What Section 15A Means for Central Public-Sector Buyers: Mandatory TReDS Settlement

India’s Micro, Small and Medium Enterprises Development (Amendment) Act, 2026 took effect on 15 October 2026 for the sections listed in the notification. The Ministry of MSME issued notification S.O. 5575(E) on 12 October to set that date, according to TeamLease RegTech. The Act received presidential assent on 13 August, according to SCC Online.

For small suppliers, the change sits alongside payment rules that Vinod Kothari & Company says the amendment does not alter. The 45-day payment ceiling and the interest on late payment remain in Sections 15 and 16 of the MSMED Act. A new Section 15A adds a settlement route for invoices owed by central public-sector buyers, through platforms that finance trade receivables.

Which Provisions Took Effect and Which Dates Are Still Open

The notified schedule brings Sections 2 to 7, Section 11 and Sections 13 to 17 into force on 15 October 2026. Section 12 follows on 15 December 2026, according to TeamLease RegTech. Vinod Kothari & Company gives the same two dates.

Vinod Kothari & Company describes the Act as a whole as in force from 15 October, while the notified schedule names specific sections. Sections 1, 8 to 10 and 18 to 21 do not appear in that schedule. Whether they are in force is unresolved, because Vinod Kothari & Company’s whole-Act statement would include them and the schedule does not. The dispute-resolution provisions discussed below fall partly in that group.

Section 15A at a Glance
Every Central Public Sector Enterprise must route settlement of invoices arising from procurement from MSMEs through an RBI-authorised TReDS platform, according to SCC Online.

A 45-Day Ceiling and Interest at Three Times the Bank Rate

A LiveLaw law-firm article on the MSMED Act describes Section 15 as requiring payment within the agreed period and, in any event, within 45 days of acceptance or deemed acceptance of goods or services. The 45-day clock therefore starts at acceptance.

Section 16 adds compound interest with monthly rests on late amounts, at three times the RBI bank rate as notified from time to time. Interest runs from the appointed day, or from a later agreed date. The same article says the section applies despite any contrary agreement, and reads that as preventing contract clauses from reducing the statutory interest. That reading is the article’s own.

Vinod Kothari & Company reports that the amendment does not change the substantive rights on timely payment or delayed-payment interest under Sections 15 and 16. For a supplier, a late receivable therefore carries a statutory cost that accrues each month. LiveLaw also notes that Section 17 makes the buyer liable for both the principal and this interest.

Section 15A: Mandatory TReDS Settlement for Public-Sector Buyers

The amendment inserts Section 15A into the MSMED Act. Every Central Public Sector Enterprise must route settlement of invoices arising from procurement from MSMEs through an RBI-authorised TReDS platform, according to SCC Online.

Vinod Kothari & Company defines a CPSE as a company in which the central government holds more than 51 per cent, directly or indirectly. SCC Online says the Central and State Governments can extend the TReDS settlement requirement to other notified authorities, bodies, public sector enterprises and entities, and that notified entities must disclose details of MSME invoices routed and settled through TReDS.

Dispute Timelines, Pre-Deposits and Penalties for Buyers

Vinod Kothari & Company describes mediation under the amended framework as needing to finish within 90 days of the first appearance. If mediation fails, the Council has 30 days to take up arbitration itself or refer the matter to an ADR provider, and the award is due within 90 days after pleadings are complete. Jurisdiction follows the supplier’s registered address, whatever the buyer’s location.

A buyer that appeals must first deposit 75 per cent of the award. During a pending appeal, courts may release part of the deposited amount to the supplier. SCC Online says courts must order payment of at least 50 per cent of the awarded amount if the challenge remains pending for more than six months.

SCC Online describes the penalties for contravening Section 22 as a warning for a first offence, a penalty of ₹10,000 to ₹50,000 for a second, and a fine of ₹50,000 to ₹1 lakh for a third or later offence. Vinod Kothari & Company links Section 22 to the disclosure of unpaid principal and interest in annual accounts.

The 45-day period runs from acceptance or deemed acceptance of goods or services, and LiveLaw reads the statute as capping any longer contractual period there.

What the RBI’s Revised TReDS Directions Add

An article dated 25 June 2026 describes revised RBI directions for TReDS that consolidate earlier instructions into a single Master Direction. The article’s date is its publication date, and the issue date of the directions is not stated there.

Operators must run validation checks to confirm that sellers are genuine MSMEs, and must credit payment proceeds only to the seller’s own bank account. Financiers can obtain credit-guarantee cover for factoring units from a government-set-up credit guarantee fund trust, and insurance cover as well. The minimum net worth for operators is set at ₹25 crore. Existing entities are given time to comply, though the article does not state how long.

Points for Founders Selling to Indian Buyers

On invoicing, the statutory period runs from acceptance or deemed acceptance, so the dates a buyer accepted goods or services are the dates that matter for the 45-day count. The LiveLaw article reads the statute as capping any longer contractual period at 45 days.

On buyer type, the TReDS requirement applies to CPSEs and to other entities that governments later notify, according to SCC Online. A founder can check whether a buyer falls in either group before setting settlement terms.

On working capital, financing for a covered invoice runs through an RBI-authorised platform. The sources reviewed do not give discount rates, so pricing has to be compared on the platform itself. On collections, the items to track are acceptance dates, interest accruing on late amounts, and the buyer’s annual-account disclosures. Mediation and arbitration run through the Facilitation Council or an ADR institution, and the sources do not settle whether Sections 18 to 21 are in force.

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