UPSC Prelims Practice Questions — The Micro, Small and Medium Enterprises Development (Amendment) Bill, 2026

Q1. Under the composite classification norms in force under the MSMED Act, 2006 immediately before the 2026 amendment, the turnover ceiling prescribed for a medium enterprise was how many times the turnover ceiling prescribed for a micro enterprise?

  • A. Ten times the micro-enterprise turnover ceiling
  • B. Twenty-five times the micro-enterprise turnover ceiling
  • C. Fifty times the micro-enterprise turnover ceiling
  • D. One hundred times the micro-enterprise turnover ceiling

Q2. Consider the following statements regarding the classification of enterprises under the MSMED Act, 2006 and its amendment in 2026: 1. A micro enterprise was one with investment in plant and machinery or equipment not exceeding Rs 1 crore and turnover not exceeding Rs 5 crore. 2. A small enterprise was one with investment in plant and machinery or equipment not exceeding Rs 10 crore and turnover not exceeding Rs 50 crore. 3. A medium enterprise was one with investment in plant and machinery or equipment not exceeding Rs 20 crore and turnover not exceeding Rs 100 crore. 4. The 2026 amendment writes the revised investment and turnover thresholds into a Schedule to the Act itself, so that they can be changed only by further legislation. Which of the above is/are NOT correct?

  1. A micro enterprise was one with investment in plant and machinery or equipment not exceeding Rs 1 crore and turnover not exceeding Rs 5 crore.
  2. A small enterprise was one with investment in plant and machinery or equipment not exceeding Rs 10 crore and turnover not exceeding Rs 50 crore.
  3. A medium enterprise was one with investment in plant and machinery or equipment not exceeding Rs 20 crore and turnover not exceeding Rs 100 crore.
  4. The 2026 amendment writes the revised investment and turnover thresholds into a Schedule to the Act itself, so that they can be changed only by further legislation.
  • A. 1 and 2
  • B. 3 only
  • C. 3 and 4
  • D. 2, 3 and 4

Q3. Once the MSMED (Amendment) Bill, 2026 comes into force, the revised investment and turnover limits for classifying an enterprise as micro, small or medium are to be laid down by which one of the following?

  • A. The Reserve Bank of India, acting in consultation with the Department of Financial Services
  • B. The Central Government, by notification issued under the amended parent Act
  • C. The National Board for Micro, Small and Medium Enterprises, by a resolution ratified by State Governments
  • D. The Advisory Committee constituted under the Micro, Small and Medium Enterprises Development Act, 2006

Q4. Consider the following statements about the place of the MSME sector in the Indian economy as officially stated in 2026: 1. MSMEs account for about 31.1 per cent of India's Gross Domestic Product. 2. MSMEs account for about 35.4 per cent of India's manufacturing output. 3. MSMEs account for about 48.58 per cent of India's exports. 4. The MSME sector is the single largest employer in the country, ahead of agriculture. Which of the statements given above is/are correct?

  1. MSMEs account for about 31.1 per cent of India's Gross Domestic Product.
  2. MSMEs account for about 35.4 per cent of India's manufacturing output.
  3. MSMEs account for about 48.58 per cent of India's exports.
  4. The MSME sector is the single largest employer in the country, ahead of agriculture.
  • A. 1, 2 and 3 only
  • B. 2 and 4 only
  • C. 1, 3 and 4 only
  • D. 1, 2, 3 and 4

Q5. Consider the following statements comparing the export performance of Indian MSMEs in 2024-25 with 2020-21: 1. The value of MSME-specified exports rose from about Rs 3.95 lakh crore to about Rs 12.39 lakh crore over this period. 2. The number of exporting MSMEs rose from about 53 thousand to about 1.73 lakh over this period. 3. The MSME share in India's exports has risen in every single year since 2020-21 and now exceeds half of the country's total exports. Which of the statements given above is/are correct?

  1. The value of MSME-specified exports rose from about Rs 3.95 lakh crore to about Rs 12.39 lakh crore over this period.
  2. The number of exporting MSMEs rose from about 53 thousand to about 1.73 lakh over this period.
  3. The MSME share in India's exports has risen in every single year since 2020-21 and now exceeds half of the country's total exports.
  • A. 1 only
  • B. 1 and 2 only
  • C. 2 and 3 only
  • D. 1, 2 and 3

Q6. Of the enterprises registered between 1 July 2020 and December 2025 across the Udyam Registration Portal and the Udyam Assist Platform taken together, how many crore were registered on the Udyam Assist Platform?

  • A. About 1.50 crore enterprises
  • B. About 2.92 crore enterprises
  • C. About 4.37 crore enterprises
  • D. About 7.30 crore enterprises

Q7. Which one of the following is the lead platform of the Ministry of MSME through which enterprises that lack GST registration and are outside the income-tax net obtain formal recognition as micro enterprises, its certificate being treated at par with the Udyam Registration Certificate for priority sector lending?

  • A. The Udyam Registration Portal, on which enterprises complete a self-declaration-based online registration
  • B. The Udyam Assist Platform, on which lending institutions act as authorised onboarding partners
  • C. The MSME Sambandh Portal, on which public procurement from small enterprises is monitored
  • D. The MSME Samadhaan Portal, on which references relating to unpaid dues are filed and tracked

Q8. Consider the following statements about the machinery for resolving delayed payments to micro and small enterprises: 1. MSME Samadhaan is an online portal, operational since 2017, on which micro and small enterprises file and monitor applications relating to delayed payments. 2. Under the 2026 amendment, a State may constitute only one Micro and Small Enterprises Facilitation Council for the whole of its territory. 3. An Online Dispute Resolution portal for end-to-end digitised handling of delayed payment cases was launched by the Ministry of MSME in June 2025. 4. Under the 2026 amendment, mediation must be concluded within 30 days and the arbitral award must be made within 180 days of completion of pleadings. Which of the statements given above is/are correct?

  1. MSME Samadhaan is an online portal, operational since 2017, on which micro and small enterprises file and monitor applications relating to delayed payments.
  2. Under the 2026 amendment, a State may constitute only one Micro and Small Enterprises Facilitation Council for the whole of its territory.
  3. An Online Dispute Resolution portal for end-to-end digitised handling of delayed payment cases was launched by the Ministry of MSME in June 2025.
  4. Under the 2026 amendment, mediation must be concluded within 30 days and the arbitral award must be made within 180 days of completion of pleadings.
  • A. 1 and 2 only
  • B. 1 and 3 only
  • C. 2, 3 and 4 only
  • D. 1, 3 and 4 only

Q9. Which one of the following statements about the principal adjudicatory forum for delayed payment disputes of micro and small enterprises is correct?

  • A. The Samadhaan portal is itself the adjudicating authority and passes binding awards in all delayed payment cases filed on it.
  • B. Every delayed payment dispute must necessarily be taken first to a civil court, which then refers it onward for adjudication.
  • C. Micro and Small Enterprises Facilitation Councils, numbering 161 across the States and Union Territories, take up references on delayed payments.
  • D. Only the National Company Law Tribunal is competent to entertain and decide references relating to delayed payments in every such case.

Q10. Consider the following statements about the Trade Receivables Discounting System (TReDS): 1. TReDS platforms are authorised and regulated by the Reserve Bank of India under the Payment and Settlement Systems Act, 2007. 2. Financing on TReDS is extended by banks and NBFCs, who bid competitively to discount the trade receivables of MSMEs. 3. The value of transactions on TReDS rose from about Rs 40,000 crore in 2021-22 to about Rs 3.47 lakh crore in 2025-26. 4. Under the framework adopted in 2026, every central public sector enterprise as well as every State public sector undertaking is required to settle MSME invoices on TReDS. Which of the above is/are NOT correct?

  1. TReDS platforms are authorised and regulated by the Reserve Bank of India under the Payment and Settlement Systems Act, 2007.
  2. Financing on TReDS is extended by banks and NBFCs, who bid competitively to discount the trade receivables of MSMEs.
  3. The value of transactions on TReDS rose from about Rs 40,000 crore in 2021-22 to about Rs 3.47 lakh crore in 2025-26.
  4. Under the framework adopted in 2026, every central public sector enterprise as well as every State public sector undertaking is required to settle MSME invoices on TReDS.
  • A. 4 only
  • B. 1 and 4
  • C. 2 and 3
  • D. 3 and 4

Q11. Consider the following features and identify those that the Micro, Small and Medium Enterprises Development (Amendment) Bill, 2026 introduces: 1. Replacement of conviction-based fines with graded civil penalties, a first contravention attracting only a warning, and penalty amounts rising by ten per cent every three years. 2. Compulsory settlement by central public sector enterprises of their invoices for procurement from MSMEs through the Trade Receivables Discounting System. 3. Statutory backing for a digital, free of cost and voluntary registration platform for enterprises. 4. A requirement that every medium enterprise compulsorily file a memorandum, non-filing being made a cognizable offence. Which of the above is/are correctly identified?

  1. Replacement of conviction-based fines with graded civil penalties, a first contravention attracting only a warning, and penalty amounts rising by ten per cent every three years.
  2. Compulsory settlement by central public sector enterprises of their invoices for procurement from MSMEs through the Trade Receivables Discounting System.
  3. Statutory backing for a digital, free of cost and voluntary registration platform for enterprises.
  4. A requirement that every medium enterprise compulsorily file a memorandum, non-filing being made a cognizable offence.
  • A. 1, 2 and 4 only
  • B. 2 and 3 only
  • C. 1, 2 and 3 only
  • D. 1, 3 and 4 only