New Delhi, Nov. 18 -- The Centre is considering a new set of measures-including charging interest and imposing a substantial levy on defaulters-to address the long-standing issue of delayed payments to micro, small, and medium enterprises (MSMEs), said two people close to the matter. The MSME and finance ministries are discussing amendments to the Micro, Small and Medium Enterprises Development (MSMED) Act, 2006, to enforce automatic interest accrual after payments remain overdue beyond the 45-day period, as verified through the UDYAM portal, unless the contract specifies a longer period, one of the two people said. "Another proposal is to penalize non-compliance with a levy amounting to 2% of large buyers' turnovers," the person added. Currently, the penalty and interest accrual only come into effect after an MSME files a complaint about the payment delay. Delayed payments to MSMEs-which account for around 30% of India's gross domestic product (GDP) and 45% of total exports-amount to about Rs.9 trillion annually, according to government data. There are around 71.4 million registered MSMEs in the nation. To be sure, an MSME payment pending for more than 45 days since delivery and invoicing is considered delayed in the country. Under the MSMED Act, buyers are required to clear invoices within 45 days or face compound interest charges at three times the Reserve Bank of India (RBI) rate. The Finance Act 2023 has also introduced a new tax rule: Starting 1 April 2024, expenses for payments delayed beyond 45 days to MSME suppliers will be disallowed under Section 43B(h) in that particular fiscal year, thereby increasing the taxable income for the businesses. In terms of regulatory measures, the government is considering introducing mandatory ageing analysis reporting in corporate filings, disclosing payment days and interest paid to MSMEs quarterly, and imposing compensation per invoice, in line with global standards, in cases where the seller is a micro or a small business, said the second person. Ageing analysis is an accounting method that categorizes outstanding invoices by the length of time they have been unpaid. Both the ministries are expected to meet and discuss the issue and the proposals in the ongoing week, the second person added. Queries emailed to the Union ministries of MSME and Finance remained unanswered until press time. Several global regulations and standards, including those in the Netherlands, the European Union, and the UK, are being studied to streamline the Indian MSME payments....