Law Updates

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Summary: An investment advertisement may look convincing, but that does not mean every claim in it is reliable. A promise of high returns, an endorsement from a familiar face or a comparison with another financial product can influence how people invest their money. The Securities and Exchange Board of India (SEBI) has now introduced a Common Advertisement Code 2026 to set common advertising requirements for several categories of regulated financial entities. On 8 October 2026, SEBI issued two amendments covering intermediaries and mutual funds. Both were published in the Official Gazette on 9 October 2026. The first introduces Chapter IIID into the SEBI (Intermediaries) Regulations, 2008, while the second changes the mutual fund regulations to refer to that chapter. The new provisions cover stockbrokers, investment advisers, research analysts, mutual funds, asset management companies and other specified entities. They deal with issues businesses regularly encounter when promoting financial services, including return claims, advertising disclosures, celebrity campaigns and promotional offers. For a regulated financial business, the main question is no longer simply whether an advertisement looks professional. It must also be accurate, clearly presented and consistent with SEBI's applicable advertising requirements. SEBI Advertisement Code 2026: Notification at a Glance Particular Details Issuing authority Securities and Exchange Board of India First notification SEBI (Intermediaries) (Second Amendment) Regulations, 2026 Reference number SEBI/LAD-NRO/GN/2026/323 Second notification SEBI (Mutual Funds) (Second Amendment) Regulations, 2026 Reference number SEBI/LAD-NRO/GN/2026/324 Notification date 8 October 2026 Gazette publication 9 October 2026 Governing law SEBI Act, 1992 Main regulatory change Introduction of Chapter IIID  Common Advertisement Code Regulations introduced 16G to 16Q Covered entities Specified stockbrokers, DPs, investment advisers, research analysts, mutual funds, AMCs, portfolio managers and online bond platform providers The notifications are related but serve different purposes. One introduces the actual advertising provisions; the other brings the relevant mutual fund provisions under the common framework.  What Is the SEBI Common Advertisement Code 2026? The Common Advertisement Code is a set of rules governing how specified SEBI-regulated entities can advertise their products, services and brands. It is introduced under Chapter IIID of the SEBI (Intermediaries) Regulations, 2008. The code covers more than paid newspaper or television advertisements. It also considers promotional communication made through digital platforms, websites, social media and other channels. An important feature is the definition of advertisement under Regulation 16G. It includes communication issued directly or indirectly by or on behalf of a regulated entity that promotes, invites interest in or solicits business for its products or services. Brand-level promotion can also fall within this definition. What Does the New Code Focus On? The provisions mainly address five areas. Advertising accuracy: Financial promotions must provide fair and accurate information without making misleading promises. Investor disclosures: Advertisements must contain the basic regulatory information and applicable disclaimers. Celebrity advertising: Endorsements are subject to restrictions, and prior approval is required in specified circumstances. Promotional practices: Certain incentives, ratings, rankings and deceptive designs are restricted. Accountability: Covered entities have responsibilities concerning unauthorised advertisements, reporting and compliance failures. The rules do not prevent financial businesses from promoting their services. They establish conditions for doing so responsibly. Why Has SEBI Introduced Common Advertising Rules? The two notifications do not provide a separate explanatory statement listing every reason behind the amendments. However, their requirements indicate the concerns the code is designed to address. Preventing Misleading Investment Promotions Financial advertisements can influence investment decisions, particularly when they describe expected returns or compare investment products. A message promising unusually high or risk-free returns can create expectations that may not reflect the actual risks involved. The new code restricts such representations and requires promotional information to be accurate and understandable. Making Financial Information Easier to Understand Financial advertisements sometimes use complicated language or large amounts of information. Regulation 16L requires advertisements to avoid excessive technical or legal language and unnecessary detail that may mislead or confuse investors. This means compliance involves more than adding a lengthy disclaimer. The main message itself must be presented fairly. Bringing Different Entities Under Common Requirements The code provides a shared set of advertisement provisions for the regulated entities identified in the amendment. The second notification also aligns relevant mutual fund advertisement requirements with Chapter IIID. This brings greater consistency to the regulatory provisions governing covered advertisements. Controlling Influencer and Celebrity Promotions Celebrity endorsements are often used to attract attention to financial brands. The code allows brand-level endorsements but restricts direct or indirect claims and inducements relating to specific products or services. It also introduces specific approval requirements for advertisements featuring celebrities. Which Financial Businesses Must Follow the New SEBI Advertisement Rules? Not every company offering financial services is automatically covered. Regulation 16G identifies the regulated entities, while Regulation 16H applies the chapter to advertisements concerning products and services under SEBI's purview. Covered Entities Regulated Entity Main Activity Advertising Compliance Focus Stockbrokers Securities trading-related services Trading promotions, return claims and incentives Depository Participants Depository-related services Service advertisements and disclosures Online Bond Platform Providers Online bond-related services Product claims and fixed-return representations Investment Advisers Investment advisory services Advice-related advertisements and return assurances Research Analysts Securities research and analysis Promotional claims and research communication Mutual Funds Collective investment schemes regulated by SEBI Scheme advertising and applicable disclosures Asset Management Companies Management of mutual fund assets Brand and fund-related promotions Portfolio Managers Portfolio management services Performance representations and advertising claims SEBI may identify additional entities from time to time. Does the Code Apply to Marketing Agencies? A marketing agency does not become a SEBI-regulated entity simply because it prepares advertisements for a financial company. However, advertisements issued on behalf of covered entities fall within the broad definition in Regulation 16G. This makes coordination with external agencies important. Marketing teams should understand the restrictions before publishing client campaigns. What Types of Advertisements Are Covered? One important aspect of the new rules is that the advertising medium does not determine whether compliance is required. The definition covers several communication formats. Print and Outdoor Advertisements Newspaper advertisements, magazines, billboards, transit promotions and in-store displays are included. Such advertisements need to meet applicable disclosure and content requirements. Television, Radio and Podcasts Broadcast advertisements are also covered. Businesses using video or audio campaigns must consider the appropriate manner of presenting required disclaimers and information. Websites and Social Media The definition expressly includes websites, social media, streaming services and online news sites. Advertisements promoted through these channels must meet the applicable requirements when issued by or on behalf of a covered entity. Mobile Notifications and Short Messages SMS, push notifications and pop-ups can also qualify as promotional communications. The code recognises that short-format messages may have character limitations and provides a conditional hyperlink arrangement for certain required disclosures. Is Every Educational Social Media Post an Advertisement? No. Regulation 16J provides exclusions for specified educational and informational communications. However, whether the exclusion applies depends on the actual content. A message intended to provide financial education may be treated differently from one designed to encourage viewers to purchase a particular product or obtain a regulated service. This distinction matters for companies publishing regular financial education content alongside their marketing campaigns. Which Communications Are Excluded from SEBI's Advertisement Rules? Not everything a financial company publishes is an advertisement. Businesses also need to communicate with investors, provide information about their services and share educational material. Regulation 16J recognises this difference. It identifies certain communications that are not considered advertisements, subject to their conditions. 1. Educational and Informational Content A company can publish material intended to explain financial concepts, improve awareness or provide training without automatically treating it as advertising. However, three conditions are relevant: The company's branding must be minimal and incidental. The content must not promote a specific product or service or try to influence a purchase decision. Where education and awareness funds are used, the communication must be reported to the supervisory body or SEBI for post-facto monitoring. The purpose and presentation of the material therefore matter. 2. Research Reports and Financial Analyses Research reports, recommendations and analyses shared with existing clients or investors can fall within the exclusion if they do not contain claims about the regulated entity's performance. This does not mean every report published by a research analyst is automatically excluded from advertising requirements. 3. Factual Product and Service Information A company's website or application may contain a list of available products or services, together with brief factual descriptions. Such communication is recognised under Regulation 16J. The distinction changes when the information is presented to solicit interest in obtaining a product or service. 4. Other Excluded Communications The code also recognises several other categories. Communication Relevant Condition Regulatory communication with existing clients Must arise from an applicable regulatory requirement. Responses to investor enquiries Information supplied in response to a request Basic company information Factual details about the entity and its activities Product demonstrations Factual details about the entity and its activities Greetings and congratulatory messages Covered by the listed exclusion Recruitment notices Must not target clients or prospective clients or investors Event sponsorships Limited to the permitted generic sponsorship information Registered client feedback surveys Intended to obtain feedback Other communications As specified by SEBI The main distinction: Regulation 16J(2) states that communication promoting a regulated entity's products or services, or soliciting interest in obtaining them, is considered an advertisement. Businesses should not assume that calling promotional content a webinar, educational post, or product update automatically removes it from the advertising rules. What Information Must Be Disclosed in SEBI-Regulated Advertisements? The Common Advertisement Code makes certain disclosures compulsory for advertisements issued by covered regulated entities. Under Regulation 16I, every applicable advertisement must contain basic information identifying the entity, along with the disclaimers specified by SEBI. Mandatory Information Disclosure What the Rule Requires Name of regulated entity Identifies the entity responsible for the advertisement. SEBI registration number Provides its regulatory registration details Entity logo Included where the entity has a logo Regulatory disclaimers As specified by SEBI from time to time Disclaimer presentation Must follow the manner prescribed by SEBI These requirements help viewers understand which regulated entity is responsible for the advertisement. An important compliance point is that the notification does not reproduce every disclaimer format. Businesses must check any applicable SEBI directions before finalising their advertising creatives. What if the Advertisement Has Limited Space? Short messages such as SMS, push notifications and pop-ups may not have enough characters to display the full required information. Regulation 16I addresses this situation. Where character limits prevent the inclusion of basic details and disclaimers, the regulated entity must include a hyperlink leading to those details and disclaimers on its official website. This arrangement applies because of the stated limitation. It is not a general exemption from advertisement disclosures. Special Disclaimer for Securities or Schemes Used as Examples Regulation 16L(1)(e) deals with advertisements that refer to particular securities or investment schemes as examples. The advertisement must state that the securities or schemes are examples and should not be treated as recommendations. The placement is also prescribed. For written advertisements, the disclaimer must appear on the same page as the example. For video advertisements, it must appear in the same frame where the relevant security or scheme is displayed. Simply putting the disclaimer at the end of a video would not meet the specific placement requirement. What Are SEBI's New Rules for Celebrity and Influencer Endorsements? Celebrity endorsements receive detailed attention under the Common Advertisement Code. The rules identify who may qualify as a celebrity, the promotional activities permitted and the approval requirements. Who Is Considered a Celebrity? Regulation 16G(2) provides a detailed definition rather than limiting the term to film stars. Category Conditions Described in the Code Celebrity-ranking personalities Individuals appearing in the top 50 of a qualifying celebrity index Film and television actors Certain lead actors in mainstream or prominent productions Social media influencers Influencers exceeding the applicable ASCI followership threshold on a single platform Sports personalities Specified national-team or international-level athletes Television hosts and anchors Persons meeting the stated programme or episode conditions Competition personalities Certain winners, runners-up and recognised participants Virtual influencers Computer-generated personalities capable of influencing audiences. Other influential persons Persons identified by SEBI or the relevant supervisory body The regulation also contains a limited exclusion relating to founders, promoters, directors, key managerial personnel and senior management appearing in their own regulated entity's advertisements. The notification does not provide a single numerical follower threshold for all influencers. It refers to the threshold under applicable ASCI guidelines. Can Celebrities Promote Financial Companies? Yes, but within the boundaries established under Regulation 16K. A celebrity may endorse a regulated entity at the brand or entity level. The endorsement may mention the names of products or services. However, it must not make direct or indirect claims about a particular product or service or encourage people to obtain it through product-specific inducements. This means celebrity involvement is permitted, but the content must remain within the allowed scope. Is Prior Approval Required for Celebrity Advertisements? Yes. An advertisement featuring a celebrity can be issued only after receiving approval from the relevant supervisory body. Where no supervisory body has been specified by SEBI for that regulated entity, approval must come from SEBI. Businesses planning celebrity advertising should account for this requirement before committing to publication dates. Who Must Bear the Endorsement Expenses? Regulation 16K also addresses endorsement costs. Expenses incurred on celebrity endorsements cannot be passed on to clients or charged to mutual fund schemes. Relevant disclaimers prescribed under the regulatory framework must also be included. For financial companies and AMCs, this makes celebrity contracts, promotional claims and expense allocation important areas of review. What Advertising Claims Are Prohibited Under the New SEBI Code? Regulation 16O contains restrictions on the content of advertisements. These are particularly relevant because promotional language that appears attractive to a marketing team may create regulatory concerns when it is unsupported or misleading. Guaranteed or Risk-Free Returns Advertisements must not directly or indirectly promise or assure guaranteed, risk-free or indicative returns to prospective or existing clients. Claims giving investors an unrealistic expectation of certainty can therefore conflict with the code. Businesses should review statements promising particular investment outcomes. Promises of Fixed Returns Fixed-return assurances are also restricted. The regulation provides a conditional exception for online bond platform providers or other entities where SEBI specifies the permitted form and manner. This should not be interpreted as blanket permission to advertise guaranteed returns. Misleading or Exaggerated Claims Advertisements must not contain false, deceptive, biased, exaggerated, ambiguous or assumption-based content. The rules also prohibit testimonials. A company's marketing claim should not create an impression that is materially different from the factual position. Past Performance and Future Returns Advertisements must not suggest that previous performance will necessarily happen again. References to past performance are permitted only in the manner specified by SEBI from time to time. The issue is not simply whether past performance information is true. The way it is presented also matters. Unfair Comparisons Businesses must not publish advertisements that unfairly compare their services with those of other regulated entities. The code also restricts disparaging competing entities and making misleading comparisons between different types of products or asset classes. Unsupported Ratings and Promotional Expressions Regulation 16O restricts vague terms such as high yield, high rated or high returns when they lack a proper basis and clarity. Other prohibitions include exploiting investors' limited knowledge, using unwarranted slogans and publishing legally prohibited content. Use of SEBI and Other Regulatory Logos Advertisements must not use the logos, images or symbols of SEBI, Market Infrastructure Institutions or other specified reputable organisations without specific permission. Regulated entities should not use regulator-related imagery in a way that suggests official endorsement where no such endorsement exists. Advertising Claims: Compliance Review Table Advertising Practice Position Under the Code Guaranteed or risk-free return promises Prohibited as specified under Regulation 16O Fixed-return assurances Restricted, subject to specified exceptions Misleading performance claims Prohibited Testimonials Prohibited in covered advertisements Unfair competitor comparisons Prohibited Unsupported high-return claims Prohibited Past-performance references Subject to SEBI-prescribed conditions Regulatory logos without permission Prohibited Inaccurate or confusing information Contrary to general advertising obligations The central requirement is straightforward: financial advertisements must not encourage decisions through information that is misleading, incomplete or presented unfairly. Are Promotional Incentives and Trading Offers Restricted? Yes. Regulation 16L(1)(g) deals with incentives designed to encourage clients to undertake specified activities. It restricts offers involving vouchers, coupons, monetary certificates, tokens, subscription plans and other forms of incentives where they are used for the prohibited inducement purposes. These purposes include encouraging clients to: Trade securities. Obtain regulated services. Reactivate inactive client accounts. Invest in schemes. Download mobile applications. The rule concerns the purpose of the incentive, not merely the name given to the promotional offer. A company should therefore examine why a particular incentive is being offered and what action the offer is intended to encourage. The provision should not be described as a blanket ban on every commercial discount or customer benefit without examining the relevant circumstances. How Does SEBI Regulate Ratings, Rankings and Performance Claims? Regulation 16N establishes conditions for using ratings and rankings in advertisements. The regulation permits ratings or rankings assigned by a Past Risk and Return Verification Agency, subject to specified requirements. What Conditions Apply? Meaning and methodology: The advertisement must explain the meaning and methodology of the rating or ranking. Alternatively, it may direct investors to the relevant website containing this information. Investor decision-making: The advertisement must state that the rating or ranking is only one factor to consider when deciding whether to use a regulated entity's services. Comparability: The rating or ranking must arise from a study or survey covering all relevant market participants within the concerned category. Additional directions: SEBI may prescribe further conditions. The provision is intended to prevent ratings or rankings from being presented without the necessary explanation or context. Businesses should examine the source of any ratings used in their advertisements and ensure the relevant conditions are met. What Are Dark Patterns, and Why Has SEBI Restricted Them? Regulation 16M prohibits covered regulated entities from engaging in dark patterns identified in Annexure I of the CCPA's Guidelines for Prevention and Regulation of Dark Patterns, 2023. A dark pattern is a deceptive design practice that manipulates or misleads users into making choices they may not otherwise make. In financial services, website and application design may influence how customers respond to an offer, choose a service or complete an online journey. The SEBI amendment directly refers to the CCPA guidelines. Businesses should therefore examine relevant website and app interfaces against the specific dark-pattern practices identified in those guidelines. This is different from a general requirement to redesign every financial application. The prohibition concerns the practices covered by the referenced guidelines. What Happens if Someone Publishes an Advertisement Without a Company's Permission? Unauthorised third-party advertising is covered by Regulation 16L(2). The provision addresses advertisements published on any platform without the regulated entity's consent. Once the regulated entity becomes aware of such an advertisement, it must take the prescribed action. Required Actions Requirement What the Regulated Entity Must Do Initial response Initiate appropriate action within seven days of becoming aware. Legal measures Include legal action where appropriate Supervisory intimation Inform the relevant supervisory body Subsequent reporting Report the action taken and its outcome Website disclosure Prominently publish details of the incident, third party and actions taken The seven-day period is an important requirement because it begins when the regulated entity becomes aware of the unauthorised advertisement. Businesses may find it useful to establish a process for escalating such incidents internally. Marketing, legal and compliance teams can then coordinate the required response without losing time identifying who is responsible. What Has Changed for Mutual Funds and Asset Management Companies? The second SEBI notification, numbered SEBI/LAD-NRO/GN/2026/324, changes the advertising provisions under the SEBI (Mutual Funds) Regulations, 2026.  Its main purpose within the notified text is to replace existing references to the Fifth Schedule with references to the Common Advertisement Code. Amendment to Regulation 28 In Regulation 28, the reference to the Fifth Schedule is replaced with a reference to Chapter IIID of the SEBI (Intermediaries) Regulations, 2008. Amendment to Regulation 81(l) A corresponding change has been made in Regulation 81(l). The amended provision refers to Chapter IIID rather than the Fifth Schedule. Removal of the Fifth Schedule The notification expressly omits the Fifth Schedule from the Mutual Funds Regulations, 2026. This does not mean that mutual fund advertising is becoming unregulated. Instead, the applicable reference is being changed to the common chapter. What Does This Mean for Mutual Fund Advertising? Mutual funds and AMCs should assess their promotional practices against the relevant common requirements. These include: Accuracy and clarity of advertisements. Applicable entity information and disclaimers. Restrictions on misleading return representations. Celebrity endorsement conditions. Ratings and rankings. Promotional incentives. Relevant reporting and supervisory requirements. The second amendment does not itself change mutual fund investment limits, NAV calculations or redemption rules. Its stated changes concern advertisement-related provisions.  SEBI Advertising Rules: Old vs New Requirements The amendments introduce a common chapter and change the regulatory references governing mutual fund advertisements. It is important not to assume that every requirement is completely new. Some restrictions may already have existed under earlier SEBI regulations, circulars or advertising codes. The following table focuses on the changes established by the two notifications. Compliance Area Earlier Position Amended Position Advertisement framework Chapter IIID was not present in the Intermediaries Regulations, 2008 New Common Advertisement Code inserted. Regulated entities Earlier obligations depended on the applicable regulations and directions Chapter IIID expressly identifies covered entities. Mutual Fund Regulation 28 Referred to the Fifth Schedule Refers to Chapter IIID Mutual Fund Regulation 81(l) Referred to the Fifth Schedule Refers to Chapter IIID Fifth Schedule Part of the Mutual Funds Regulations, 2026 Omitted Celebrity advertising Earlier requirements required comparison with prior instruments Regulation 16K establishes common endorsement provisions Reporting Earlier requirements depended on applicable rules and circulars Regulation 16P provides for SEBI-specified reporting Non-compliance Existing regulatory enforcement mechanisms applied Regulation 16Q expressly addresses violations of the common code A full historical comparison of each advertising restriction would require examining the relevant earlier SEBI circulars and regulatory provisions. For businesses, the immediate priority is understanding the amended requirements that will apply after commencement. SEBI Common Advertisement Code 2026: Implementation Timeline Both amendments contain the same commencement provision. They were issued on 8 October 2026, published in the Gazette on 9 October 2026, and are stated to come into force on the 180th day from Gazette publication. The calculated commencement date is 7 April 2027, based on the 180-day rule and Gazette publication date. Businesses should confirm whether SEBI issues any subsequent amendment or clarification affecting commencement. Is There a Separate Grace Period? The attached notifications do not expressly provide a general additional grace period after commencement. They also do not prescribe one universal deadline for auditing all previous advertisements. However, reviewing advertisements that will remain active after commencement is a sensible compliance measure. Who Will Supervise Advertisement Compliance? Regulation 16G(4) identifies supervisory bodies for the covered entities. Regulated Entity Supervisory Body Stockbrokers Stock exchanges Online Bond Platform Providers Stock exchanges Depository Participants Depositories Investment Advisers Investment Adviser Administration and Supervisory Body Research Analysts Investment Adviser Administration and Supervisory Body Mutual Funds and AMCs Association of Mutual Funds in India Portfolio Managers Association of Portfolio Managers in India These bodies are relevant to the approval and supervisory provisions established under the code. Advertisement Approval Prior approval is specifically required for advertisements featuring celebrities under Regulation 16K. The notification does not state that every ordinary advertisement must undergo the same approval process. Advertisement Reporting Regulation 16P provides that advertisement reporting requirements will apply as specified by SEBI from time to time. Businesses should check the relevant directions rather than assuming a monthly, quarterly or other universal filing schedule. Regulatory Action Regulation 16Q also allows SEBI to direct supervisory bodies to take appropriate action in cases involving violations. How Will the New Advertisement Code Affect Financial Businesses? The effect will depend on the type of regulated entity and its marketing activities. Businesses relying heavily on digital promotions, celebrity campaigns or performance-related advertising may have more material to review than those using limited factual communications. Stockbrokers and Trading Platforms Stockbrokers may need to review advertisements promoting trading services, mobile applications and other brokerage offerings. Particular attention should be given to promotional incentives, return claims and misleading messages. Mutual Funds and AMCs Mutual fund companies must consider the updated regulatory references together with the common advertising provisions. Advertising teams may need to review disclaimers, schemes used as examples, celebrity arrangements and promotional claims. Investment Advisers and Research Analysts These entities should pay attention to the distinction between educational or analytical communication and promotional content. Claims concerning returns, expertise or performance must also be assessed against the applicable restrictions. Portfolio Managers Advertisements involving historic performance, ratings and investment-related claims may require careful review. The regulation restricts misleading performance statements and requires the appropriate treatment of rankings. Financial Marketing Agencies Marketing agencies working for regulated entities may need to adjust creative review processes. A financial advertisement should not go live merely because the marketing team has approved its design. The regulated entity's relevant compliance requirements must also be considered. Likely Business Impact Business Function Possible Effect Marketing Review and revision of advertisements Legal Interpretation of restrictions and approval requirements Compliance Applicability assessment and ongoing monitoring Digital operations Website and application design review Finance Review of celebrity endorsement expense allocation Agency management Coordination with outside advertising partners These are practical implications and should not be presented as separately prescribed staffing or departmental requirements. What Are the Risks of Not Following SEBI Advertisement Rules? Regulation 16Q provides for action when the Common Advertisement Code or circulars issued under it are violated. SEBI may act under Chapter V of the Intermediaries Regulations, applicable provisions of relevant legislation or other SEBI regulations. It may also direct supervisory bodies to act. Regulatory Consequences The notification gives SEBI enforcement powers but does not prescribe one fixed monetary penalty for every type of advertising violation. The consequences in a particular matter will depend on the relevant legal provisions and regulatory action. Practical Business Consequences A non-compliant advertisement could also create operational problems, including: Additional review and correction of promotional material. Withdrawal or interruption of affected campaigns. Legal and compliance expenses. Reputational concerns. Greater internal scrutiny of advertising practices. These are potential business implications, not automatic statutory penalties. Restriction During Suspension Regulation 16L(1)(h) expressly prohibits a suspended regulated entity from issuing advertisements during its suspension, whether directly or indirectly, alone or jointly with another regulated entity. Businesses should treat this as a distinct regulatory obligation. What Challenges May Businesses Face During Implementation? The new code may require organisations to change their advertising review arrangements, particularly where promotional content is produced by several teams or external agencies. Reviewing Existing Content A financial company may have promotional material appearing across different channels. Reviewing advertisements that will remain active after commencement may require coordination between marketing and compliance personnel. Updating Disclosures Some advertising materials may require changes to entity information, disclaimers or the way particular claims are presented. Managing Celebrity Endorsements Celebrity advertising requires attention to the permitted scope of endorsements, prior approval and expense allocation. Businesses using such campaigns should consider these matters before publication. Managing Compliance Costs The notifications do not prescribe a general compliance review fee. However, businesses may incur operational expenses for legal review, content revision, staff training and changes to internal procedures. Such costs will vary according to the organisation's existing arrangements. What Should SEBI-Regulated Businesses Do Next? Businesses should start by understanding which parts of the code apply to their activities. A practical compliance review can be organised around the following actions. Confirm applicability: Determine whether the organisation is a regulated entity covered by Chapter IIID. Identify advertising activities: Review advertisements issued directly or through outside parties. Check mandatory information: Examine registration details, entity identification and applicable disclaimers. Review promotional claims: Identify misleading statements, prohibited assurances, testimonials and improper performance references. Assess influencer campaigns: Check whether the relevant persons meet the celebrity definition and whether prior approval is required. Review incentive programmes: Determine whether promotional offers involve prohibited inducements. Examine digital interfaces: Assess relevant website and application designs against the dark-pattern prohibition. Prepare for unauthorised advertisements: Establish practical internal responsibilities for responding to such incidents. Check supervisory requirements: Monitor applicable approval, disclaimer and reporting directions. Review ongoing compliance: Keep advertising practices under review as additional official directions are issued. These steps are recommendations for organising compliance work. They do not create separate statutory filing or certification requirements. SEBI Advertisement Compliance Checklist Compliance Area Action Legal Basis Applicability Determine whether the entity and advertisement are covered 16G–16H Educational communication Check whether an exclusion applies 16J Entity information Include required basic details 16I Disclaimer Apply the relevant SEBI-prescribed disclaimer 16I Securities and scheme examples Place the specified disclaimer correctly 16L Celebrity advertisements Obtain prior approval where required 16K Advertising accuracy Avoid misleading or confusing content 16L, 16O Promotional incentives Avoid prohibited inducements 16L Unauthorised advertisements Follow the seven-day response and related disclosure requirements 16L Dark patterns Avoid covered practices 16M Ratings and rankings Follow applicable verification and information conditions 16N Reporting Follow SEBI-prescribed requirements 16P Internal review process Maintain a practical advertisement review arrangement Recommended measure Businesses should keep the distinction clear between obligations expressly stated in the code and recommended internal measures supporting those obligations. How Can Corpseed Help with SEBI Advertisement Compliance? For financial businesses, preparing for the Common Advertisement Code is not just about editing a few words in advertisements. The first task is understanding which provisions apply to the organisation, what must change and which requirements need further verification. Businesses seeking SEBI regulatory compliance services may require support in interpreting the amended regulations and assessing their existing compliance arrangements. Depending on the scope of the engagement and available services, Corpseed can assist with the following areas. 1. SEBI Regulatory Applicability Assessment Understanding whether a business falls within the specified categories of regulated entities and which advertising requirements apply to its operations. 2. Advertisement Compliance Gap Assessment Reviewing existing promotional practices to identify potential differences between current arrangements and the applicable regulatory provisions. 3. Regulatory Compliance Advisory Providing support in understanding SEBI notifications, advertisement restrictions, disclaimer requirements and other relevant provisions. 4. Compliance Documentation Review Assisting with the review of relevant compliance policies, disclosure practices and supporting documentation. 5. Compliance Preparation Supporting businesses in identifying practical actions required for regulatory readiness, including areas where further legal review or internal controls may be necessary. 6. Ongoing Regulatory Support Helping businesses understand subsequent regulatory updates and assess their possible implications for existing operations. Looking for SEBI regulatory compliance services? Businesses can contact Corpseed to discuss applicability assessment, regulatory compliance consulting and relevant compliance support for their operations. Key Takeaways The SEBI Common Advertisement Code 2026 introduces common advertising requirements for specified securities-market intermediaries, mutual funds and asset management companies. Through two amendments dated 8 October 2026, SEBI has inserted Chapter IIID into the Intermediaries Regulations, 2008, and aligned the relevant provisions of the Mutual Funds Regulations, 2026, with this new chapter. The rules cover advertisement disclosures, celebrity endorsements, return-related claims, promotional incentives, ratings, dark patterns and unauthorised third-party advertising. For businesses, the priority is to understand which provisions apply and review relevant promotional practices before the commencement date. The notifications do not require every covered business to obtain a new SEBI registration or a separate advertisement compliance certificate. They establish advertising obligations that must be followed once applicable.

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Summary: Manufacturers of pipe wrenches, spanners, adjustable wrenches and certain types of pliers now have a revised timeline to prepare for mandatory BIS certification. The Ministry of Commerce and Industry, through the Department for Promotion of Industry and Internal Trade (DPIIT), issued the Hand Tools (Quality Control) Order, 2026 on 9 October 2026 under notification S.O. 5561(E). The new Order replaces the Hand Tools (Quality Control) Order, 2025 and identifies nine Indian Standards that covered products must follow. This notification requires that the relevant hand tools conform to their respective Indian Standards and bear the BIS Standard Mark with an appropriate licence. The phased implementation shall commence from 1 April 2027 for general enterprises, 1 July 2027 for small enterprises, and 1 October 2027 for micro enterprises. For manufacturers, this means checking whether their products fall under the notification, reviewing the applicable standards and preparing for certification before their deadline. Importers sourcing these tools from overseas manufacturers also need to verify the relevant BIS requirements . The Order includes limited exemptions, but these come with specific conditions. Understanding those conditions is just as important as knowing the certification deadline. Hand Tools Quality Control Order 2026 at a Glance Particular Details Notification Hand Tools (Quality Control) Order, 2026 Issuing Ministry Ministry of Commerce and Industry Issuing Department DPIIT Notification Number S.O. 5561(E) Date of Issue 9 October 2026 Gazette Publication 9 October 2026 Governing Legislation Bureau of Indian Standards Act, 2016 Relevant Section Section 16 Earlier Notification Hand Tools (Quality Control) Order, 2025 Products Covered Hand tools listed against nine Indian Standards Certification Requirement BIS Standard Mark under a licence Applicable Scheme Scheme-I, Schedule-II of the BIS (Conformity Assessment) Regulations, 2018 General Enterprise Deadline 1 April 2027 Small Enterprise Deadline 1 July 2027 Micro Enterprise Deadline 1 October 2027 Certification and Enforcement Authority Bureau of Indian Standards Express Exemptions Domestic manufacture for export and qualifying R&D imports The Order itself came into force when it was published in the Official Gazette. The later 2027 dates are the scheduled dates for compliance with the Indian Standards. They should not be confused with the date the Order was issued. What Is the Hand Tools Quality Control Order 2026? The Hand Tools Quality Control Order 2026 is a government notification that makes specified Indian Standards compulsory for certain hand tools. Indian Standards set out requirements for particular products. Depending on the standard, these may address dimensions, materials, mechanical performance, testing methods or marking. Before treating a product as covered, the manufacturer must check whether it falls within one of the categories listed in the Order. The notification does not cover every product commonly sold as a hand tool. Regarding covered products, the primary requirements are quite simple: the tool should conform to the Indian Standard and have the Standard Mark on an appropriate license from BIS when the date of implementation is applicable. This has a practical effect on manufacturers producing several product varieties. A factory making adjustable wrenches and ring spanners, for instance, cannot assume that both products fall under one Indian Standard merely because they serve similar purposes. Each product category needs to be examined against the correct specification. What Is the Legal Framework Behind the Hand Tools QCO 2026? The notification has been issued under Section 16 of the Bureau of Indian Standards Act, 2016. It also refers to the BIS (Conformity Assessment) Regulations, 2018. Role of DPIIT DPIIT is the government department that issued the notification after consultation with BIS. Through Quality Control Orders, the Central Government can make conformity with specified Indian Standards compulsory for notified products. This creates a legal requirement rather than leaving conformity entirely to a manufacturer's voluntary choice. Role of the Bureau of Indian Standards BIS is responsible for certification and enforcement under the 2026 Order. Its role includes administering the applicable product certification process, granting licences where requirements are satisfied and enforcing the relevant provisions of the BIS framework. Manufacturers should understand that certification is connected to specific products, standards and manufacturing arrangements. A licence is not an unrestricted approval for every product a business makes. Why Does Scheme-I Matter? The notification requires the Standard Mark under a licence issued according to Scheme-I of Schedule-II of the BIS (Conformity Assessment) Regulations, 2018. Scheme-I is associated with product certification and use of the Standard Mark, commonly called the ISI Mark. For a covered hand tool, a manufacturer's own declaration that the product meets an Indian Standard is not enough to replace the required BIS licence. Why Has the Government Issued the Hand Tools QCO 2026? The notification states that the Central Government considered the Order necessary or expedient in the public interest. It does not provide detailed findings about defective tools, industrial accidents or particular market complaints. Such reasons should therefore not be presented as confirmed explanations for the notification. From a regulatory perspective, making Indian Standards compulsory can help establish consistent product requirements. Hand tools are used in workshops, factories, construction activities, installation work and routine equipment maintenance. Their performance depends on factors such as design, suitability for the intended use and manufacturing quality. Applying recognised specifications can support clearer quality checks by manufacturers and industrial buyers. The Order also gives manufacturers defined standards against which covered products must be assessed. Instead of relying only on a supplier's own specifications, businesses can identify the applicable Indian Standard and verify the relevant certification. These are general benefits of product standardisation, not outcomes specifically guaranteed by the government. What Has Changed Under the Hand Tools Quality Control Order 2026? The most important development is the replacement of the 2025 Order with a new notification that lists updated Indian Standards and revised implementation dates. The 2026 Order makes the following provisions clear. 1. The 2025 Order Has Been Superseded This notification hereby replaces the Hand Tools (Quality Control) Order, 2025, without prejudice to anything done or not done prior to such replacement. Manufacturers should therefore refer to the 2026 Order when checking the currently notified implementation schedule, while also considering any relevant past compliance position. 2. Nine Indian Standards Are Listed The Order specifies nine standards covering pipe wrenches, spanners, adjustable wrenches, chain pipe wrenches, slugging wrenches and combination side-cutting pliers. A manufacturer producing several categories may need to examine more than one standard. 3. The BIS Standard Mark Is Compulsory Covered hand tools must bear the Standard Mark under a BIS licence, in accordance with the applicable certification framework. The requirement goes beyond simply obtaining an independent laboratory test report. 4. Compliance Dates Differ by Enterprise Category There are different implementation timelines for the Order between general enterprises, small enterprises, and micro enterprises. Small and micro enterprises get more time to prepare, but they do not get exemption forever. 5. Export and R&D Exemptions Are Provided This Order does not cover products that will be exported and were produced in domestic industry. This Order also provides exemption of hand tools for research & development in limited quantity. 6. BIS Will Handle Certification and Enforcement BIS is identified as the certification and enforcement authority. Violations are punishable under the provisions of the BIS Act, 2016. Hand Tools QCO 2025 vs 2026: What Is Different? The 2026 notification makes two changes particularly relevant to manufacturers: it revises the implementation dates and replaces the earlier editions of the listed Indian Standards. The previous Order, S.O. 5596(E), was issued on 4 December 2025. Comparing that document with the October 2026 notification makes the changes easier to understand.  Comparison of Old and New Requirements Compliance Area 2025 Order 2026 Order Notification Number S.O. 5596(E) S.O. 5561(E) Notification Date 4 December 2025 9 October 2026 General Enterprise Deadline 1 October 2026 1 April 2027 Small Enterprise Deadline 1 January 2027 1 July 2027 Micro Enterprise Deadline 1 April 2027 1 October 2027 Applicable Standards Earlier editions of nine standards Revised editions of nine standards BIS Standard Mark Mandatory under licence Requirement retained Export Exemption Available Retained R&D Import Exemption Conditional exemption Retained Enforcement Authority BIS BIS Revised Indian Standards: Old vs New Indian Standard Under 2025 Order Indian Standard Under 2026 Order IS 4003 (Part 1):1978 IS 4003 (Part 1):2026 IS 4003 (Part 2):1986 IS 4003 (Part 2):2026 IS 2028:2004 IS 2028:2026 IS 2029:1998 IS 2029:2026 IS 6149:1984 IS 6149:2025 IS 4123:1982 IS 4123:2024 IS 4508:1992 IS 4508:2024 IS 4509:1992 IS 4509:2024 IS 3650:1981 IS 3650:2026 For manufacturers, the updated standards deserve particular attention. A business that previously examined an older version of a standard should not assume that the technical requirements remain unchanged. It is necessary to examine the current standard before relying on earlier testing or technical documents. Whether an existing BIS licence needs modification or any additional assessment depends on the applicable BIS requirements. The additional six months in the revised implementation schedule also gives affected businesses more time for preparation. It does not remove the underlying certification requirement. Which Hand Tools Are Covered Under the Quality Control Order 2026? The notification covers products falling within nine specified Indian Standards. These include several varieties of wrenches and spanners, along with combination side-cutting pliers. Product-Wise List of Applicable BIS Standards S. No. Product Indian Standard 1 Pipe Wrenches - Part 1, General Purpose IS 4003 (Part 1):2026 2 Pipe Wrenches - Part 2 IS 4003 (Part 1):2026 3 Open Jaw Wrenches (Spanners) IS 4003 (Part 1):2026 4 Ring Wrenches (Spanners) IS 2029:2026 5 Single Ended Open-jaw Adjustable Wrenches IS 6149:2025 6 Chain Pipe Wrenches IS 4123:2024 7 Open-Ended Slugging Wrenches (Spanners) IS 4508:2024 8 Ring Slugging Wrenches (Spanners) IS 4509:2024 9 Combination Side Cutting Pliers IS 3650:2026 The list is taken from the official Gazette.  Pipe Wrenches Pipe wrenches are commonly used in plumbing, mechanical maintenance and industrial installation work. Their jaws grip pipes and similar components so that they can be turned. The notification specifies two parts of IS 4003. Manufacturers must check which part applies to their particular product. A business manufacturing more than one pipe wrench design should not assume that a single product description or licence automatically covers every variety. Open Jaw and Ring Spanners Open-jaw spanners and ring spanners are used to tighten or loosen nuts and bolts. The 2026 Order lists IS 2028:2026 for open-jaw wrenches and IS 2029:2026 for ring wrenches. Although both tools perform fastening work, they have different designs and corresponding product standards. Manufacturers should evaluate them separately when preparing for BIS certification. Adjustable Wrenches Single-ended open-jaw adjustable wrenches fall under IS 6149:2025. These tools allow the jaw opening to be adjusted for different fastener sizes. Manufacturers should examine the applicable specification for the exact product requirements. Chain Pipe Wrenches Chain pipe wrenches are covered by IS 4123:2024. These tools use a chain arrangement to grip and turn suitable pipes or cylindrical components. Their construction differs from that of conventional pipe wrenches. Manufacturers producing chain pipe wrenches should therefore check the separate standard rather than relying on the requirements for ordinary pipe wrenches. Slugging Wrenches The notification covers open-ended slugging wrenches under IS 4508:2024 and ring slugging wrenches under IS 4509:2024. These are heavy-duty fastening tools commonly used in industrial maintenance. The relevant standard determines the specific technical requirements for each category. Combination Side Cutting Pliers Combination side-cutting pliers are included under IS 3650:2026. These tools are used for gripping, bending and cutting operations, depending on the product design. Manufacturers should verify the relevant specifications before beginning product testing or certification preparation. Does the QCO Apply to Every Hand Tool? No. The Order identifies particular products and standards. A manufacturer producing hammers, screwdrivers, saws or other tools should not automatically assume those products fall under this specific notification. Each product must be assessed against the published scope of the Order and relevant Indian Standards. Other regulations may apply independently. The Gazette also states that the latest versions of the Indian Standards, including amendments notified by BIS, will apply. When Does BIS Certification Become Mandatory for Hand Tools? The implementation dates are spread across three stages in 2027. Implementation timeline under the 2026 Order General enterprises 1 April 2027 Other than micro and small enterprises Small enterprises 1 July 2027 As defined under the MSMED Act Micro enterprises 1 October 2027 As defined under the MSMED Act Deadline for General Enterprises: 1 April 2027 Manufacturers outside the micro and small enterprise categories are covered by the earliest scheduled implementation date. This includes medium enterprises, since the notification does not provide a separate delayed date for them. Deadline for Small Enterprises: 1 July 2027 Eligible small enterprises have until 1 July 2027. They should use the additional time to review the technical requirements, identify any manufacturing gaps and prepare for the applicable BIS licensing process. Deadline for Micro Enterprises: 1 October 2027 Micro enterprises have the latest implementation date. The extended period is intended to provide more preparation time under the notified schedule. After the applicable date, covered products must satisfy the requirements unless a stated exemption applies. How Should MSMEs Confirm Their Category? The Order refers to micro and small enterprises as defined under the Micro, Small and Medium Enterprises Development Act, 2006. Businesses should confirm their correct classification under the applicable MSME framework instead of assuming that every enterprise with an Udyam registration qualifies for the latest deadline. Is BIS Certification Mandatory for Hand Tool Manufacturers? Yes, for products covered by the notification after their applicable implementation date, unless an exemption applies. The Order requires conformity with the corresponding Indian Standard and the BIS Standard Mark under a licence. What Does the ISI Mark Mean? The ISI Mark is the product certification mark associated with BIS Scheme-I. It shows that the manufacturer has obtained authorisation to use the Standard Mark for products covered by the relevant licence. For hand tool manufacturers, this means product testing alone cannot be treated as equivalent to having a BIS licence. Who Needs BIS Certification? The certification requirement is centred on the manufacturing entity and its covered products. Indian producers will have to evaluate the relevant Indian product certification process. Foreign producers wishing to sell their covered hand tools in India will have to evaluate the relevant certification process for foreign manufacturers. Importers and distributors should check product and manufacturer certification rather than assuming that an ordinary trading licence replaces the required BIS product licence. Are Imported Hand Tools Covered Under the Order? Imported hand tools intended for the Indian market require attention when they fall within the categories covered by the QCO. The notification does not provide a general exemption for imported products. What Should Indian Importers Check? Importers should examine the exact product, corresponding Indian Standard and manufacturer's certification status. Before placing orders for covered goods, practical checks include: Confirming the product category and notified standard. Checking whether the applicable implementation date has arrived. Verifying that the foreign manufacturer has the relevant BIS licence, where required. Confirming that the licence covers the product being imported. Reviewing whether any stated exemption genuinely applies. This can help importers identify regulatory issues before goods are shipped. BIS Certification for Foreign Manufacturers BIS operates the Foreign Manufacturers Certification Scheme (FMCS), through which eligible overseas manufacturers can apply for product certification. The procedure can involve evaluation of the manufacturing facility, testing arrangements, an Authorised Indian Representative and other applicable conditions. Foreign manufacturers should refer to current BIS guidance for the actual application requirements.  What Exemptions Are Available Under the Hand Tools QCO 2026? The notification provides two important exemptions. Exemption for Domestically Manufactured Goods Intended for Export Goods manufactured in India for export are excluded from the Order. Manufacturers supplying both domestic and overseas customers should distinguish the relevant products and transactions when determining whether this exemption applies. The exemption should not be used for hand tools intended for domestic sale. Exemption for Research and Development Imports The notification also exempts up to 200 goods or articles per year imported by hand tool manufacturers for research and development, subject to all specified conditions. Condition Requirement Purpose Research and development Eligible importer Manufacturer of hand tools Quantity 200 goods or articles per year Commercial sale Not permitted Disposal Goods must be disposed of as scrap Record-keeping Year-wise records must be maintained Government verification Records must be produced when requested The R&D exemption is not intended for normal commercial imports. A business cannot rely on this provision to import products for market testing through commercial sales or ordinary distribution if doing so would violate the conditions. The exemption is useful only when the imported goods meet the stated purpose, quantity and disposal requirements. How Can Manufacturers Obtain BIS Certification for Hand Tools? Manufacturers looking for BIS certification for hand tools should begin with the product standard, not the application form. Before applying, the business needs to know which standard applies, whether its manufacturing arrangements can meet the relevant requirements and what product varieties will be included in the certification application. The following explains the general preparation and licensing stages under the BIS product certification framework. Step 1: Identify the Correct Indian Standard Start by reviewing the manufacturer's product range. A business producing ring spanners and adjustable wrenches, for example, needs to examine the separate standards for those products. The actual product scope should be checked before deciding on the certification requirements. Step 2: Examine the Technical Requirements Once the standard is identified, manufacturers should obtain and review the relevant Indian Standard. The review may involve product specifications, manufacturing processes, testing arrangements and marking requirements. Any technical gaps can then be assessed before the certification application. Step 3: Prepare the Manufacturing Facility BIS product certification involves assessing relevant manufacturing and testing capabilities. Depending on the certification procedure and product, manufacturers may need to demonstrate suitable production arrangements, quality controls and testing facilities. The requirements should be confirmed using the applicable official BIS guidance. Step 4: Prepare and Submit the Application Manufacturers should use the application procedure prescribed for the relevant BIS certification route. Domestic manufacturers can refer to the BIS Manakonline system, while foreign manufacturers should review the FMCS requirements. The application should identify the manufacturing premises, applicable Indian Standard and relevant product scope. Step 5: Complete the Applicable Assessment The BIS certification process can involve document assessment, factory inspection and product testing. The exact procedure depends on the certification route and applicable BIS requirements. Manufacturers should not assume that sending a product to a laboratory automatically completes the certification process. Step 6: Obtain the BIS Licence Once all the requirements have been satisfied and the licence is issued by BIS, the manufacturer can apply the Standard Mark as per the scope of the licence. The issuance of a licence for a single product or standard does not necessarily mean that the licence applies to all types of hand tools manufactured in the facility. Step 7: Complying with Certification Requirements Once a certificate has been obtained, compliance with all licence conditions will still remain the responsibility of the manufacturers. They should monitor changes to Indian Standards, maintain required records and follow BIS instructions relating to marking, surveillance and licence maintenance. What Testing and Quality Requirements Apply to Hand Tools? The Hand Tools QCO 2026 lists the applicable Indian Standards but does not reproduce their full technical specifications. Manufacturers need to refer to the actual standards to identify the tests and requirements relevant to their products. Product Design and Dimensions Depending on the standard, requirements may address product construction, size, dimensions or other design characteristics. Manufacturers should not rely only on market descriptions such as general-purpose wrench or heavy-duty spanner when deciding whether their product conforms. Material and Mechanical Performance Relevant standards may contain requirements relating to materials and mechanical performance. The exact criteria must be checked against the applicable Indian Standard. It would be inaccurate to assign the same strength or durability test to all nine product categories without examining those specifications. Product Testing Product testing is used to establish conformity with relevant requirements. The tests, sampling arrangements and laboratory conditions applicable to a particular manufacturer must be established under the relevant standard and BIS certification procedure. Product Marking Covered products must carry the Standard Mark under a BIS licence after their respective implementation dates. Any additional product marking or identification requirements should be checked against the applicable standard and licence conditions. What Documents Are Required for BIS Certification for Hand Tools? The Hand Tools QCO itself does not provide a complete checklist of documents for certification applications. The documents required by BIS depend on the relevant certification procedure, manufacturing arrangements and product category. Manufacturers should refer to official BIS application guidance rather than treating a general consultancy checklist as a statutory document list. Document or Information Purpose Status BIS licence application Request certification for the relevant product and standard As required by BIS procedure Manufacturing premises information Identify the manufacturing facility According to BIS requirements Product specifications Establish the product being certified Application and conformity assessment Testing and quality-control information Support product conformity assessment According to the applicable scheme BIS licence Authorise use of the Standard Mark within its scope Required for covered products R&D import records Record qualifying research and development imports Expressly required by the QCO when using the exemption Product classification worksheet Help identify the applicable Indian Standard Recommended internal record For manufacturers importing hand tools under the R&D exemption, year-wise records are particularly important because the notification expressly requires them. What Is the Cost of BIS Certification for Hand Tools in India? There is no single certification cost stated in the Hand Tools Quality Control Order 2026. The final expenditure can vary depending on the manufacturer's product range, certification route, testing requirements and readiness of the manufacturing facility. BIS Application and Licence Charges BIS prescribes relevant charges under its product certification framework. Manufacturers should check the current official fee schedule for application, inspection, licence and marking fees. Product Testing Expenses Testing costs can depend on the applicable standard, number of relevant product varieties and tests required. The QCO does not publish separate testing prices for the nine listed standards. Manufacturing and Quality-Control Expenses Some manufacturers may already have the technical arrangements needed for certification. Others may need to review their production controls, testing equipment or product specifications. Any expenditure on these adjustments will depend on the manufacturer's existing facilities and actual requirements. Foreign Manufacturer Certification Costs Overseas manufacturers should examine the applicable FMCS fee structure and related conditions. The domestic certification costs are not to be assumed as the complete cost of the certification of a foreign manufacturer’s products. Companies wishing for an estimate need to determine the relevant standard and the scope of the certification process. The BIS certification consultant will help in understanding the cost components without providing a definite number. How Will the Hand Tools QCO 2026 Affect Businesses? The notification is particularly relevant to businesses manufacturing, importing or supplying the listed products. Its practical effects will not be identical across the hand tool industry. Impact on Indian Manufacturers Manufacturers need to check whether their existing production and certification arrangements cover the updated standards. Businesses producing several covered products may have to review each standard separately. Impact on Micro and Small Enterprises Smaller manufacturers receive additional preparation time. However, they may need to plan for technical assessments, testing and certification expenditure before their applicable deadlines. Impact on Importers Importers should coordinate with overseas manufacturers regarding product conformity and BIS certification. The manufacturer's certification position can become an important part of procurement planning for covered tools. Impact on Distributors and Industrial Buyers The distributors and industrial buyers may want to scrutinize the certification process for suppliers. The best course of action is to verify the Standard Mark and licensing for the product in question. Business Category Main Concern Practical Preparation Domestic manufacturer Product conformity and licensing Review standards and certification status Micro manufacturer October 2027 implementation Assess readiness and available resources Small manufacturer July 2027 implementation Plan testing and licensing preparation Foreign manufacturer BIS certification for the Indian market Review FMCS requirements Importer Overseas supplier compliance Verify relevant manufacturer licence Distributor Product sourcing Check supplier certification information Distributor Procurement assurance Review applicable standards and marking What Are the Penalties for Non-Compliance with the Hand Tools QCO 2026? The notification identifies BIS as the certification and enforcement authority. It also provides that any person contravening the Order will be punishable under the BIS Act, 2016. The notification does not independently prescribe a particular fine or imprisonment term. The applicable statutory consequence must be determined from the BIS Act and the nature of the violation. What Risks Can Businesses Face? A failure to meet mandatory certification requirements may create both legal and commercial problems. Potential business effects include difficulty supplying covered products, additional corrective expenditure and delays in fulfilling orders. Businesses may also face questions from customers and industrial buyers about certification and product conformity. These are possible consequences, not automatic penalties established by the notification. What Are the Benefits and Challenges of Mandatory BIS Certification? Mandatory standards can make product requirements more consistent, but certification also requires time and resources. Potential Benefits Technical benchmarking standards: It is possible to develop against Indian Standards that are recognized.  Product quality certification: Certification provides a formal process of conformity assessment. Buyer confidence: Industrial customers can check whether a product falls within a BIS licence. Better manufacturing controls: Certification preparation may encourage businesses to review their production and testing arrangements. More consistent sourcing: Importers and buyers can use the applicable standard and certification information when evaluating suppliers. Practical Challenges Multiple standards: Manufacturers producing different tool categories may need to examine several standards. Testing preparations: Some organizations might need to make certain technological preparations prior to getting certified. Costs associated with compliance: Application, testing, assessment and continuous licensing expenses. Foreign supplier coordination: Importers may need to work with overseas manufacturers to establish the relevant certification position. Timeline management: Businesses must prepare for the correct implementation date rather than assuming that all manufacturers have until October 2027. For smaller manufacturers, these challenges may be more noticeable because certification work can place demands on limited technical and financial resources. What Compliance Mistakes Should Manufacturers Avoid? A few incorrect assumptions can make certification preparation more difficult. Treating All Hand Tools as One Product Category The QCO covers particular hand tools under nine standards. Manufacturers should not assume that every tool they produce is covered by the same standard. Using Earlier Editions Without Checking the New Standards The 2026 Order lists revised editions. Earlier test records or specifications should be checked before being relied upon. Assuming MSME Registration Automatically Gives the October Deadline The delayed dates differ between small and micro enterprises. The business's applicable classification must be established. Confusing Testing with Certification A test report is not automatically a BIS licence, and it does not by itself authorise use of the Standard Mark. Treating the R&D Exemption as a Commercial Import Allowance The exemption is conditional and expressly prohibits commercial sale. Ignoring R&D Record-Keeping Requirements Manufacturers using the R&D exemption must maintain year-wise records and make them available when requested by government authorities. What Should Manufacturers Do Before the 2027 Deadlines? Manufacturers should start with an assessment of their existing products and certification position. A practical preparation sequence is: Review the product range. Identify all products potentially covered by the Order. Match the relevant standards. Determine the exact Indian Standard for each covered product. Confirm enterprise classification. Establish whether the general, small or micro implementation date applies. Look at the BIS licenses that exist. Examine the products covered and the standards for which certification already exists. Evaluate manufacturing capability. Determine what problems there may be. Evaluate testing requirements. Examine the Indian Standards and BIS process. Prepare certification information. Follow the correct BIS application route. Coordinate with suppliers. Ensure all manufacturing and certification requirements for imported products are taken care of. Exemptions should be evaluated with caution. Ensure that all the conditions under which the exemption was granted have been fulfilled. Keep checking for any official developments. See if BIS or DPIIT makes any more changes. These measures are only recommendations and not a separate process created under QCO. Is the Hand Tools QCO 2026 Beneficial or an Additional Burden for MSMEs? For micro and small manufacturers, the 2026 Order brings both a compliance responsibility and additional preparation time. Manufacturers that already maintain suitable product testing and quality-control arrangements may find it easier to prepare for the applicable BIS certification requirements. However, businesses without established testing facilities or documented manufacturing controls may need to invest additional time and money. The revised deadlines are therefore particularly relevant for smaller enterprises. Small businesses have up to 1 July 2027 and micro-businesses up to 1 October 2027. The later deadlines will give sufficient time to evaluate the requirements but will not make the firms immune to mandatory conformity. The value of the additional time will depend on whether manufacturers use it to identify their relevant standards, review their existing facilities and prepare for certification. How Can Corpseed Help with BIS Certification for Hand Tools? The first challenge for many manufacturers is establishing exactly which Indian Standard applies to their product. After that comes the work of reviewing certification requirements, technical documents and manufacturing readiness. Corpseed helps manufacturers and importers with regard to regulatory assistance and BIS certification for hand tools by enabling them to know all the necessary regulations and how to get certified. 1. BIS Certification Consultancy Corpseed can assist manufacturers in understanding the applicable BIS licensing framework, product coverage and certification requirements. 2. ISI Certification Services Businesses seeking an ISI Mark licence can obtain support in identifying the relevant standard, reviewing application requirements and preparing certification-related information. 3. Product Compliance Services Manufacturers dealing in several hand tool categories may need to evaluate multiple standards. Corpseed can support product applicability reviews and compliance preparation. 4. Technical Documentation Assistance Certification preparation may require manufacturers to organise product specifications, manufacturing details and testing information. Corpseed can assist in reviewing and preparing relevant documentation based on the applicable BIS requirements. 5. Product Testing Coordination Where testing is required, Corpseed can assist businesses in understanding the applicable requirements and coordinating with appropriate testing facilities. 6. Importer and Foreign Manufacturer Compliance Support Businesses importing covered hand tools can seek assistance in understanding relevant BIS certification obligations and foreign manufacturer requirements. 7. Compliance Readiness Assessment Manufacturers can also review their existing certification arrangements, product specifications and relevant compliance gaps before the scheduled implementation dates. Manufacturers and importers requiring BIS certification for hand tools can contact Corpseed for guidance on the applicable Indian Standards, BIS licence requirements and certification preparation. Key Takeaways The Hand Tools (Quality Control) Order, 2026 replaces the previous 2025 Order and specifies revised Indian Standards and implementation dates for covered hand tools. The notification requires covered products to comply with their respective Indian Standards and bear the BIS Standard Mark under a licence. The main deadlines are 1 April 2027 for general enterprises, 1 July 2027 for small enterprises and 1 October 2027 for micro enterprises. The Order also provides conditional exemptions for domestically manufactured export goods and limited R&D imports. Manufacturers should begin by checking whether their products fall under the nine notified standards. Those requiring certification should then examine the applicable BIS procedures and prepare for compliance before their implementation date.

Subject

Summary: The Ministry of Textiles has notified the Textiles Committee (Adjudication and Manner of Holding Inquiry and Imposition of Penalty) Rules, 2026, through Notification G.S.R. 873(E), dated 8 October 2026. The rules came into effect on the same day. The notification explains how complaints involving specified violations under the Textiles Committee Act, 1963, will be examined and decided. It covers the process of issuing show cause notices, conducting inquiries, examining evidence, imposing monetary penalties and filing appeals. For textile manufacturers and other businesses covered by the relevant provisions of the Act, the update is worth understanding. A regulatory notice may require a written explanation, supporting records or appearance before an adjudicating officer. Missing an applicable deadline can affect how the case proceeds. The rules also explain what happens after a penalty order is issued, how the order can be challenged and how unpaid penalties may be recovered. However, the notification does not introduce a fresh manufacturing licence or a new product certification requirement for the entire textile industry. It mainly deals with the procedure followed when specified alleged violations are taken up for adjudication. Textiles Committee Penalty Rules 2026: Notification at a Glance Particulars Details Issuing authority Ministry of Textiles, Government of India Notification number G.S.R. 873(E) Notification date 8 October 2026 Date of publication 8 October 2026 Effective date 8 October 2026 Name of rules Textiles Committee (Adjudication and Manner of Holding Inquiry and Imposition of Penalty) Rules, 2026 Governing law Textiles Committee Act, 1963 Nature of notification Final rules Main provisions Complaints, inquiries, penalties, appeals and penalty recovery Number of rules 14 Prescribed forms Form I to Form V Applicability Persons subject to relevant proceedings under the Textiles Committee Act, 1963 General compliance filing deadline Not separately specified The notification follows an earlier draft issued through G.S.R. 746(E), dated 18 August 2026, and published on 19 August 2026. The government invited objections and suggestions on the draft. According to the final Gazette notification, no objections or suggestions were received during the prescribed consultation period. What Are the Textiles Committee Penalty Rules, 2026? The Textiles Committee Penalty Rules, 2026, provide a procedure for dealing with specified alleged violations under the Textiles Committee Act, 1963. In simple terms, the rules explain how an alleged violation reaches the adjudicating officer, how the concerned person gets an opportunity to respond and how a final decision is made. They also explain the procedure for challenging a penalty order. An important part of the framework is that a complaint does not automatically establish liability. The adjudicating officer must follow the prescribed inquiry procedure and consider the evidence before deciding whether a penalty should be imposed. There are basically five major steps that are involved in the process: Step one: A complaint is lodged by the authorised officer regarding the contravention that has been committed. Step two: Notice is issued to the concerned individual with the details of the case against him. Step three: The case is then investigated by the adjudicating officer. Step four: The officer makes an order and issues a decision along with the penalty under the Act. Step five: There can be an appeal against the order as well. These provisions are particularly relevant for businesses that receive notices or become involved in proceedings under the Act. What Is the Regulatory Framework Under the Textiles Committee Act, 1963? The Textiles Committee Act, 1963, provides the legal basis for the Textiles Committee and its statutory functions concerning textiles and textile machinery. The Act deals with matters relating to textile quality, standards and certain regulatory restrictions. The 2026 rules operate within this existing legislation. Role of the Textiles Committee The Textiles Committee performs functions assigned under the Act, including activities relating to quality assessment and standards in the textile sector. Its statutory responsibilities must be understood according to the governing legislation and relevant government orders. The latest notification deals specifically with procedures for adjudication and related matters. It should not be interpreted as expanding every function of the Committee into a new mandatory business approval. How Does Section 17 Relate to the New Rules? Section 17 of the Act addresses prohibition on the export and domestic sales of particular textiles or textile machinery, subject to certain statutory provisions. The 2026 rules refer to specified contraventions associated with this legal framework. Whether a particular business activity violates Section 17 depends on the applicable statutory provision or government order and the facts involved. What Is the Role of Section 17A? Section 17A is identified in the notification as the legal basis for the appointment and functions of the adjudicating officer and appellate authority. The new rules explain the procedure these authorities must follow when conducting inquiries, issuing orders and dealing with appeals. How Does Section 18 Apply? Section 18 addresses offences by companies under the governing Act. Where a company is involved in an alleged contravention, the statutory rules concerning responsibility must be examined. Liability should not be assumed merely because a person is a director, manager or employee. The relevant legal conditions and facts must be considered. What Authority Does Section 22 Provide? Section 22 contains the Central Government's rule-making powers. The Ministry of Textiles has exercised the specified powers under Section 22, read with Section 17A, to notify the 2026 procedural rules. This gives the new rules their legal foundation. Why Were the Textiles Committee Penalty Rules, 2026, Introduced? The notification establishes a defined procedure for examining alleged violations and handling penalty-related proceedings under the Textiles Committee Act, 1963. The rules address several questions that may arise during a regulatory case. For instance, who is authorised to file a complaint? How much time should be provided to respond? Can a person submit documents or appoint a representative? What happens when a penalty order is disputed? The notification provides procedures for each of these matters. A Defined Complaint Procedure Rule 3 specifies who can submit a complaint and how the complaint must be filed. This provides a formal starting point for the adjudication process. Opportunity to Explain the Alleged Violation The rules require the concerned person to receive a show cause notice identifying the alleged contravention. The person can then submit an explanation and supporting documents within the applicable period. Examination of Evidence Before a Decision The adjudicating officer must consider the material presented during the inquiry before deciding whether a contravention has occurred. This is particularly relevant when the allegations depend on documents, inspection findings or disputed facts. A Procedure for Challenging Orders The rules provide an appeal mechanism for persons aggrieved by adjudication orders. An appellate authority can review the order and take action within the powers provided by the rules. Recovery of Unpaid Penalties The notification also explains how a penalty may be recovered when the required payment is not made. From a business perspective, these procedures make it necessary to monitor notices and decisions carefully. The notification does not expressly attribute the rules to an increase in textile violations or failures by manufacturers. Such claims should not be added without supporting evidence. What Has Changed Under the Textiles Committee Rules, 2026? The notification sets out a detailed framework for complaint registration, inquiry, penalty decisions and appeals. Rather than imposing a general new registration requirement, it establishes procedures to be followed in relevant enforcement cases. Regulatory area Procedure under the 2026 rules Meaning for affected businesses Complaint filing Complaints are submitted through Form I Alleged violations are formally recorded. Show cause notice Notice is issued through Form II The concerned person receives details of the allegation. Submission of evidence Documents may be provided through the prescribed procedure Businesses have an opportunity to support their explanation. Inquiry The adjudicating officer examines the matter Evidence is considered before a penalty decision. Penalty determination Factors under Rule 6 are considered Circumstances of the contravention may affect the penalty. Adjudication order A written order must state reasons The basis of the decision is recorded. Appeal Form IV is prescribed An aggrieved person may challenge the order Rectification Apparent errors may be corrected Certain mistakes in orders can be addressed Recovery Form V and recovery procedures apply Unpaid penalties may lead to formal recovery action The practical effect depends on the particular statutory provision and the proceedings initiated. Who Is Covered Under the Textiles Committee Penalty Rules, 2026? The rules apply to proceedings involving the relevant contraventions under the Textiles Committee Act, 1963. This means applicability must be assessed with reference to the governing Act and the allegation concerned. Textile Manufacturers Manufacturers may be affected when an applicable statutory provision concerning their products or activities is allegedly violated. If proceedings are initiated, the manufacturer may need to produce records, explain the relevant facts and respond to the notice. Textile Exporters Exporters may need to consider applicable restrictions under the Act relating to specified textiles or textile machinery. Where a complaint is made, the business must examine the legal basis of the alleged contravention. Companies and Other Business Entities Companies may be involved in proceedings where the governing legislation applies to their activities. The responsibility of individuals associated with a company must be assessed according to the relevant statutory provisions. MSMEs and Small Textile Businesses The rules do not expressly create a general exemption for micro, small or medium enterprises. However, they also do not state that every MSME must complete a new registration or file a separate compliance application. For smaller businesses, the immediate concern is understanding whether a specific legal requirement applies and responding appropriately if proceedings begin. Detailed Rule-Wise Explanation of the Textiles Committee Rules, 2026 The notification contains 14 rules dealing with different stages of adjudication, appeal and penalty recovery. Rule 1: Short Title and Commencement Rule 1 gives the official name of the rules and states when they take effect. The rules came into force on 8 October 2026, the date of their publication in the Official Gazette. No separate implementation period is provided in this rule. Rule 2: Definitions Rule 2 explains the terms used throughout the notification. The important definitions include: Act: The Textiles Committee Act, 1963. Adjudicating officer: An officer appointed under Section 17A of the Act. Appellate authority: The authority appointed under Section 17A(2). Collector: The district Collector or another officer authorised to carry out the Collector's functions. Form: A form appended to the rules. Notice of demand: A notice requiring a person liable for a monetary penalty to pay the specified amount within the period mentioned. These definitions help identify which authority handles each stage of the case. Rule 3: Complaint Procedure Rule 3 provides the method for submitting a complaint. The Secretary of the Textiles Committee, or an officer authorised in writing by the Secretary, may submit a complaint based on a report, inspection or reference. The complaint must follow Form I. It may be submitted through: Electronic means. Registered speed post with proof of delivery. Hand delivery. After receiving the complaint, the adjudicating officer must record its details in the complaint register. This is the formal beginning of the prescribed proceedings. Rule 4: Holding an Inquiry and Imposing a Penalty Rule 4 explains how an inquiry is conducted. The adjudicating officer must issue a show cause notice in Form II identifying the alleged contravention. The concerned person is given an opportunity to explain why an inquiry should not be held. The notice must allow a period of not less than seven days from service for showing cause. The rule also provides that the concerned person may submit a reply with supporting documents within 15 days from receiving the notice. After considering the explanation, the officer may decide that an inquiry is necessary. In that case, the concerned person may be required to appear personally or through an authorised representative. During the inquiry, the officer may examine documents, receive evidence and require relevant persons to attend. If a person fails, neglects or refuses to appear when required, the officer may proceed in that person's absence after recording reasons. Rule 5: Order of the Adjudicating Officer Rule 5 deals with the decision issued after the inquiry. Where the adjudicating officer is satisfied, after examining the evidence, that a contravention has occurred, a written penalty order may be passed. The order must identify the relevant statutory provision and explain why the penalty is being imposed. Copies of the order and proceedings must be supplied free of cost to the complainant and the person against whom the inquiry was conducted. The proceedings must be completed within six months from the date of issuing the notice to the opposite party, subject to applicable extension provisions. Rule 6: Factors Considered While Imposing Penalties Rule 6 identifies the factors that may be considered when determining the amount of a penalty. These include: Nature and seriousness of the contravention: The adjudicating officer may consider the circumstances and gravity of the violation. First-time or repeated violation: The officer may examine whether the contravention occurred for the first time, was repeated or continued. Loss or damage: Any loss or damage caused by the contravention may be relevant. Mitigating circumstances: Facts placed on record that may justify a different assessment can be considered. Other relevant factors: The officer may consider additional appropriate factors within the applicable legal framework. The rule does not establish one fixed penalty amount for all textile businesses. Rule 7: Copy of the Order Rule 7 requires the adjudicating officer to send copies of the order to the concerned person and the specified officials of the Textiles Committee and Central Government. This creates an official record of the decision and its communication. Rule 8: Service of Notices and Orders Rule 8 specifies how notices and orders can be delivered. The methods allowed include personal delivery, delivery through an authorized agent, communication by electronic means, and registered speed post with proof of delivery. In the event that ordinary service cannot be made, the regulations provide for posting the notice on an appropriate part of the property in question under the prescribed requirements. This implies that companies need to keep up-to-date contact information. Rule 9: Filing an Appeal Rule 9 permits an aggrieved person to appeal against an adjudicating officer's order. The appeal must ordinarily be submitted within 30 days from receipt of the order. A delayed appeal may be admitted where the appellate authority is satisfied that sufficient cause prevented timely filing. The appeal must follow Form IV and include the relevant order, statement of facts, grounds of appeal and statutory references. Rule 10: Order of the Appellate Authority Rule 10 explains what the appellate authority may decide after considering the evidence and submissions. The appellate authority may: Confirm the adjudicating officer's order. Modify the order. Set aside the order. Return the matter to the adjudicating officer for reconsideration in specified circumstances. The order must contain reasons and be communicated to the relevant parties. Rule 11: Extension of Time Rule 11 permits the adjudicating officer or appellate authority to extend periods specified under the rules where reasonable cause exists. The authority must record the reasons for granting an extension. An extension is not automatic merely because a business requests it. Rule 12: Orders Rule 12 requires every order under the rules to be dated, signed and communicated to all concerned parties. Rule 13: Rectification of Orders Rule 13 allows correction of an error apparent on the face of the record. Such errors may include typographical mistakes and other obvious errors that do not require extensive reasoning to identify. The rule provides a period of 15 days from the order for rectification. This procedure should not be confused with an appeal challenging the legal or factual merits of the decision. Rule 14: Recovery of Penalties Rule 14 addresses the recovery of monetary penalties that have not been paid. When all prescribed conditions are fulfilled, a notice of demand can be issued in Form V. When there is no payment after the time period mentioned in the notice of demand, a recovery certificate can be sent to the district collector. Then the monetary penalty can be recovered as arrears of land revenue. Important legal clarification: The attached Gazette contains an apparent inconsistency between the Hindi and English versions of Rule 14 concerning the initial penalty-payment period. The Hindi text appears to state seven days, while the English text states sixty days. The legally applicable period should be verified through an authoritative clarification before relying on either figure. What Types of Violations Can Lead to Penalty Proceedings? The rules concern specified contraventions under the Textiles Committee Act, 1963. The precise nature of an alleged violation depends on the applicable statutory provision and any relevant government order. For a business facing proceedings, three questions should be examined. Is There an Applicable Legal Requirement? The business must first identify the statutory provision or government order said to have been violated. A general concern about product quality does not automatically establish a contravention under these rules. Does the Alleged Activity Fall Within That Requirement? The relevant products, activities and circumstances must be compared with the applicable legal provision. For example, a restriction relating to specified textiles cannot automatically be assumed to apply to every textile product. What Does the Governing Law Provide? The legal consequences must be determined from the relevant current statutory provisions. The notification itself does not prescribe a single universal monetary penalty or introduce a new certification scheme for the textile sector. How Does the Complaint and Adjudication Process Work? The rules establish a sequence for examining an alleged contravention. Step 1: Filing a Complaint An authorised officer files a complaint using Form I. The complaint includes details of the alleged contravention and relevant supporting information. Step 2: Registration of the Complaint The adjudicating officer records the complaint in the complaint register. Step 3: Issuing a Show Cause Notice The officer issues Form II, identifying the alleged contravention and asking the concerned person to explain why an inquiry should not be held. Step 4: Submission of Reply and Documents The concerned person may submit an explanation and supporting documents within the prescribed period. The reply should address the allegations and provide relevant evidence. Step 5: Conducting the Inquiry Where the officer considers an inquiry necessary, the concerned person may be required to appear. The officer examines the relevant information and may require further evidence. Step 6: Passing the Order After considering the evidence, the adjudicating officer decides whether a contravention has occurred. A penalty may be imposed through a reasoned written order where authorised under the Act. Step 7: Filing an Appeal, Where Required An aggrieved person may challenge the order under the appeal provisions. The appeal follows the prescribed format and procedural conditions. What Happens When a Textile Business Receives a Show Cause Notice? A show because notice is a formal communication concerning an alleged violation. Receiving a notice does not mean that a penalty has already been finally determined. The notice provides an opportunity to explain the circumstances before further proceedings. Check the Alleged Contravention The first step is to read the legal provision mentioned in the notice. The business should identify what conduct is being questioned and which documents may be relevant. Review the Response Period Rule 4 contains a minimum seven-day show cause period and a separate provision allowing a reply with supporting documents within 15 days of receipt. Businesses should examine the dates stated in the actual notice carefully. Collect Relevant Documents Depending on the allegations, relevant business records may need to be reviewed. The rules do not provide one universal document checklist applicable to every case. Prepare an Accurate Reply The explanation should address the allegations directly. Statements should be supported by available records rather than assumptions. Attend the Inquiry When Required If the adjudicating officer requires an appearance, the concerned person should follow the notice and the applicable representation requirements. Failure to appear may result in the inquiry continuing in that person's absence under the conditions specified in Rule 4. What Powers Does the Adjudicating Officer Have? The adjudicating officer plays the central role in the inquiry. Under the notification, the officer may issue notices, consider explanations, examine relevant evidence and require the attendance of persons familiar with the case. The officer may also call for documents considered useful or relevant to the inquiry. Rule 4 provides that the adjudicating officer is not bound to observe the Bharatiya Sakshya Adhiniyam, 2023, when taking evidence under these proceedings. However, the officer must still follow the procedures prescribed by the applicable rules. Any penalty order must state the relevant statutory contravention and the reasons for imposing the penalty. How Are Penalties Determined Under the New Rules? The amount of a penalty is not determined simply by the fact that a complaint has been filed. Rule 6 provides factors that may be considered during assessment. Factor What the adjudicating officer may examine Nature of violation What conduct is alleged and how serious it is Previous conduct Whether the violation is first-time, repeated or continuing Loss or damage Whether the contravention caused identifiable loss or damage Mitigating circumstances Relevant circumstances placed on record Other factors Additional appropriate considerations under the legal framework The applicable statutory penalty provisions must also be examined. Businesses should not assume that every alleged contravention attracts the same penalty. Similarly, a first-time violation does not automatically mean that no penalty can be imposed. How Can Businesses Appeal Against a Penalty Order? An appeal provides a way to challenge an adjudication order. Who Can File an Appeal? Any person aggrieved by an order under these rules may file an appeal before the appellate authority. What Is the Appeal Deadline? The appeal must ordinarily be filed within 30 days from receipt of the order. A delayed appeal may be admitted where sufficient cause is established. What Documents Are Required? The appeal must include: A copy of the adjudicating officer's order. A statement of facts. Grounds of appeal. The relevant statutory provision. What If the Appeal Has Defects? The appellate authority may return a defective appeal for correction. The rules provide 21 days from receipt of the defect notice, or an extended period where granted, to correct the defects. Failure to correct them may result in refusal to admit the appeal, with reasons recorded. How Long Does the Appeal Process Take? Rule 9 requires the appellate authority to dispose of the appeal within 60 days from filing. The actual handling of the case remains subject to the applicable procedural provisions. Important Deadlines Under the Textiles Committee Rules, 2026 The notification includes several periods that become relevant at different stages of proceedings. Requirement Prescribed timeline Effective date 8 October 2026 Minimum show cause period 7 days from service Reply with supporting documents Within 15 days from receipt Completion of adjudication Within 6 months from issuance of notice to the opposite party Filing an appeal Within 6 months from issuance of notice to the opposite party Rectification of appeal defects 21 days from receipt of notice, unless extended Respondent's reply to appeal Within 30 days from service of appeal notice Disposal of appeal Within 60 days from filing Rectification of apparent error in order Within 60 days from filing Penalty payment before demand procedure Requires clarification because of the Hindi-English discrepancy The notification also allows extensions of specified periods under Rule 11 where reasonable cause exists and the authority records reasons. These timelines are procedural. They do not mean that all textile manufacturers must submit a compliance application by a particular date. What Documents and Forms Are Required Under the Rules? The notification provides five forms for different procedural stages. Form Purpose Main information Form I Complaint Complainant details, alleged contravention, supporting evidence Form II Show cause notice Allegation and required explanation Form III Documents or evidence Counterstatement, supporting details and signature Form IV Appeal Appellant details, order particulars, grounds of appeal Form V Demand notice Penalty amount, relevant order and payment instructions Form I: Complaint This form is used by the authorised complainant. It includes information about the alleged incident, supporting evidence and the complainant's declaration. Form II: Show Cause Notice This is issued by the adjudicating officer. It describes the alleged contravention and asks the concerned person to explain why an inquiry should not be initiated. Form III: Furnishing Documents or Evidence This form is used for submitting a counterstatement and relevant details in connection with the inquiry. Form IV: Appeal This form is used when an aggrieved person challenges an adjudication order. Form V: Notice of Demand This form is used when a monetary penalty becomes subject to the prescribed demand procedure. It states the relevant order, amount and payment instructions. Can Businesses Request More Time or Correction of an Order? The rules contain provisions addressing both extensions and correction of apparent mistakes. Extension of Time Rule 11 allows the adjudicating officer or appellate authority to extend prescribed periods where reasonable cause exists. The authority must record the reasons. This does not mean that a delayed submission will always be accepted. Correction of an Order Rule 13 concerns errors apparent on the face of the record. Such errors may include typographical mistakes and other readily identifiable errors. A disagreement with the legal reasoning or findings of an order should not automatically be treated as an apparent error eligible for rectification. The appropriate remedy may instead be an appeal, depending on the circumstances. What Happens If a Monetary Penalty Is Not Paid? Rule 14 provides the process for recovering unpaid monetary penalties. Where the applicable conditions are met, the adjudicating officer may issue a notice of demand through Form V. The notice identifies the outstanding penalty and the period for payment. If the amount remains unpaid within the period specified in the demand notice, a recovery certificate may be forwarded to the relevant district Collector. The Collector may recover the amount, together with recovery costs, as arrears of land revenue under the applicable law. Businesses receiving a demand notice should review the underlying order, amount payable, available remedies and relevant deadlines. The apparent difference between the Hindi and English payment-period provisions should be resolved through authoritative legal clarification rather than assumption. What Are the Rights of Businesses During Inquiry Proceedings? The rules provide several procedural opportunities for persons facing proceedings. These include: Receiving information about the allegation: The show cause notice must identify the alleged contravention. Submitting an explanation: The concerned person may respond and provide supporting documents. Participating in an inquiry: The rules provide for appearance personally or through an authorised representative at the relevant stage. Producing evidence: Relevant documentary material may be submitted for consideration. Receiving a reasoned order: A penalty order must identify the relevant statutory provision and provide reasons. Filing an appeal: An aggrieved person may challenge the adjudication order before the appellate authority. Seeking rectification: Apparent errors may be corrected under Rule 13. These procedural opportunities are subject to the requirements and conditions of the rules. How Will the New Rules Affect Textile Businesses? The notification is likely to be most relevant when a business receives a complaint-related notice or becomes involved in adjudication proceedings. Impact on Textile Manufacturers Manufacturers covered by the relevant provisions of the Act may need to provide explanations and documentary evidence during inquiries. Keeping accurate records and identifying the applicable statutory provisions can support a proper response. Impact on Textile Exporters Exporters should examine any relevant statutory restrictions affecting their goods. Where proceedings arise, the business may need to review the applicable order and records related to the disputed activity. Impact on MSMEs Smaller businesses may find it difficult to manage documentation, understand statutory provisions and prepare replies within limited periods. Professional compliance guidance may be useful where the legal requirements are unclear. However, the notification does not create a separate mandatory certification or registration requirement for all MSMEs. Impact on Compliance and Legal Teams Internal teams may need to monitor notice receipt dates, hearing schedules, documentary requirements and appeal periods. Maintaining an organised record of official communications can help reduce the risk of missing important procedural steps. What Challenges Could Businesses Face Under the New Rules? The rules establish procedures that may require administrative and legal attention when proceedings begin. Understanding the Alleged Violation A business must identify the applicable statutory provision and determine how the allegation relates to its activities. This may require examining government orders, product records and other relevant documents. Preparing Supporting Evidence Different proceedings may require different records. Collecting accurate information from several departments can take time, particularly where older business records are involved. Meeting Procedural Deadlines A missed reply or appeal period can affect the available options. Businesses should therefore monitor official correspondence and maintain accurate records of receipt. Managing Legal and Compliance Costs Where proceedings are contested, a business may incur costs for professional advice, document review or representation. The notification does not prescribe a standard consultancy fee or provide estimated costs for these services. What Are the Risks of Ignoring Regulatory Notices? Ignoring a notice can have procedural consequences. A failure to appear before the adjudicating officer, where required under Rule 4, may result in the inquiry proceeding in the person's absence after the officer records reasons. Similarly, missing an appeal deadline may make it necessary to establish sufficient cause for delayed filing. Failure to correct defects identified in an appeal may affect its admission. Where a valid monetary penalty remains unpaid, the demand and recovery provisions may become relevant. For these reasons, a notice should be reviewed promptly even if the business believes the allegation is incorrect. What Should Textile Businesses Do Next? Businesses that may be affected by proceedings under the Act should focus on understanding their legal position and maintaining accurate records. A practical approach includes: Review applicable requirements: Identify the statutory provisions and government orders relevant to the business. Check existing notices: Examine whether any complaint, inquiry or order requires attention. Record important dates: Maintain evidence of when notices and orders were received. Collect documents: Identify records relevant to the alleged contravention. Prepare accurate explanations: Ensure that responses address the actual allegations. Follow inquiry requirements: Arrange attendance or representation when required. Review orders carefully: Check the findings, reasons and any penalty imposed. Assess available remedies: Consider appeal or rectification where appropriate. Maintain records of submissions: Preserve copies and proof of delivery. Seek professional advice where necessary: Obtain help with complex statutory interpretation or contested proceedings. These actions are recommended for relevant circumstances. They are not a newly created universal filing requirement. Best Practices for Textile Industry Regulatory Compliance A business can reduce avoidable procedural problems by maintaining clear internal responsibility for regulatory matters. Useful practices include keeping an organised register of official notices, preserving relevant compliance records, assigning personnel to review regulatory correspondence and maintaining copies of all submissions. Where an inquiry is initiated, the concerned teams should coordinate to ensure that the information submitted is accurate and supported by available records. Businesses should also distinguish routine internal reviews from actions legally required under a specific notice. This is where a suitable compliance gap assessment or professional manufacturer compliance service may help identify relevant documentation and procedural concerns. Compliance Checklist for Affected Businesses Compliance activity Nature of action Identify the applicable statutory provisions Recommended applicability review. Review any show because notice received Case-specific action Check the date and manner of service Recommended procedural control Prepare replies with relevant evidence Required where applicable under the inquiry procedure Arrange attendance or authorised representation Required where directed under the rules Maintain copies of submissions and orders Recommended record-management practice Review grounds for appeal after an adverse order Recommended case assessment Observe applicable appeal requirements Required when pursuing an appeal Review payment obligations after a penalty order Case-specific requirement Obtain qualified legal or regulatory assistance Recommended where necessary The checklist is intended for businesses involved in or preparing for relevant proceedings. Business and Regulatory Perspective The Textiles Committee Penalty Rules, 2026, introduce a prescribed method for handling specified alleged contraventions. The requirement to issue notices, examine evidence and pass reasoned orders provides a defined procedure for deciding these matters. For businesses, the value of understanding the rules lies in knowing how to respond when proceedings are initiated. At the same time, formal proceedings can require time, documentation and legal attention. Smaller organisations may face additional practical challenges when they do not have dedicated compliance personnel. The rules should therefore be understood as a procedural framework rather than a new industry-wide certification or licence requirement. Their practical effect will depend on the nature of individual cases and how the prescribed provisions are applied. How Can Corpseed Help? Textile manufacturers and other affected businesses may need assistance when interpreting regulatory requirements, reviewing compliance obligations or preparing relevant documentation. Corpseed provides regulatory compliance services and related business compliance support. Depending on the nature of the requirement and the services available, assistance may cover: Regulatory compliance assessment: Reviewing applicable legal and regulatory requirements for a business. Compliance consulting services: Helping businesses understand compliance obligations and procedural expectations. Manufacturer compliance services: Supporting manufacturers in identifying relevant statutory requirements. Compliance gap assessment: Reviewing existing practices against applicable compliance requirements. Documentation support: Assisting with the organisation and review of relevant compliance records. Compliance advisory services: Guiding regulatory changes affecting business operations. Compliance audit readiness: Helping businesses prepare relevant documents and internal records for regulatory review. Where a matter involves formal legal representation, disputed statutory liability or an appeal, an appropriately qualified legal professional may be required. Businesses seeking clarity on textile-sector regulatory requirements can contact Corpseed for suitable regulatory compliance services and an assessment of their applicable obligations. Key Takeaways The Ministry of Textiles notified the Textiles Committee Penalty Rules, 2026, through G.S.R. 873(E), effective from 8 October 2026. The rules establish procedures for filing complaints, issuing show cause notices, conducting inquiries, examining evidence, imposing penalties, filing appeals and recovering unpaid monetary amounts. They also prescribe five forms and several procedural deadlines. For textile businesses, the main concern is understanding the relevant legal provisions and responding properly when a complaint or notice is issued. The notification does not introduce a general new manufacturing registration or product certification requirement. Businesses should maintain accurate records, monitor official notices and examine available remedies where an adverse order is issued.

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Summary: The Securities and Exchange Board of India (SEBI) has changed certain rules relating to professional certification in the securities market. Under the SEBI Certification Amendment Regulations 2026, the regulator has introduced a new definition of "Specified Persons", added another way to obtain certification through the National Institute of Securities Markets (NISM), and revised the provisions dealing with certificate validity and renewal. The amendment was notified on 7 October 2026 and published in the Official Gazette on 8 October 2026. It came into force on the date of publication. These changes are relevant to individuals working in securities market businesses, including principals and employees of intermediaries, agents, distributors and certain employees of foreign investment entities working in India. There are some issues that will arise for the intermediaries in the securities market due to this amendment. What employees will be covered under the new definition? Do all of them require new NISM certification? Will existing certificates be valid for a longer period? The notification answers some of these questions directly, while others depend on the existing SEBI regulations and further specifications issued by SEBI or NISM. Businesses should therefore understand what has changed before revising their certification policies or making decisions about employee training. SEBI Certification Amendment Regulations 2026: Notification at a Glance SEBI introduced the amendment through Notification No. SEBI/LAD-DOP/2026/319. It makes changes to the certification regulations originally introduced in 2007. Particular Details Regulatory Authority Securities and Exchange Board of India Amendment SEBI (Certification of Associated Persons in the Securities Markets) (Amendment) Regulations, 2026 Notification Number SEBI/LAD-DOP/2026/319 Notification Date 7 October 2026 Gazette Publication 8 October 2026 Effective Date 8 October 2026 Governing Act SEBI Act, 1992 Principal Regulations SEBI Certification Regulations, 2007 New Terminology Specified Persons Major Changes Definition, certification methods, validity and renewal Main Stakeholders Relevant intermediaries, their personnel, agents, distributors and other covered individuals Separate Universal Deadline Not specified in the amendment The notification changes selected provisions of the existing certification framework. It does not replace the entire 2007 regulations or introduce a separate certification system for every person working in the financial sector. What Is the Regulatory Framework for Securities Market Certification in India? Individuals performing certain functions in the securities market are required to hold appropriate professional certifications. These requirements help establish that persons carrying out regulated activities have the relevant knowledge and competency. SEBI determines the categories of persons for whom certification is necessary. NISM plays a central role in conducting or facilitating the certification and professional education arrangements provided under the regulations. SEBI's Role in Professional Certification SEBI regulates India's securities market and supervises registered intermediaries. Its responsibilities include prescribing requirements for persons carrying out activities that may affect investors, clients, market operations and regulatory compliance. Under Regulation 3 of the certification regulations, SEBI may specify the categories of persons who must obtain certification and the relevant time limits. The requirement is linked to the nature of the work and the applicable regulatory notification. This distinction matters because holding a position in a securities-related organisation does not automatically mean that every employee must obtain the same NISM certificate. What Are the SEBI Certification Regulations, 2007? The SEBI Certification Regulations, 2007, provide the legal framework for determining certification obligations and the methods through which relevant certificates can be obtained. They cover matters such as: Certification applicability: Identifying the categories of persons required to hold certification. Certification methods: Establishing permitted routes for obtaining relevant certificates. Professional competency: Providing for examinations, classroom-based routes and other recognised methods. Certificate validity: Determining how long certification remains valid. Revalidation: Setting out the relevant requirements for maintaining certification. Intermediary obligations: Addressing compliance responsibilities where applicable. The October 2026 amendment makes changes within this framework. It should also be read alongside the amendments introduced in July 2025, which revised important provisions of Regulation 3 and Regulation 6. What Is the Role of NISM? The National Institute of Securities Markets is an institution established by SEBI to support education, professional development and certification in the securities market. NISM provides certification examinations and Continuing Professional Education programmes for relevant market professionals. Its certification activities cover different areas of securities market operations, subject to the requirements prescribed for particular functions. The new amendment adds another permitted certification route involving a course or programme specified by NISM in consultation with SEBI. However, the availability of a particular NISM course does not automatically make it a recognised route for every certification category. What Has Changed Under the SEBI Certification Amendment Regulations, 2026? The latest amendment changes how certain securities market professionals are described under the regulations and how certification may be obtained or maintained. The main changes are explained below. 1. The Term Associated Persons Has Been Replaced SEBI has replaced the term "Associated Persons" with "Specified Persons" throughout the relevant certification regulations, with an exception for the proviso to Regulation 3(1). This also changes the title of the regulations. The amendment introduces a revised definition under Regulation 2(1)(m), allowing the certification framework to use the new terminology. 2. A New Definition of Specified Person Has Been Introduced The amendment removes the earlier definition under Regulation 2(1)(c) and inserts the definition of Specified Person under Regulation 2(1)(m). The definition covers principals and employees of intermediaries, agents, distributors and other individuals engaged in securities market business. It also expressly includes employees of foreign portfolio investors and foreign venture capital investors working in India. 3. Another NISM Certification Pathway Has Been Added A new clause (d) has been introduced under Regulation 4(1). It allows certification through successful completion of a course or programme specified by NISM in consultation with SEBI. This is an additional pathway within the existing certification framework. 4. Changes Have Been Made to Certification Eligibility Provisions Regulations 4(2), 4(3) and 4(4) have been amended to accommodate the newly introduced course or programme route. Regulation 4(3) also changes the wording concerning the relevant date for examination, CPE or enrolment in a specified programme. 5. SEBI Can Specify an Extended Certificate Validity Period The amended Regulation 5 allows a certificate to remain valid for three years or another extended period specified by SEBI. This does not automatically extend the validity of every certificate. 6. Related Regulations Have Also Been Updated The notification introduces Regulation 12 and a Schedule containing amendments to selected provisions of the Debenture Trustees Regulations, 1993, and Self-Regulatory Organizations Regulations, 2004. These amendments mainly align terminology with the revised certification regulations. Who Are Specified Persons Under the SEBI Amendment Regulations, 2026? The new definition of Specified Person is one of the most important parts of the amendment. According to Regulation 2(1)(m), the term covers a principal or employee of an intermediary, an agent, distributor or another natural person engaged in securities market business. It also includes employees of foreign portfolio investors and foreign venture capital investors working in India. The definition identifies the relevant categories of individuals. Whether someone must obtain a particular certificate depends on the applicable certification requirements. Principals of Securities Market Intermediaries A principal is a person involved in managing an intermediary's securities business. The underlying regulations describe principals with reference to management activities, including supervision, solicitation and conduct of business. They also identify categories such as sole proprietors, managing partners and whole-time directors. Where a principal performs a function covered by a SEBI certification requirement, the relevant certification provisions must be examined. Employees Working in Securities Market Activities Employees of intermediaries are included within the definition. However, this does not mean that every employee working in the same organisation has identical certification obligations. The individual's duties and the certification category specified by SEBI are important. For example, functions relating to investment advice, securities operations, investor servicing or compliance may be subject to different regulatory requirements. The appropriate certification should be determined from the applicable regulations and official notifications. Agents and Distributors The definition also covers agents and distributors engaged in securities market business. Such individuals may be involved in the sale or distribution of securities or other relevant regulated activities. Their certification requirements must be assessed with reference to the actual activity performed. The fact that a person is called an agent or distributor is not, by itself, enough to identify the exact certificate required. Employees of Foreign Portfolio Investors The amendment explicitly mentions the employees of foreign portfolio investors in India. This is important to consider while examining the extent of certification of individuals related to foreign portfolio investments. Organisations should distinguish between persons covered by the definition and those for whom SEBI has prescribed a specific certification requirement. Employees of Foreign Venture Capital Investors Employees of foreign venture capital investors working in India are also expressly included. Their certification position must similarly be assessed against the relevant requirements. Applicability of the Revised Definition Category Covered by the definition? Main compliance consideration Principals of intermediaries Yes Check applicable certification obligations Employees of intermediaries Yes Identify role-specific requirements Securities market agents Yes, within the defined scope Verify relevant activities Securities distributors Yes, within the defined scope Determine prescribed certification Other natural persons engaged in securities market business Yes Review the nature of the activity Employees of FPIs working in India Expressly included Check applicable certification requirements Employees of FVCIs working in India Expressly included Review role-based applicability Important: The revised definition should not be confused with a new blanket certification requirement for all people in these categories. Associated Persons vs Specified Persons: What Is the Difference? The earlier regulations used the expression, Associated Persons. The October 2026 amendment replaces it with Specified Persons and introduces a new definition. The earlier definition referred to principals, employees, agents, distributors and other natural persons engaged in the securities business. It also referred to employees of foreign institutional investors or foreign venture capital investors working in India. The revised definition expressly refers to foreign portfolio investors. This is a relevant terminology update, particularly because the regulatory framework for foreign portfolio investment has changed over time. Old vs New SEBI Certification Regulations Compliance area Earlier position Position after amendment Term used Associated Persons Specified Persons Definition Regulation 2(1)(c) Regulation 2(1)(m) Principals Included Included Employees of intermediaries Included Included Agents and distributors Included Included Foreign investment reference Foreign Institutional Investors in the original wording Foreign Portfolio Investors NISM certification routes Existing permitted methods Additional specified course/programme route Validity framework Three-year period Three years or another SEBI-specified extended period Related regulations Earlier terminology Corresponding substitutions The practical change for businesses is not limited to replacing words in an internal policy. Intermediaries should examine the revised definition and determine whether existing compliance records and role classifications remain accurate. At the same time, the notification should not be interpreted as automatically cancelling existing certificates merely because the terminology has changed. What Are the New NISM Certification Requirements Under SEBI Rules? Regulation 4 explains the permitted methods of obtaining certification. Before the 2026 amendment, Regulation 4(1) recognised three routes, subject to the applicable conditions. The amendment introduces a fourth route. Existing Certification Methods The earlier framework provided for certification through the following methods: 1. Certification examination A person could obtain certification by passing an examination conducted through an organisation or self-regulatory organisation approved or engaged as specified by NISM. The relevant examination depends on the certification requirement applicable to the person. 2. Classroom credits The regulations also recognised obtaining the prescribed number of classroom credits through classes on subjects specified by NISM. This was not an unrestricted option for every person. The relevant conditions in Regulation 4 continued to apply. 3. Conducting formal classroom sessions Another recognised route involved delivering the prescribed number of formal classroom sessions in relevant Continuing Professional Education programmes. This route was also subject to the applicable regulatory conditions. New Course or Programme-Based Certification The newly inserted Regulation 4(1)(d) permits certification by passing a course or programme specified by NISM in consultation with SEBI. The wording is important for two reasons. First, the course or programme must be specified by NISM in consultation with SEBI. Second, the person must satisfy the relevant certification conditions applicable to their category. The amendment does not state that any training course, workshop or professional programme can be treated as an approved substitute for certification. It also does not provide a new universal course fee, examination structure or programme duration. Does the New Pathway Replace NISM Examinations? No. The amendment adds clause (d) to the existing Regulation 4(1). The earlier methods remain part of the framework, subject to the regulations. The introduction of another permitted route does not mean that every certified professional can choose any method without checking the relevant conditions. What Should Businesses Check Before Selecting a Certification Pathway? Organisations should examine: The employee's role and applicable certification category. The certification requirement specified by SEBI. The methods available under Regulation 4. Any relevant NISM specification for the course-based route. Eligibility conditions and applicable dates. The certificate validity and revalidation rules. These checks are especially useful when an organisation has employees performing different securities market functions. How Does the Amendment Affect Regulation 4(2), 4(3) and 4(4)? The amendment does more than insert a new clause under Regulation 4(1). It also modifies related provisions that govern the way different categories of persons may obtain certification. Changes to Regulation 4(2) Regulation 4(2) concerns certification methods applicable to principals. The amendment adds a reference to clause (d), bringing the newly introduced NISM course or programme pathway within the methods recognised under this provision. Its actual application remains subject to the relevant regulatory conditions. Changes to Regulation 4(3) The amendment revises the wording used to identify the relevant date under Regulation 4(3). Depending on the applicable route, it refers to: The date of appearing for the examination. The date of obtaining CPE. The date of enrolment in a qualifying course or programme. It also adds a reference to the new clause (d). These changes are relevant to the operation of Regulation 4(3). The eligibility conditions in the full provision must still be considered. Changes to Regulation 4(4) The amendment adds clause (d) alongside clause (a) in Regulation 4(4). This recognises the additional course- or programme-based option for the relevant category of specified persons. Together, the amendments make the new pathway part of the existing certification structure rather than creating an unrelated certification system. How Has SEBI Changed NISM Certificate Validity and Renewal? Certificate validity is another area addressed by the October 2026 amendment. Regulation 5 provides the framework for determining the period for which a certificate remains valid and how it may be revalidated. Earlier Certificate Validity The existing provision prescribed a three-year validity period from the date of grant or revalidation, as applicable. Certificate holders were required to consider the relevant expiry date and the applicable revalidation requirements. Revised Certificate Validity The 2026 amendment adds wording allowing the certificate to remain valid for three years or another extended period specified by SEBI. This means SEBI can provide for a different validity period where it makes an applicable specification. The amendment itself does not announce one extended period for every NISM certificate. A person whose certificate presently carries a three-year validity should not assume that it has automatically been extended. Changes to Certificate Revalidation Regulation 5(2) has also been amended. The revised wording allows for arrangements otherwise provided by SEBI and recognises the possibility of an extended revalidation period. The Continuing Professional Education provisions remain relevant to the applicable revalidation framework. Certification Validity: Old vs New Particular Earlier provision Revised provision Ordinary validity period Three years Three years Another validity period Not provided in the same manner SEBI may specify an extended period Revalidation period Three years at a time Three years or another SEBI-specified extended period CPE Relevant to revalidation Continues under applicable requirements Automatic extension for all certificate holders No Not introduced by the amendment For employers, certificate validity should continue to be checked against the certificate and applicable official specifications. What Is the Role of Continuing Professional Education in Certification Renewal? Continuing Professional Education, commonly called CPE, is intended to help securities market professionals maintain relevant knowledge and skills. The NISM framework provides for CPE programmes in connection with applicable certifications. Such programmes may address changes in securities market practices, regulatory requirements, governance and professional competency. How CPE Connects With Revalidation The applicable certification regulations link certificate revalidation with successful completion of the relevant NISM-prescribed CPE programme. The 2026 amendment changes the wording concerning validity and revalidation periods. It does not generally remove the CPE framework. Does Every Certificate Holder Have the Same CPE Requirements? Not necessarily. The applicable conditions may differ according to the certificate and current NISM specifications. Certificate holders should therefore verify the requirements for their particular certification rather than relying on another employee's renewal arrangements. Points to Verify Before Renewal Category of applicable certification. Expiry date of current certificate. Any CPE requirement for revalidation. Eligibility to join the program. Period of extension, if any, as specified by SEBI. NISM guidance currently regarding the above. No new CPE fee/course duration being introduced as per the October 2026 SEBI notification. Regulation-Wise Analysis of the SEBI Certification Amendment, 2026 This amendment touches upon a number of related provisions. Some are substantive, and some are mere terminological/statutory modifications. Regulation Change introduced What it means Regulation 2(1)(c) Earlier definition omitted Removes the previous definition clause Regulation 2(1)(m) New definition inserted Defines Specified Person Regulation 2(2) Companies Act reference revised Refers to Companies Act, 2013 Regulation 4(1) Clause (d) added Introduces another certification route Regulation 4(2) Clause (d) included Recognises new pathway for principals Regulation 4(3) Relevant timing wording changed Updates applicable eligibility provisions Regulation 4(4) Clause (d) included Recognises additional route for the relevant category Regulation 5(1) Extended-period wording added Allows SEBI-specified validity extension Regulation 5(2) Revalidation wording amended Allows alternative SEBI arrangements Regulation 12 New provision inserted Gives effect to amendments in the Schedule Amendment to Regulation 2 Regulation 2 deals with definitions. The amendment removes the former definition of Associated Person and introduces the Specified Person definition. It also updates the Companies Act reference from the Companies Act, 1956, to the Companies Act, 2013. Amendment to Regulation 4 Regulation 4 sets out the methods for obtaining certification. The new clause (d) introduces the NISM-specified course or programme pathway. The related provisions have been amended to recognise this route where applicable. Amendment to Regulation 5 Regulation 5 deals with validity and revalidation. The amendment allows SEBI to specify an extended period instead of relying solely on the ordinary three-year period. Insertion of Regulation 12 The new Regulation 12 provides for amendments to the other regulations identified in the Schedule. Its purpose is to give effect to the consequential changes contained in that Schedule. Which Other SEBI Regulations Have Been Amended? The notification also introduces terminology amendments to two other regulatory frameworks. SEBI (Debenture Trustees) Regulations, 1993 Regulation 17A(4) has been amended to replace "Associated Persons" with "Specified Persons". This aligns the terminology used in the Debenture Trustees Regulations with the revised certification framework. The Schedule does not separately create a new debenture trustee registration procedure or certification fee. SEBI (Self-Regulatory Organizations) Regulations, 2004 The amendment changes terminology in Regulations 2(1)(ea) and 2(1)(ha). References to Associated Persons are replaced with Specified Persons. The amendments are consequential and should be understood in connection with the main certification regulations. When Did the SEBI Certification Amendment Regulations 2026 Come Into Force? The amendment came into force on 8 October 2026, when it was published in the Official Gazette. Regulatory event Date Amendment notified 7 October 2026 Gazette publication 8 October 2026 Commencement of amendment 8 October 2026 New universal certification deadline Not expressly specified Automatic extension of all existing certificates Not provided The effective date applies to the amendment itself. It should not be confused with deadlines or validity periods that may apply to individual certificate holders under separate SEBI and NISM requirements. How Will the SEBI Certification Amendment Affect Businesses? Securities market intermediaries may need to review their certification arrangements following the October 2026 changes. The level of work involved will depend on the business's activities, the categories of employees it engages and the certification requirements applicable to those employees. Impact on Securities Market Intermediaries Intermediaries must determine if their present certification process is in agreement with the amended framework. This can be achieved by reviewing the classification of covered personnel and determining whether their present internal processes have correctly identified the appropriate certification process. The new terminology may also require updates to internal policy references. These are practical review measures rather than a separate filing obligation introduced by the amendment. Impact on Employees and Principals Employees and principals should understand which certification requirements apply to their functions. Where the new NISM course-based pathway is relevant, they may need to verify whether NISM has specified an eligible programme. The validity of the certificates already issued should also be reviewed and assessed. Impact on Agents and Distributors Agents and distributors involved in securities business should familiarize themselves with the certification requirements for their field of business. This is particularly relevant where they operate under arrangements with registered intermediaries. The revised definition does not, by itself, prescribe one certificate for every distributor. Impact on Foreign Investment Entities The new definition expressly refers to employees of foreign portfolio investors and foreign venture capital investors working in India. Relevant organisations may need to consider whether any of their India-based personnel fall within certification categories prescribed by SEBI. Impact on Compliance and HR Teams Compliance and HR teams often maintain information about employee qualifications, professional certifications and renewal dates. Following the amendment, an organisation may find it useful to review these records together. This can help ensure that certification decisions are based on current regulations rather than outdated terminology. What Compliance Requirements Should Securities Market Intermediaries Review? The certification obligations applicable to an organisation cannot be determined from the October 2026 amendment alone. The existing regulations, relevant SEBI notifications and current NISM requirements must also be considered. The following areas deserve attention. 1. Identification of Covered Personnel Businesses should identify employees and other individuals whose functions may fall within the certification framework. The assessment should consider the actual activities performed. 2. Applicable Certification Requirements After identifying the relevant personnel, the organisation should determine which certification requirements SEBI has prescribed for those functions. However, the requirement of the same certificate may not be necessary for every individual under the definition. 3. Certification Approaches Allowed The concerned individual must ensure that he or she opts for an approach allowed under the relevant provisions. This new approach can be used where the particular NISM specification applies. 4. Certificate Validity Periods Validity periods for certificates need to be verified. Organizations cannot take for granted that October 2026 amendment makes all certificates valid. 5. Revalidation and CPE If there are CPE or any revalidation requirements, the person concerned must confirm the current requirements. 6. Internal Compliance Controls Companies can check their internal controls in relation to certification status. Such reviews can help identify certificates approaching expiry and possible gaps in employee certification records. What Documents and Records Should Intermediaries Review? The amendment does not prescribe a new universal document-submission process. However, reviewing relevant internal records may help intermediaries assess their certification position. Record Purpose Status Employee role information Identify relevant functions Recommended internal review NISM certification details Check existing certification Recommended review Certificate expiry records Monitor validity Recommended control CPE completion information Verify applicable revalidation requirements Depends on certification Internal certification policy Review amended terminology Recommended update NISM programme information Confirm recognised pathways Recommended verification Regulatory notices Check applicable changes Recommended monitoring These records should not be presented as a newly mandatory filing list under the 2026 amendment. What Are the Benefits of the Revised SEBI Certification Framework? The amendment introduces changes that may be useful for market participants, particularly in relation to certification methods and validity periods. Additional route for certification: The newly inserted clause (d) permits qualifying certification through a course or programme specified by NISM in consultation with SEBI. Flexibility in validity periods: SEBI can specify an extended validity period where applicable. Updated regulatory terminology: The definition of Specified Person provides revised wording for identifying individuals under the regulations. Consistency across related provisions: Terminology amendments have been made to the Debenture Trustees Regulations and Self-Regulatory Organizations Regulations. Scope for administrative review: Intermediaries can review existing certification processes against the amended provisions. The actual benefits will depend on the category of person, applicable NISM specifications and any further directions issued by SEBI. What Challenges May Businesses Face After the SEBI Certification Amendment? Although the notification introduces additional flexibility, interpreting the changes may require attention from compliance teams. Identifying the Correct Certification Category Businesses may have several employees performing different functions. Determining which certification applies requires an examination of the relevant role and regulatory requirements. Understanding the New Course-Based Pathway The amendment refers to courses or programmes specified by NISM in consultation with SEBI. Businesses must check whether a particular programme qualifies before relying on it as a certification route. Managing Certificate Validity An intermediary may have employees holding certificates with different validity and renewal requirements. The revised Regulation 5 makes it important to verify the applicable period rather than assume one rule applies to everyone. Updating Internal Records Policies, employee records and certification trackers may still use the earlier terminology. Organisations may choose to update these references after reviewing the amended regulations. Possible Administrative Costs Costs might be incurred in the course of internal reviews, training and documentation changes. But the October 2026 notice does not provide any cost for the universal certification process. What Are the Risks of Misunderstanding the New SEBI Certification Rules? The biggest risk is treating a targeted regulatory amendment as though it introduces a completely new certification regime. Businesses should avoid the following mistakes. Assuming every employee needs new NISM certification: The amendment does not introduce a universal fresh-certification requirement. Assuming every NISM programme qualifies: The new route is limited to programmes specified in consultation with SEBI.  Disregarding the existing validity dates: The extended validity has to be justified by an applicable SEBI regulation. Equating the same criteria for all employees: The certification criteria relate to the job profile and category. Overlooking existing SEBI notifications: Earlier applicable certification notifications may remain relevant. Treating internal reviews as statutory filings: The amendment does not create a new universal SEBI filing procedure. The correct approach is to examine the amended provisions together with the applicable certification requirements. What Should Securities Market Intermediaries Do Next? Businesses should focus on understanding the amendment and checking whether their existing certification arrangements require attention. A practical review can be organised as follows. Priority Recommended action Responsible function High Review the October 2026 amendment Legal/Compliance High Identify relevant personnel and certification categories Compliance/HR High Verify existing certificate status Compliance/HR Medium Check applicable NISM certification routes Compliance/Training Medium Review validity and CPE requirements Compliance/HR Medium Update outdated internal references Legal/Compliance Ongoing Monitor relevant SEBI and NISM directions Compliance These actions are recommendations for managing the regulatory change. They should not be described as mandatory steps with a new deadline unless supported by an applicable legal provision. Best Practices for Managing SEBI Certification Compliance Certification management will become much simpler for organizations if they are able to have correct information on their employees and requirements for their jobs. Intermediaries may consider adopting the following internal practices. Maintain a certification register: Record the certificate category, holder, validity period and relevant renewal information. Review employee roles: Check whether changes in responsibilities affect applicable certification requirements. Verify NISM programmes: Use current official information before selecting a course or programme for certification. Track certificate expiry dates: Maintain a suitable process for reviewing certificates that may require revalidation. Coordinate within departments: The HR and compliance department should exchange information about certifications. Update on regulations: Determine whether there are any new SEBI regulations regarding certification. Update internal terminology: Revise policies where references to the earlier regulations no longer reflect the current framework. These measures can support internal compliance management, although they do not replace the legal requirements prescribed by SEBI. What Should Securities Market Participants Monitor in the Coming Months? The October 2026 amendment leaves room for further specifications under the certification framework. One area to monitor is the identification of NISM courses or programmes qualifying under Regulation 4(1)(d). Another is the possibility of SEBI specifying different certificate validity or revalidation periods. Businesses should distinguish between the flexibility permitted by the amendment and specific directions that have actually been issued. Until a relevant specification applies, organisations should follow the certification requirements governing their personnel. How Can Corpseed Help With SEBI Compliance Consulting Services? The October 2026 amendment may require securities market intermediaries to revisit their understanding of certification requirements, employee classifications and internal compliance arrangements. Businesses looking for SEBI compliance consulting services may benefit from professional assistance in interpreting the applicable regulations and reviewing their existing procedures. Subject to the scope of services offered, Corpseed can support businesses in the following areas. SEBI Regulatory Compliance Advisory Understanding the regulations imposed by SEBI related to the securities market operations. Regulatory Applicability Assessment Reviewing business activities and employee functions to identify which regulatory provisions may apply. Compliance Gap Assessment Examining existing procedures against applicable regulatory requirements and identifying areas that may need further review. Certification Requirement Assessment Guiding the business regarding its certification responsibilities related to its activities and identifying SEBI and NISM guidelines for it. Certification is still within the official NISM framework. Compliance Documentation Support Assistance with reviewing relevant internal documents, regulatory references and compliance policies. Ongoing Regulatory Compliance Support Helping businesses understand subsequent regulatory changes and assess their possible operational implications. Corpseed's regulatory compliance consulting services can be useful for organisations seeking a clearer understanding of their obligations under the amended SEBI framework. Corporations may reach out to Corpseed to discuss the regulatory compliance issues for which guidance is required from SEBI. Key Takeaways The SEBI Certification Amendment Regulations 2026 introduce targeted changes to the certification framework for persons engaged in securities market activities. The amendment replaces Associated Persons terminology with Specified Persons, introduces a revised definition, adds another NISM-specified course or programme certification route and permits SEBI to specify extended certificate validity periods. The amendment came into force on 8 October 2026. It does not automatically require every securities market employee to obtain fresh certification. Nor does it automatically extend the validity of every existing NISM certificate. Intermediaries and certification holders, on the other hand, will need to know the amendments along with the certification regulations that apply to their roles. A review of certification categories, validity periods, and NISM regulations may assist companies in making the right decisions in terms of compliance.

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Summary: The government has announced when several provisions of the MSME Development (Amendment) Act, 2026, will come into effect. The Ministry of Micro, Small and Medium Enterprises issued Notification S.O. 5575(E) on 12 October 2026, confirming two implementation dates. Most of the notified amendments will take effect on 15 October 2026, while a separate provision concerning the composition of Micro and Small Enterprises Facilitation Councils will come into force on 15 December 2026. For businesses, the changes go beyond registration. The Amendment Act covers enterprise classification, digital MSME registration, invoice settlement through the Trade Receivables Discounting System (TReDS), dispute-resolution institutions, reporting requirements and penalties for certain violations. These changes matter particularly to MSMEs supplying goods or services to public sector enterprises, businesses seeking MSME registration and organisations responsible for invoice payments or statutory disclosures. However, the notification does not mean that every MSME must complete a new registration or filing by 15 October. The actual responsibilities depend on the provisions applicable to each business. MSME Amendment Notification 2026 at a Glance The latest notification brings specified provisions of the Amendment Act into force on different dates. Particular Details Issuing Authority Ministry of Micro, Small and Medium Enterprises Notification Number S.O. 5575(E) Notification Date 12 October 2026 Amendment Act Micro, Small and Medium Enterprises Development (Amendment) Act, 2026 Act Number 16 of 2026 Governing Legislation Micro, Small and Medium Enterprises Development Act, 2006 First Implementation Date 15 October 2026 Sections Covered in First Phase Sections 2–7, 11 and 13–17 Second Implementation Date 15 December 2026 Section Covered in Second Phase Section 12 Nature of Notification Commencement of specified statutory provisions The first implementation date is only two days after the notification was issued. Businesses covered by the new requirements should therefore examine the relevant provisions promptly. At the same time, the actual procedures for registration, invoice settlement and reporting must be checked against the applicable rules and government notifications. What Is the MSME Development (Amendment) Act, 2026? The MSME Development (Amendment) Act, 2026, updates selected provisions of the Micro, Small and Medium Enterprises Development Act, 2006. The Amendment Act received Presidential assent on 13 August 2026 and was published as Act No. 16 of 2026. The original MSMED Act was introduced to support the development of micro, small and medium enterprises and provide a legal framework for matters such as enterprise classification, institutional support and delayed payments. Over time, business transactions have increasingly moved towards digital systems. MSMEs now deal with electronic invoices, online registrations, digital payments and larger procurement networks. The 2026 amendment changes parts of the existing legal framework to address these developments. How Is the 2026 Act Different from the MSMED Act, 2006? The 2026 law is an amending Act. It does not replace the MSMED Act, 2006, in its entirety. Instead, it changes specific provisions through additions, substitutions and revisions. The important areas include Enterprise classification Revising the legal provision governing the classification of micro, small and medium enterprises. Digital registration Providing for free and voluntary registration through notified national and State digital platforms. Invoice settlement Introducing TReDS settlement requirements for Central Public Sector Enterprises and other notified entities. Facilitation Councils Changing the arrangements for establishing and constituting Councils. Compliance reporting Introducing disclosure requirements related to invoices settled through TReDS. Penalties Revising the consequences of certain statutory violations. Each amendment must be considered separately because the businesses affected and the commencement dates are not necessarily the same. Why Has the Government Amended the MSMED Act? Delayed payments, access to finance and the functioning of dispute-resolution mechanisms have remained important concerns for smaller businesses. A manufacturing unit or service provider may complete its work but still have to wait for payment from a customer. The longer payment remains outstanding, the more difficult it can become to manage ordinary business expenses. Digital registration and invoice-processing systems have also become more widely used since the original legislation was introduced. The government's published explanation of the 2026 amendments identifies improvements in payment mechanisms, institutional arrangements and ease of doing business among the intended outcomes. Improving MSME Payment Systems The insertion of Section 15A creates a statutory requirement for Central Public Sector Enterprises to route covered MSME invoice settlements through an RBI-authorised TReDS platform. The intention is to bring more structure to the handling and financing of MSME receivables. Supporting Digital Registration The revised Section 8 provides for notified digital platforms through which enterprises can voluntarily file registration memoranda without a government filing fee. This gives digital registration an express place in the amended statutory framework. Improving Dispute-Resolution Institutions Changes to Sections 20 and 21 address the establishment, functioning and composition of Micro and Small Enterprises Facilitation Councils. These Councils are relevant to eligible micro and small enterprise suppliers seeking resolution of delayed-payment disputes. The changes are intended to improve the institutional arrangements, although actual outcomes will depend on their implementation. What Has Changed Under the MSME Amendment Act, 2026? Several provisions of the 2006 Act have been amended. The changes affect different areas of business regulation, rather than introducing one uniform requirement for every MSME. 1. Revised MSME Classification Framework Section 4 of the Amendment Act substitutes Section 7(1) of the MSMED Act. The revised provision expressly refers to two criteria for classifying enterprises Investment in plant and machinery or equipment. Turnover of the enterprise. The Central Government may notify the applicable limits for these criteria. The provision also clarifies that specified expenditure on pollution control, research and development, industrial safety devices and other notified items is excluded when calculating investment in plant and machinery. What does this mean for businesses? Enterprises should check the classification limits prescribed under the applicable government notification when determining whether they fall within the micro, small or medium category. The Amendment Act does not itself introduce a fresh numerical table of investment and turnover limits through Section 4. Businesses should therefore avoid assuming that their classification automatically changes simply because the Amendment Act has been notified. 2. Free and Voluntary Digital MSME Registration Section 5 substitutes Section 8 of the original Act. The revised provision requires the Central Government to notify a national digital platform for the free and voluntary filing of MSME registration memoranda. State Governments may also notify State digital platforms for enterprises seeking applicable State benefits. Two points deserve attention. First, registration under this provision is voluntary. The amendment does not make every business in India legally required to obtain MSME registration. Second, the statutory registration filing is free. Businesses should distinguish government registration charges from any optional professional assistance they choose to obtain. MSME registration services can still be useful for businesses that need help understanding their eligibility, preparing accurate information or resolving procedural difficulties. However, professional assistance does not replace the official registration process. 3. Mandatory TReDS Invoice Settlement for Covered Enterprises Section 7 introduces Section 15A into the MSMED Act. Under this provision, every Central Public Sector Enterprise must route the settlement of invoices arising from procurement of goods or services from MSMEs through an RBI-authorised TReDS platform, in the manner prescribed by the Central Government. The law also allows the relevant Central or State Government to extend this requirement to other specified authorities, bodies or entities through notification. The obligation does not automatically apply to every private business purchasing from an MSME. 4. Changes to Micro and Small Enterprises Facilitation Councils The amended law revises provisions governing the establishment and composition of Facilitation Councils. State Governments must establish an adequate number of Councils, in addition to existing ones, for the areas and jurisdictions specified in their notifications. The composition-related changes have a later commencement date of 15 December 2026. 5. New Invoice Disclosure Requirements Section 13 introduces Section 22A. Covered Central Public Sector Enterprises and other notified entities must disclose details of MSME invoices routed and settled through TReDS in the prescribed form and manner. State Public Sector Enterprises and other entities notified by the relevant State Government may also be covered. 6. Revised Penalty Provisions Section 14 substitutes the existing Section 27 and introduces Section 27A. The revised provisions establish warnings and graded penalties for specified violations, along with an adjudication and appeal mechanism. These penalties relate to defined statutory contraventions. They must not be treated as general penalties for remaining unregistered as an MSME. MSME Amendment Act 2026 Section-Wise Implementation Timeline The government has notified two commencement dates. Amendment Section Main Subject Effective Date Section 2 Changes to statutory definitions 15 October 2026 Section 3 Development Commissioner representation 15 October 2026 Section 4 MSME classification framework 15 October 2026 Section 5 Digital and voluntary registration 15 October 2026 Section 6 Amendment to Section 14 of the MSMED Act 15 October 2026 Section 7 TReDS invoice settlement 15 October 2026 Section 11 Establishment and functioning of Facilitation Councils 15 October 2026 Section 12 Composition of Facilitation Councils 15 December 2026 Section 13 Disclosure of TReDS invoice details 15 October 2026 Section 14 Penalties and adjudication 15 October 2026 Section 15 Central Government rule-making powers 15 October 2026 Section 16 State Government rule-making powers 15 October 2026 Section 17 Saving of earlier actions and notifications 15 October 2026 An important distinction is that Sections 8, 9 and 10 of the Amendment Act are not included in Notification S.O. 5575(E). These sections deal with matters including mediation, recovery of mediated settlements and arbitral awards, and applications to set aside certain orders or awards. Their commencement should not be assumed from the October and December dates specified in this notification. Which Provisions Will Apply from 15 October 2026? Most of the sections covered by the new notification will commence on 15 October. For businesses, three areas deserve particular attention digital registration, public sector invoice settlement and statutory reporting. Digital Registration and Enterprise Classification The revised classification provision will operate from 15 October. Businesses assessing their MSME status should use the applicable notified investment and turnover criteria. The amended registration framework also comes into effect on the same date. Enterprises seeking Udyam registration should continue using the official government registration system and follow the instructions applicable at the time of filing. TReDS Compliance for Central Public Sector Enterprises Central Public Sector Enterprises will need to examine the statutory requirement to route MSME invoice settlements through an RBI-authorised TReDS platform. This may require coordination between procurement, finance and accounts departments. The exact operating process must follow the prescribed rules and applicable directions. Reporting and Disclosure Requirements The new Section 22A concerns disclosures of invoices routed and settled through TReDS. Covered organisations should establish which information they must report, in what form and according to which applicable procedure. The Amendment Act does not itself provide every operational detail of the reporting process. Revised Penalties and Administrative Arrangements The changes to penalties and adjudication also commence on 15 October. Businesses subject to the relevant provisions should examine their existing statutory disclosures and information-management practices. What Will Change from 15 December 2026? Section 12 of the Amendment Act will come into force on 15 December 2026. This section substitutes Section 21 of the MSMED Act and concerns the composition of Micro and Small Enterprises Facilitation Councils. New Composition of Facilitation Councils The amended provision specifies that each Council must consist of at least three and not more than five members. The composition must include A Chairperson An officer not below the rank of Joint Director. Industry representation One or more office-bearers or representatives of micro or small enterprise associations. Legal representation At least one member from the field of law. The State Government may prescribe details relating to appointments, vacancies and procedures followed by Council members. Why Does Council Composition Matter? Facilitation Councils handle references relating to delayed payments to eligible micro and small enterprise suppliers. The way these Councils are constituted can affect their administrative functioning and the conduct of proceedings. By expressly requiring legal and industry representation, the amended provision changes the statutory requirements for Council membership. Businesses involved in delayed-payment disputes should identify the relevant Council and check any updated State Government notifications concerning its composition and jurisdiction. The notification does not specify the government's reason for allowing a later commencement date for this particular section. Who Will Be Affected by the MSME Amendment Act, 2026? The amendments affect different stakeholders in different ways. Stakeholder Relevant Change What It Means Micro enterprises Classification, registration and applicable payment-related provisions Review eligibility and supplier-related rights Small enterprises Registration and Facilitation Council arrangements Understand dispute-resolution and compliance changes. Medium enterprises Classification, registration and covered TReDS procurement Check provisions applicable to their category Central Public Sector Enterprises TReDS settlement and invoice disclosure Review procurement, finance and reporting processes State Public Sector Enterprises TReDS provisions where notified Check applicable State Government notifications State Governments Facilitation Council provisions Establish Councils and prescribe relevant arrangements. Buyers covered by statutory disclosures Revised disclosure and penalty provisions Maintain accurate records and follow applicable requirements. Impact on Micro and Small Enterprises Micro and small enterprises supplying goods or services to larger organisations may benefit from more structured payment-settlement arrangements.They should also understand the changes to Facilitation Councils, particularly where delayed-payment disputes arise. Impact on Medium Enterprises Medium enterprises are included within the registration and classification framework. The TReDS provision also expressly concerns procurement from micro, small and medium enterprises. However, businesses should not assume that every delayed-payment protection available to eligible micro and small suppliers automatically applies to medium enterprises. Impact on Public Sector Enterprises Public sector enterprises face some of the clearest operational changes. Covered entities should examine their invoice settlement, procurement documentation and statutory reporting arrangements. The applicable requirements will depend on whether the enterprise is directly covered by the amended Act or brought within its scope through a separate notification. Old vs New MSME Legal Provisions What Has Changed? The amendment changes specific legal provisions rather than replacing the entire MSME regulatory system. Compliance Area Earlier Position Position Under the 2026 Amendment MSME classification Earlier statutory classification framework Express reference to investment and turnover criteria MSME registration Earlier Section 8 registration framework Free and voluntary digital registration under substituted Section 8 TReDS settlement No equivalent Section 15A obligation Covered Central Public Sector Enterprises must route relevant invoice settlements through TReDS Facilitation Councils Existing statutory establishment framework Revised requirements for establishment and regular meetings Council composition Earlier membership provisions Three to five members, with specified industry and legal representation Invoice disclosure Existing Section 22 disclosure provisions Additional TReDS-related disclosure under Section 22A Penalties Earlier penalties under Section 27 Warning-based and graded penalty provisions for specified violations Adjudication Earlier enforcement arrangements Express adjudication and appeal provisions under Section 27A The earlier legal framework continues to matter. Businesses must read the amended provisions alongside the remaining sections of the MSMED Act. Will Existing MSME Registrations or Udyam Certificates Change? Businesses that already hold Udyam registration may be concerned about whether the amendment affects their existing registration status. The 12 October notification does not direct every registered MSME to apply again. Is Fresh MSME Registration Mandatory? No general fresh-registration requirement is created by this commencement notification. The revised Section 8 expressly provides for voluntary digital registration. Businesses should continue following the applicable official registration procedures and check whether any separate notification changes their reporting or updating requirements. What About Existing MSME Registrations? Section 17 of the Amendment Act contains a saving provision. It allows earlier actions and notifications under the original MSMED Act to continue, to the extent they are consistent with the amended law, unless revoked. This provides an important measure of legal continuity. It does not mean that every previous procedure will remain unchanged forever. Any future notification or prescribed procedure must still be considered. Should MSMEs Review Their Registration Information? Businesses should maintain correct information about their activities and enterprise status. Information that may be relevant to a registration review includes The registered business name and identifying details. Business activities and applicable classification. Investment and turnover information under the applicable rules. Existing registration records. Any officially required updates. These are practical review points, not a new document-submission list introduced by S.O. 5575(E). Enterprises unsure about eligibility or filing procedures may seek assistance from an MSME registration consultant, while remembering that the government's voluntary registration filing is free. New MSME Compliance Requirements Under the 2026 Amendment The amended law creates different duties for different stakeholders. TReDS Invoice Settlement Compliance Under Section 15A, Central Public Sector Enterprises must route relevant invoices through an RBI-authorised TReDS platform in the prescribed manner. The Central Government may notify additional covered authorities or entities. State Governments may also notify State Public Sector Enterprises and other entities. A business should therefore establish whether it is Directly covered as a Central Public Sector Enterprise. Covered through a Central Government notification. Covered through a relevant State Government notification. An MSME supplier affected by the invoice settlement arrangements. Invoice Reporting Compliance 22A deals with disclosures by covered entities. These disclosures relate to information about invoices that have been transmitted and settled through TReDS. Provisions relating to such disclosure shall be made by the concerned government. Accuracy of Statutory Information These penalty provisions, after amendment, shall be levied on certain breaches and offences, including wilful furnishing of false information in the memorandum of registration. Organizations need to ensure the correctness of information provided through relevant statutory processes. Facilitation Council Requirements The amendments also impose responsibilities on State Governments concerning the establishment and composition of Facilitation Councils. These are institutional responsibilities rather than universal filing duties for every MSME. Revised Penalties Under the MSME Amendment Act, 2026 The Amendment Act changes the penalty framework for specified violations under the MSMED Act. The revised Section 27 introduces warnings for certain first instances of non-compliance and monetary penalties for subsequent contraventions. Violation First Instance Second Instance Third or Subsequent Instance Wilfully false registration information or specified failure under Section 26(2) Warning Rs1,000-Rs50,000 Rs1,000-Rs50,000 Buyer contravention of Section 22 Warning Rs10,000-Rs50,000 Rs50,000-Rs1,00,000 The Act also provides for periodic adjustment of specified penalties in accordance with the statutory formula and relevant government notification. These amounts should not be confused with penalties for all MSME-related compliance failures. How Will Penalties Be Adjudicated? The inserted Section 27A provides an adjudication mechanism. The Development Commissioner is to act as the adjudicating officer for the specified penalties. A person facing a penalty must be given a reasonable opportunity to be heard. An affected person may appeal the adjudication order to the designated appellate authority within 30 days of receiving it. The law also allows delayed appeals to be admitted where sufficient cause is established. The appellate authority is required to dispose of an appeal within 60 days of filing. These provisions provide a defined route for adjudication and appeal rather than leaving every specified penalty to the earlier enforcement process. How Will the MSME Amendment Affect Businesses? The business impact will differ according to the size, activities and legal responsibilities of the organisation. Better Visibility of Invoice Transactions For public sector procurement, TReDS-related settlement and disclosure requirements may make invoice handling more structured. MSME suppliers dealing with covered entities may gain clearer visibility into the processing and settlement of eligible invoices. However, TReDS involvement does not automatically guarantee immediate payment in every transaction. More Attention to Registration Accuracy The revised digital registration framework makes it important for enterprises to understand their eligibility and submit accurate information. Businesses should distinguish official registration requirements from optional consultancy assistance. Changes to Delayed-Payment Institutions The establishment of additional Facilitation Councils may increase institutional capacity for handling eligible disputes. The revised composition requirements may also change how Councils are organised at State level. Actual results will depend on staffing, infrastructure, procedural rules and implementation. Operational Changes for Public Sector Enterprises Covered public sector enterprises may need to examine Existing supplier and invoice records. Procedures for identifying MSME vendors. TReDS-related settlement arrangements. Responsibilities of finance and procurement departments. Applicable reporting procedures. Record accuracy and internal controls. The required changes must be aligned with the law and relevant prescribed procedures rather than based on assumptions about the notification. Benefits and Challenges of the MSME Amendment Act, 2026 Potential Benefits for Businesses 1. Clearer digital registration framework The amended law provides an express basis for free and voluntary digital registration through notified platforms. 2. Greater emphasis on MSME invoice settlement The TReDS provisions place statutory responsibilities on covered public sector buyers. 3. Improved institutional arrangements Changes to Facilitation Councils may help States organise dispute-resolution institutions more effectively. 4. Procedure for defined penalties This provision clearly separates the warning, penalty, and appeal procedures for specified violations. 5. Improved regulatory clarity Companies can now tell what sections of the Act relate to registration, payment clearing, reporting or procedures within institutions. Challenges Businesses May Face Applicability Various sections will be relevant to various classes of businesses and authorities. Review of current practices Governmental organizations might have to consider whether their procedures for dealing with invoices comply with the revised approach. Implementation procedures Some provisions call for procedures to be laid down. Registration information Businesses should see that their statutory information is complete and in line with applicable requirements. Understanding commencement dates The Act contains provisions that are not brought into force by the 12 October notification. What Businesses Should Do Before the New MSME Rules Take Effect The immediate priority is to understand whether a particular amendment applies to the organisation. Before 15 October 2026 Bodies corporate must ensure that they Study the chapters from 15 October onwards. Check whether they are classified as micro, small, or medium enterprise. Find out about any settlement obligations under TReDS, if they apply. See what the requirements in procurement and invoicing are. Consider the penalty provisions that have been amended. Before 15 December 2026 Stakeholders concerned with Facilitation Councils should Review the revised composition requirements. Check relevant State Government notifications. Identify the Council having jurisdiction over a relevant dispute. Monitor any changes to Council membership and procedures. Recommended MSME Compliance Checklist Review Area Recommended Action Responsible Team MSME classification Check applicable notified investment and turnover criteria Management / Finance Udyam registration Review current information and official filing requirements Administration TReDS applicability Identify whether Section 15A directly applies Finance / Procurement Invoice records Check relevant settlement and disclosure information Accounts Statutory information Review accuracy of applicable filings Compliance Delayed-payment matters Identify the relevant Facilitation Council Legal / Finance Future notifications Monitor prescribed rules and commencement notifications Compliance / Legal The checklist provides practical review steps. It does not create additional legal duties beyond the applicable provisions. Risks Businesses Should Avoid The amendment is not difficult to understand once the different provisions are separated. Problems can arise when businesses treat all the changes as a single requirement. Assuming Every MSME Needs Fresh Registration The amendment provides for voluntary registration. The commencement notification does not instruct all existing MSMEs to register again. Assuming All Provisions Start on 15 October Section 12 begins on 15 December. Sections 8-10 are not covered by the commencement notification dated 12 October. Applying TReDS Requirements to Every Buyer Section 15A directly covers Central Public Sector Enterprises and permits expansion to other entities through notification. Businesses should check the actual coverage before treating the provision as universally applicable. Ignoring Revised Disclosure and Penalty Provisions Covered organisations should examine their obligations under Sections 22, 22A, 26 and 27, as relevant. Confusing Legal Requirements with Recommended Practices Maintaining accurate records and reviewing registration details are sensible business practices. However, a recommendation should not be presented as a compulsory filing requirement unless the law or applicable rules establish that duty. How Corpseed Can Help with MSME Registration and Regulatory Compliance Businesses dealing with registration, enterprise classification or compliance requirements may need assistance in understanding which rules apply to them. Corpseed provides support with MSME registration services and other related business compliance requirements. MSME and Udyam Registration Services Businesses planning to register as MSMEs may need help identifying their enterprise category, understanding eligibility and preparing accurate registration information. Corpseed can assist with relevant registration guidance and application-related support. The official government filing remains free and voluntary under the amended statutory provision. MSME Compliance Services Enterprises may require help understanding applicable statutory responsibilities, particularly when their business activities involve several registrations or government compliance requirements. Corpseed can assist with identifying relevant compliance areas and reviewing available documentation. Regulatory Compliance Services Businesses affected by new statutory provisions may require a review of their existing regulatory position. Such reviews may help identify where internal procedures need attention and which additional government notifications should be monitored. Business Registration and Documentation Support New and growing enterprises may need assistance with business registration procedures and related documentation. Corpseed can support businesses in preparing information for applicable registration processes. Compliance Gap Assessment An MSME compliance assessment may help businesses identify differences between their existing procedures and relevant legal requirements. This is particularly useful when an organisation has several departments responsible for statutory filings, procurement records or regulatory documentation. Looking for MSME registration or compliance assistance? Corpseed supports businesses with applicable MSME registration services, Udyam registration guidance, documentation reviews and regulatory compliance support. Businesses can contact Corpseed to discuss their registration requirements and the compliance issues relevant to their operations. Key Takeaways The MSME Development (Amendment) Act, 2026, changes selected provisions of the MSMED Act, 2006. The latest notification confirms when several of these changes will begin operating. The main points businesses should remember are 15 October 2026 Sections 2–7, 11 and 13–17 come into force. 15 December 2026 Section 12, concerning Facilitation Council composition, comes into force. MSME registration The amended Section 8 provides for free and voluntary digital registration. TReDS settlement Covered public sector entities must examine the requirements under Section 15A. Compliance and penalties The amendment revises specified disclosure, enforcement and adjudication provisions. Other provisions Sections 8–10 are not brought into force by the 12 October notification. Businesses should check their own responsibilities before making changes to registration, payment or compliance procedures.