New MSME Bill Targets Payment Delay Tactics

Why do MSMEs still wait years despite a 45-day payment law?

The 45-day rule only sets when payment is owed, not what happens if a buyer refuses. Disputes then go to the Facilitation Council, and buyers routinely challenge awards through appeals under multiple overlapping laws, dragging cases through courts, tribunals and insolvency proceedings for years before an MSME actually recovers the money.

How do multiple overlapping laws cause the delay?

Insolvency and recovery in India run through several separate laws, the Companies Act, SARFAESI Act, Sick Industrial Companies Act and IBC among them, each with its own courts, tribunals and boards. A buyer facing an award can shift the fight between these forums, so winding up or recovery drags on for years even after an MSME wins its case.

Why do MSMEs lose out even when a buyer goes bankrupt?

Under the insolvency waterfall, an MSME is classed as an 'operational creditor' and paid last, after secured lenders. Resolution professionals prioritise compliance with the Insolvency and Bankruptcy Code alone, so MSME dues often get zero liquidation value even when a resolution plan is approved.

Has reporting delayed payments to regulators fixed the problem?

Since 2018, companies delaying MSME payments beyond 45 days must file a half-yearly return to the Ministry of Corporate Affairs disclosing the amount and reason. It creates disclosure pressure but no enforcement teeth, which is why, on the separate Samadhaan portal, thousands of applications worth crores in dues still needed direct MSEFC intervention rather than resolving on their own.

How did this Bill pass without any debate in the Lok Sabha?

Opposition MPs were staging sustained protests over alleged police action against student demonstrators at Jantar Mantar and the Ram Mandir donations row, repeatedly demanding Home Minister Amit Shah appear in the House. Amid this din, the government moved the Bill for passing rather than debate, and it cleared the Lok Sabha via voice vote without discussion, mirroring how other bills passed that same session.

Was this the only bill passed without debate that week?

No. The same pattern repeated across the session: the Taxation and Other Laws (Amendment) Bill, 2026 passed amid din with no discussion, and a day earlier the Bankers' Books Evidence Bill, 2026 cleared the Lok Sabha via voice vote, also without discussion, as Opposition protests continued.

What specifically were Opposition MPs protesting to force this?

Opposition MPs demanded Home Minister Amit Shah address alleged police action against student protesters at Jantar Mantar on July 20, and separately raised allegations of embezzlement in Ram Mandir donation funds, displaying placards reading "Chanda chor, gaddi chhod" and "Amit Shah jawab do" through multiple sittings.

Did the Rajya Sabha version actually get debated?

Yes, unlike the Lok Sabha, the Rajya Sabha held an actual discussion on August 3, though it too was disrupted by sloganeering over the students' agitation. Leader of Opposition Mallikarjuna Kharge was initially denied a chance to speak, prompting protest, before MPs including Ajay Maken and others debated provisions like corporate versus MSME treatment.

Can this Bill help MSMEs once a buyer goes insolvent?

The evidence here does not address insolvency specifically. What the Bill does provide is faster adjudication timelines and direct enforceability of buyer-supplier settlement agreements, plus a rule forcing buyers to deposit 50% of an award if their appeal to overturn it drags past six months, which is meant to stop stalling tactics before a buyer's finances deteriorate that far.

What liquidity tools exist for MSMEs besides litigation?

The TReDS platform lets MSMEs discount trade receivables through multiple financiers rather than wait on buyers, and has already unlocked over ₹7 lakh crore for the sector. This works alongside credit routes like the SRI Fund, which has backed 682 MSMEs with ₹15,442 crore as of November 2025, giving small firms cash flow independent of a buyer's solvency.