Bill defines 'Development Commissioner' for MSME Act, adds digital dispute resolution

This Bill amends the Micro, Small and Medium Enterprises Development Act, 2006 to mandate the use of a digital platform for invoice settlement by public sector enterprises, establish a national digital registration platform, and introduce strict time limits and enforcement mechanisms for resolving payment disputes between buyers and MSMEs.

Who it concerns: Micro, small, and medium enterprises (MSMEs); Central and State Public Sector Enterprises; other authorities, bodies, or entities notified by the Central or State Government; and the Micro and Small Enterprises Facilitation Councils.

What the bill does

• Mandates Central Public Sector Enterprises to route invoice settlements through a Trade Receivables Discounting System (TRDS) platform authorized by the Reserve Bank.
• Allows the Central and State Governments to notify other entities (beyond public sector enterprises) that must also use the TRDS platform for settling invoices with MSMEs.
• Requires the Central Government to notify a national digital platform for free and voluntary MSME registration to access government benefits.
• Sets a mandatory time limit of 90 days for the Micro and Small Enterprises Facilitation Council or mediation providers to complete mediation.
• Requires the Council or arbitration centers to make awards within 90 days of the completion of pleadings.
• Allows mediated settlement agreements or arbitral awards to be recovered as arrears of land revenue by the State Government.
• Requires any party (other than the supplier) applying to set aside an award or settlement to deposit 75% of the awarded amount with the court.
• Mandates that if a setting-aside application is pending for more than six months, the court must order at least 50% of the deposited amount to be paid to the supplier.
• Requires State Governments to establish adequate numbers of Micro and Small Enterprises Facilitation Councils with specific composition rules (3-5 members, including a Joint Director as Chairperson and a legal member).
• Requires notified entities to disclose details of invoices settled through the TRDS platform.

Also in the document

• The Bill creates a new definition for 'Development Commissioner' in the principal Act.
• It clarifies that costs for pollution control, R&D, and industrial safety devices are excluded from the calculation of investment in plant and machinery for MSME classification.
• It explicitly states that the amount determined by a mediated settlement or arbitral award constitutes a valid debt recognizable under the Insolvency and Bankruptcy Code, 2016.
• It allows for online mediation or arbitration via audio-video and electronic means.