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Cashflow Council
To: the Ministry of Micro, Small and Medium Enterprises, Government of India
From: Harpreet Singh, Chair, Cashflow Council, Founders Assembly, Reseated; and the Rapporteur, Cashflow Council
Letter to the Ministry of Micro, Small and Medium Enterprises of India on enforcement of section 15 and section 43B(h)
Dear officials of the Ministry,
1.We write on behalf of the Cashflow Council of Reseated’s Founders Assembly to share evidence concerning late payment to small suppliers and to offer practical cooperation on enforcement and implementation of India’s existing protections. We recognize the importance of ensuring that a rule on payment timing works in the everyday commercial relationships between a buyer and a small enterprise—not only in statute, but in the moment an invoice falls due, a payment is withheld, or a supplier has to decide whether raising a dispute is worth the cost.
2.Our purpose is not to make findings about any named buyer, supplier, or government office. The reports summarized here are submitted by members in many countries and are handled as evidence about recurring practices. Members remain anonymous unless they choose otherwise. We do not identify a member’s business in this letter, and we do not present individual accounts as independently adjudicated legal findings.
Who we are and our mandate
3.Reseated is a global assembly of small-business owners, organized through seven councils. It launched on 10 February 2026 and is a nonprofit. The Assembly’s Rules of Procedure establish the process by which members consider issues and adopt common positions. The Cashflow Council examines payment practices
affecting small suppliers and buyers, gathers reports, tests whether a problem recurs across members, and develops proposals for consultation and decision by the Assembly.
4.Our process is intended to distinguish an isolated disagreement from a pattern that merits a shared response. Reports are assessed against five considerations: volume, frequency, consistency, spread, and corroboration. Where a pattern is supported, the Council develops a draft response, consults publicly, and submits the proposal to an Assembly ballot. A letter such as this is part of that work: it presents evidence and asks for consideration by the public authority with responsibility for the subject. It does not claim to speak for every member or every small enterprise in India.
5.At the date of this letter, 766 members were seated in 49 countries. They had filed 2,008 reports from 50 countries. The Cashflow Council comprised 175 members from 39 countries and had received 543 reports from 46 countries. These are the figures in the Council’s records as of 28 May 2026; they should be read as evidence gathered by a voluntary assembly, not as a representative survey of all enterprises or a measurement of the national incidence of late payment.
Evidence before the Council
6.The 543 Cashflow Council reports describe a range of payment experiences. In 452 reports, the reported situation was a client paying late. In 91, it concerned supplier terms. The Council’s classification records the reported type of situation; it does not establish that a particular contract was governed by Indian law, that a payment was legally overdue, or that a particular party breached a legal obligation.
7.The reports came from 46 countries. The largest country counts were Canada, 72; the United Kingdom, 63; the United States, 63; India, 43; South Africa, 24; Spain, 22; Australia, 21; and Mexico, 16. The figures describe where reports were submitted, not the location of all transactions or the relative prevalence of late payment in those countries. The Council had 175 members from 39 countries, a distinct measure from the 46 countries represented in its reports.
8.The median amount at stake across the Cashflow Council’s reported cases was approximately US$4,590. This is a median, not a mean or a national estimate. It indicates why a payment delay can matter materially to a small supplier while remaining modest in scale to a larger buyer. The practical burden may include the time spent following up, uncertainty about when cash will arrive, and difficulty meeting the supplier’s own obligations. The Council’s evidence does not quantify those associated costs separately.
9.In the 30 days preceding the 28 May reporting point, the Council received 218 reports. This recent flow is relevant to the persistence of the issue, but the Council does not infer from it a month-to-month national trend. For team size, the reported composition was: just me, 39%; 2–9 people, 41%; 10–49 people, 15%; and 50–249 people, 5%. Those percentages describe the Council’s reported team-size categories; they are not an estimate of the structure of India’s MSME sector.
10.The Council’s records do not contain a validated, consistently coded sector-by-sector count. The Council considers that limitation important. If sectoral analysis would assist the Ministry, we can work with the Ministry to define categories and assess whether an anonymized, sufficiently reliable breakdown can be prepared from the underlying records.
11.The Council’s evidence is useful in identifying recurring experiences, but it has limits. It is voluntary, is not a probability sample, and includes reports from outside India. We have not independently audited every report or verified every invoice, contract, or payment record. Counts should not be treated as a count of legal claims, proven violations, or unique enterprises in a country. We offer them in that bounded form: a cross-border record of repeated small-supplier concerns, including 43 reports submitted from India, which may help inform questions for policy and enforcement.
Legal and policy context in India
12.The sources cited describe section 15 of the Micro, Small and Medium Enterprises Development Act as requiring payment to a micro or small enterprise within 15 days where there is no written agreement, and permitting a written payment term of no more than 45 days. They also describe section 43B(h) of the Income-tax Act as linking the deduction for sums payable to micro and small enterprises to payment within the applicable time under section 15: where payment is late, the deduction is not available in that year. The cited legal reference further identifies compound interest at three times the Reserve Bank of India bank rate as a consequence associated with delayed payment under the MSMED Act. These provisions and their application are summarized in the cited legal reference; we defer to the Ministry and other competent authorities on their authoritative interpretation and administration.1
13.The Council understands that these measures address different points in the payment problem. Section 15 establishes a time limit for payment; the interest provision creates a financial consequence for delay; and section 43B(h) concerns the timing of a tax deduction. A supplier’s practical ability to rely on those protections may depend on knowing the applicable deadline, identifying the appropriate route for a dispute, preserving relevant records, and believing that using a remedy will not expose the business to disproportionate cost or commercial risk.
14.We do not presume that the Ministry has taken a particular view about the performance of these provisions, the causes of late payment, or the appropriate enforcement response. Nor do we assume that every delayed invoice is a violation: disputes over delivery, quality, invoice accuracy, or other contractual matters may require examination on their facts. Our concern is narrower. A statutory deadline and remedy can only change payment practice if small suppliers and buyers can understand them, and if recurring non-compliance can be identified and addressed through accessible processes.
Requests to the Ministry
15.We respectfully ask the Ministry to consider the following measures within its remit and in coordination with relevant authorities where necessary:
Publish a clear, practical explanation of the rules. Provide a concise, accessible explanation for micro and small suppliers and for buyers setting out the 15-day rule where there is no written agreement, the maximum 45-day written term described in the law, the interest consequence, and the tax treatment associated with section 43B(h). Cases should distinguish a written term from an extension agreed after an invoice becomes due and should direct readers to authoritative guidance on questions of interpretation.
Make the route from unpaid invoice to remedy easy to find. Bring together the relevant official information on records to retain, how a supplier can raise a payment dispute, the appropriate forum or process, and what happens after a matter is submitted. The instructions should be usable by a small enterprise without dedicated legal or finance staff, and should explain how to proceed when the buyer disputes the invoice rather than simply failing to pay.
Improve visibility of implementation. Consider publishing regular, appropriately aggregated information about reports or disputes involving delayed payment to micro and small enterprises, including the number received, the stage reached, and the time taken to resolve them. Where data permit, distinguish between categories of matter and show how outcomes are defined. Clear definitions and privacy protections would help users understand what the figures do—and do not—measure.
Assess awareness and barriers to use. Commission or conduct structured research into whether micro and small suppliers and their buyers understand the applicable time limits and consequences, and what prevents suppliers from pursuing a remedy. Such work should distinguish lack of awareness from disputed invoices, administrative burden, fear of losing a customer, and other possible barriers, rather than treating all late payments as a single problem.
Support consistent, proportionate enforcement. Consider whether guidance, outreach, dispute-resolution processes, and enforcement activity are sufficiently clear and accessible to address repeated late payment while allowing genuine invoice disputes to be examined. We encourage attention to the practical experience of smaller suppliers and to the need for procedures that do not impose costs out of proportion to the sums at stake.
Invite evidence from affected enterprises. Provide a channel through which micro and small suppliers can submit anonymized accounts and relevant information about payment timing, without having to disclose a business publicly merely to contribute to policy development. Where personal or commercial information is necessary for an individual case, clear protections and boundaries should be explained.
Review implementation with a defined evidence base. After an appropriate period, assess whether awareness, payment behaviour, and access to remedies have changed. Publish the method, coverage, definitions, and limitations of the assessment so that suppliers, buyers, and public bodies can interpret its results and identify where further work is needed.
Offer of cooperation and data safeguards
16.The Cashflow Council would welcome the opportunity to provide the Ministry with an anonymized summary of the evidence underlying this letter, subject to appropriate safeguards and to a clear agreement about purpose and handling. At minimum, the summary could restate the aggregate counts given above and explain the Council’s classifications and limitations. Any more detailed analysis would first require us to assess whether the proposed categories are supported by the records and whether small groups could be identified indirectly.
17.We will not provide names of members or their businesses as part of a general evidence exchange. We will not characterize a member’s report as a proven breach, and we will not offer identifiable case material without the relevant member’s informed agreement and safeguards appropriate to the circumstances. If the Ministry wishes to explore sectoral analysis, we propose agreeing in advance on definitions, minimum group sizes, permitted uses, and a process for checking that published results cannot reasonably identify a contributor.
18.The Council would also welcome a discussion with the appropriate officials about what evidence would be most useful, which existing public information already answers the questions raised, and where additional analysis would be duplicative. Our offer is one of cooperation, not a request for privileged access or a claim to
represent every small supplier. We hope that clear information and a dependable path to remedy can reduce the distance between a legal entitlement and the day-to-day experience of a small business awaiting payment.
Conclusion
19.The Council’s records show a sustained volume of reports across countries and a material number submitted from India, while also showing why restraint is necessary: the dataset is voluntary, is not sector-coded in a reliable way for this letter, and cannot establish legal violations. We ask the Ministry to consider practical steps that improve understanding, visibility, and access to remedies under the existing framework, and we would be pleased to contribute carefully protected aggregate evidence to that work.
20.Thank you for considering this letter. We would welcome a written acknowledgement and guidance on the appropriate office or channel for submitting an anonymized evidence summary. No response is assumed or represented here.
Yours sincerely,
Harpreet SinghChair, Cashflow CouncilFounders Assembly, ReseatedManchester, United Kingdom
RapporteurCashflow CouncilFounders Assembly, Reseated
Annex: sources and evidence notes
Legal and policy summary concerning payments to micro and small enterprises, section 15 of the MSMED Act, and section 43B(h) of the Income-tax Act. The Council cites this reference for the statutory summary in paragraphs 12–14 and defers to authoritative interpretation by competent Indian authorities.
Reseated internal Cashflow Council and Assembly figures as of 28 May 2026. These are the figures stated in paragraphs 5–11; they are not an external source or a representative survey.
Notes and sources
Sources
This document has no standing until adopted under the Founders Charter. Reseated Councils is not affiliated with the United Nations.