MSMED Amendment Act 2026 mandates TReDS for MSME payments

The Micro, Small and Medium Enterprises Development (Amendment) Act, 2026, has received Presidential assent, introducing significant changes to the regulatory framework for MSMEs.

A key provision of the amendment requires every Central Public Sector Enterprise (CPSE) to route the settlement of invoices arising from MSME procurement through a Reserve Bank-authorised Trade Receivables Discounting System (TReDS) platform. The Central and State Governments also hold the authority to extend this mandatory TReDS settlement requirement to other notified entities and public sector enterprises.

Additionally, the Act modifies how enterprises are classified. Under the substituted Section 7, the Central Government will classify micro, small, or medium enterprises based on two combined criteria: investment in plant and machinery or equipment, and total turnover. When calculating investment, costs for research and development, pollution control equipment, and industrial safety devices will be excluded.