Ease of Doing business for MSMEs: Wholesale and retail trading activities were earlier classified as MSMEs but a gazette notification dated June 2017 ousted them from the sector.
Ease of Doing Business for MSMEs: In a longstanding demand from retail and trade industry associations, Minister of MSME Nitin Gadkari today announced revised definition for MSMEs. Through a tweet, he announced that the MSME Ministry has issued an order to include retailers and wholesale traders under the MSMEs to extend the benefits of priority sector lending to them.
Gadkari wrote in a tweet, “Under the leadership of PM Shri Narendra Modi Ji, we are committed to strengthening of MSME and make them engines for economic growth. The revised guidelines will benefit 2.5 Cr Retail and Wholesale Traders.”
Wholesale and retail trading activities were earlier classified as MSMEs but a gazette notification dated June 2017 ousted them from the Micro and Small enterprises sector. Its rationale was that they are neither manufacturing units nor service units and hence, cannot obtain the Udyog Aadhaar Memorandum (which is called MSME registration).
With the revised guidelines the retail and wholesale trades will now be able to register on the Udyam Registration Portal.
The announcement has seen a positive response from the trade associations. Kumar Rajagopalan, CEO, Retailers Association of India (RAI), said that this is a landmark decision that will give retail MSMEs the support they need to survive, revive and thrive.
B.C.Bhartia, National President and Praveen Khandelwal, Secretary General of the Confederation of All India Traders (CAIT) said this move will benefit more than eight crore small businesses of the country. CAIT has been raising this issue for more than a year. They said in a press statement, “traders now will be able to avail requisite finances from the banks and financial institutions under Priority Sector Lending.” They could now also leverage several other Government schemes for the MSMEs.
However, there is also a flipside and the announcement has been criticised for increasing stress on the sector. Consortium of Indian Associations Convenor K E Raghunathan said that while the intention of the government to help the traders and wholesalers is commendable but including them in the MSME sector is not the right strategy. “It is a disastrous move that will dilute the MSME sector that is already quite vast and struggling for its survival.” The reasons, says Raghunathan, are aplenty. For one, good quality MSME data is nearly absent in the country, and including over 2.5 crore traders and retailers will further complicate the issue. It will be much more difficult to map data points around micro, small and medium enterprises according to the industry and sector in each district and state. “It will also be difficult to estimate and analyse the problems prevailing in each sector, thereby making it difficult to introduce the right provisions at the right time,” he said. Also, existing support to MSMEs through Government e-Marketplace portal, quantum under priority sector lending, payment outstanding redressal by state facilitation centers will be weakened with such a large addition, he added.