 18 shall be entertained decree, award or by any court unless the applicant (not being a supplier) has mandatorily mediated settlement deposited with it seventy-fiveper cent. of the amount in terms of the award or agreement. the mediated settlement agreement,as the case may be.Sec. 1] THE GAZETTE OF IND5IA EXTRAORDINARY 5

(2) Pending disposal of the application to set aside the decree, award, other order or mediated settlement agreement, as the case may be, the court shall order that such percentage of the amount deposited shall be paid to the supplier, as it considers reasonable under the circumstances of the case:

Provided that if the application has been pending for more than six months, the court shall order to pay to the supplier a sum equivalent to at least fifty per cent. of the amount awarded from the amount deposited by the applicant.

(3) The application under sub-section (1) shall be filed within the jurisdiction of the court where official address of the supplier is located as referred to in section 8.”.

11. For section 20 of the principal Act, the following section shall be Substitution of substituted, namely:— new section for

section 20. “20. (1) The State Government shall, by notification, establish adequate Establishment of number of Micro and Small Enterprises Facilitation Council, in addition to the Micro and Small Enterprises existing Council, at such places, exercising such jurisdiction, and for such Facilitation areas, as may be specified in that notification. Council.

(2)The Micro and Small Enterprises Facilitation Council shall meet on regular basis for timely resolution of references made under section 18, at such intervals and in accordance with such procedure as may be prescribed by the State Government.

(3) The State Government may provide adequate infrastructure and resources, including physical infrastructure, digital systems and trained manpower, as may be necessary for effective and timely disposal of references, to the Council established under this section.”.

12. For section 21 of the principal Act, the following section shall be Substitution of substituted, namely:— new section for

section 21. “21. (1) The Micro and Small Enterprises Facilitation Council shall Composition of consist of not less than three but not more than five members. Micro and Small Enterprises

(2) Each Micro and Small Enterprises Facilitation Council constituted Facilitation Council. by the State Government shall include the following members, namely:––

(a) an officer not below the rank of Joint Director as the Chairperson of the Micro and Small Enterprises Facilitation Council; and

(b)oneor moreoffice-bearersor representatives of associationsof micro or small industry or enterprises; and

(c)atleastone member fromthe field of law.

(3)Subject to the provisions of sub-sections (1) and (2), the composition of the Micro and Small Enterprises Facilitation Council, the manner of filling vacancies of its members and the procedure to be followed in the discharge of their functions by the members shall be such, as may be prescribed by the State Government.”.

13. After section 22 of the principal Act, the following section shall be Insertion of new inserted, namely:— section 22A. “22A. (1) Every Central Public Sector Enterprise or any other authority, Reporting of body or entity, notified by the Central Government, shall disclose the details compliance.

of invoices of micro, small and medium enterprises routed and settled through Trade Receivables Discounting System platform as referred to in sub-sections (1) and (2) of section 15A, in such form and manner as may be prescribed by the Central Government.6 THE GAZETTE OF IND6IA EXTRAORDINARY [Part II—

(2)Every State Public Sector Enterprise or any other authority, body, or entity, notified by the State Government, shall disclose the details of invoices of micro, small and medium enterprises routed and settled through Trade Receivables Discounting System platform as referred to in sub-section (3) of

section 15A, in such form and manner as may be prescribed by the State Government.”.

Substitution of 14. For section 27 of the principal Act, the following sections shall be new sections 27 substituted, namely:— and 27Afor

section 27. “27. (1) Whoever wilfully furnishes false information in the Penalty for memorandum of registration filed under section 8 or fails to comply with the contravention of provisions of sub-section (2) of section 26 shall be—

section 8 or

section 22 or

section 26. (a)warned at the first instance of non-compliance;

(b) liable to penalty which shall not be less than one thousand rupees but which may extend to fifty thousand rupees in case of second or subsequent instances of non-compliance.

(2)Where a buyer contravenes the provisionsof section 22, he shall be—

(a)warned at the first instance of non-compliance;

(b) liable to penalty which shall not be less than ten thousand rupees but which may extend to fifty thousand rupees in case of second contravention;

(c)punishable with fine which shall not be less than fifty thousand rupees but which may extend to one lakh rupees in case of third or subsequent contravention.

(3) The penalties provided under this section shall be increased by ten per cent. of minimum amount of penalty provided therefor, after the expiry of every three years from the date of commencement of the Micro, Small and Medium Enterprises Development (Amendment) Act, 2026, as may be notified by the Central Government.

Adjudication of 27A. (1) For the purposes of adjudging the penalties under section 27, penalties. the Central Government shall appoint the Development Commissioner to be an adjudicating officer for holding an inquiry and imposing penalty in such

manner as may be prescribedby the Central Government:

Provided that no such penalty shall be imposed without giving theperson concerned a reasonable opportunity of being heard.

(2) Whoever is aggrieved by an order of the adjudicating officer under sub-section (1) may prefer an appeal to the Secretary to the Government of India in charge of the Ministry or Department of the Central Government having administrative control of micro, small and medium enterprises, within a period of thirty days from the date of receiptof such order in such form and manner as may be prescribedby the Central Government.

(3) An appeal may be admitted after the expiry of the period of thirty days if the appellant satisfies the appellate authority that he had sufficient cause for not preferringthe appeal within that period.Sec. 1] THE GAZETTE OF IND7IA EXTRAORDINARY 7

(4) The appellate authority may, after giving the party to the appeal an opportunity of being heard,pass such order as it may think fit.

(5)An appeal under sub-section (2) shall be disposed of within a period of sixty days from the date of filing.

(6)If penalty imposed by the adjudicating officer under sub-section (1) or by an order of the appellate authority under sub-section (4), is not deposited, the amount shall be recovered as an arrear of land revenue.”.

15.In section 29 of the principal Act, in sub-section (2),— Amendment of

section 29.

(i)after clause (b), the following clause shall be inserted, namely:–– “(ba) the form and manner to file memorandum for registration of micro, small and medium enterprises under sub-section (1) of

section 8;”;

(ii)after clause (d), the following clauses shall be inserted, namely:–– “(da) the form and manner to route the settlement of invoices through Trade Receivables Discounting System platform under sub-sections (1) and (2) of section 15A;

(db) the procedure and manner of online mechanism under sub-section (7) of section 18;

(dc) the form and manner to disclose the details of invoices of micro, small and medium enterprises under sub-section (1) of

section 22A;”;

(iii)after clause (e), the following clauses shall be inserted, namely:–– “(ea)the manner of holding inquiry and imposing penalties under sub-section (1) of section 27A;

(eb) the form and manner of preferring appeal to the appellate authority against the order of adjudicating officer under sub-section (2) of section 27A;”.

16. In section 30 of the principal Act, in sub-section (2), for clauses (a) and Amendment of

(b), the following clauses shall be substituted, namely:–– section 30. “(a)theformandmannertofilememorandumforregistrationofmicro, smalland medium enterprises under sub-section (2) of section 8;

(b) the form and manner to route the settlement of invoices through Trade Receivables Discounting System platform under sub-section (3) of section 15A;

(c)the intervals and procedure for meeting of the Micro and Small Enterprises Facilitation Council under sub-section (2) of section 20;

(d) the composition of the Micro and Small Enterprises Facilitation Council, the manner of filling vacancies of the members and the procedure to be followed in the discharge of their functions by the members of that Council under sub-section (3) of section 21;

(e) the form and manner to disclose the details of invoices of micro, small and medium enterprises under sub-section (2) of section 22A; and8 THE GAZETTE OF IND8IA EXTRAORDINARY [Part II—

(f) any other matter which is to be, or may be, prescribed under this Act.”.

17. Notwithstanding anything contained in this Act, anything done or any Saving. action taken or any notification issued under the principal Act, shall in so far as it is consistent with the provisions of this Act, continue to be in force unless and until revoked, and shall have effect as if it had been done, taken or issued under the corresponding provision of the principal Act, as amended by this Act.

————— The above Bill has been passed by the Houses of ParliamenDt.R. RAJIV MANI, Secretary to the Govt. of India.

Dated the Speaker. ————— I assent to this Bill.

Dated the President.

UPLOADED BY THE MANAGER, GOVERNMENT OF INDIA PRESS, MINTO ROAD, NEW DELHI–110002 AND PUBLISHED BY THE CONTROLLER OF PUBLICATIONS, DELHI–110054.

MGIPMRND—509GI(S4)—13-08-2026.