India
India is one of the world’s largest construction markets and has no construction-specific security-of-payment statute on the Australian or UK model. Instead, small construction subcontractors and suppliers rely on a general SME-protection law — the MSMED Act 2006 — which, where it applies, is one of the most aggressive delayed-payment remedies in this vault: a 45-day payment limit and statutory interest at three times the Reserve Bank of India bank rate, compounded monthly, with no discretion for any court to reduce it.
India [relates] MSMED Act 2006 MSMED Act 2006 [opposes] Global Subcontractor Payment Delays
The enforcement route is the MSME Facilitation Council (MSEFC): conciliation, then arbitration, to be concluded within 90 days, producing an award enforceable as a court decree — and a buyer wanting to challenge the award must first deposit 75% of it. On paper this is strong protection. In practice it is undercut for construction by a live legal controversy: Indian courts have split on whether the MSMED Act applies to “works contracts” at all, with several decisions holding composite, indivisible works contracts fall outside it. A construction subcontractor’s access to the strongest remedy India offers is therefore uncertain.
MSME Facilitation Council [regulates] Construction Payment Disputes India [supports] Construction Payment Problem
On conditional-payment clauses, India has no statutory ban like the UK or Malaysia, but its courts interpret Pay-When-Paid Clauses strictly against contractors. In the National Projects case the Delhi High Court refused to read a “back-to-back” subcontract as depriving a subcontractor of payment for completed work merely because the contractor had not been paid by the employer. India thus protects subcontractors through a combination of SME legislation and judicial interpretation rather than a dedicated construction-payment statute — a structurally patchier model than the security-of-payment markets.
India [relates] Pay-When-Paid Clauses
Connections
- MSMED Act 2006 — primary delayed-payment remedy for small subcontractors, source: 2026
- MSME Facilitation Council — statutory dispute forum, source: 2026
- Pay-When-Paid Clauses — interpreted strictly by Indian courts, source: 2024
- Construction Payment Problem — India exhibits it with patchy protection, source: 2026