MSME Amendment Act 2026: What Changes If Your Buyer Does Not Pay

The Micro, Small and Medium Enterprises Development (Amendment) Act 2026 received Presidential assent on 13 August 2026. It does not shorten the 45 day payment window and it does not change the interest rate. What it rebuilds is everything that happens after a small supplier files: fixed deadlines at the Facilitation Council, a case heard where your factory is registered rather than where your buyer sits, and an award you can recover as arrears of land revenue or carry into insolvency proceedings. The amended provisions come into force on a date the Central Government notifies in the Gazette, and that notification is still awaited as at 20 August 2026. This is general information about a law in transition, not advice on your situation.

Did the 45 day rule itself change?

No. A buyer must still pay a registered micro or small supplier by the date agreed in writing, and no written agreement may run beyond 45 days from acceptance or deemed acceptance. Where there is no written agreement at all, the window is 15 days, not 45, which catches most small factories by surprise. Acceptance is deemed to have happened on the delivery date if the buyer raises no written objection within 15 days. The amendment left this machinery alone and inserted its new obligations alongside it.

What actually changes once you file a case?

The clock. Mediation before the Facilitation Council must now finish within 90 days from the date fixed for first appearance, the Council must act within 30 days of mediation ending, and an arbitral award must issue within 90 days of pleadings being completed. Those are the first hard deadlines this process has carried. They exist because the old process stopped working: against 256,892 complaints filed on the government portal by June 2026, the FY26 disposal rate was 4.07 percent, down from around a third in FY21.

Where do you file now?

Where your enterprise is registered, not where the buyer is. The amendment fixes the Facilitation Council's territorial jurisdiction at the supplier's registered address regardless of the buyer's location, and permits mediation and arbitration to run online through video conferencing and electronic filing. For a factory supplying buyers in three other states, that removes the single biggest practical deterrent to filing, which was never the fee. It was the travel, the adjournments and the days off the floor.

What happens if the buyer challenges the award?

He pays first. Anyone other than the supplier who wants a court to entertain a challenge must deposit 75 percent of the awarded amount, which was already the position. What is new is that the court may release a portion of that deposit to the supplier while the challenge runs, and must order at least 50 percent paid over where the matter stays pending beyond six months. An appeal used to be a free delay tactic. It now has a cash cost attached to the delay itself.

How is an award actually collected?

Two routes, and this is the sharpest change in the whole amendment. A mediated settlement or an arbitral award may be recovered as arrears of land revenue through the district administration, which puts state recovery machinery behind your award instead of leaving you to chase a decree. It also counts as an enforceable debt under the Insolvency and Bankruptcy Code 2016. A buyer who could previously absorb an award as a paper loss now faces a recovery officer or an insolvency filing.

Does the TReDS mandate help your factory?

Only if you supply the public sector, for now. A new Section 15A requires every Central Public Sector Enterprise to route settlement of invoices from MSME procurement through a Reserve Bank authorised TReDS platform, and notified entities must disclose what they routed and settled. Central and State Governments may extend the same requirement to other bodies and enterprises by notification. If your buyers are private wholesalers and brands, nothing here reaches you yet, and watching which entities get notified is worth more than reading the clause.

What should you fix before any of this is notified?

Four things, none of which need software or a lawyer. Confirm your Udyam registration is live and print the number on every invoice with a line stating you are a micro or small enterprise under the MSMED Act 2006. Issue a signed delivery challan for every despatch and keep the acknowledged copy, because deemed acceptance is what starts every clock above and an objection raised six weeks later is unanswerable without it. Keep one receivables list ordered by due date rather than by amount. And if one buyer holds most of that list, you are carrying customer concentration and a payment cycle you do not control, stacked on each other.