Inclusion of Retail and Wholesale Sale Trades as MSMEs

On Friday, the Minister of MSME, Shri Nitin Gadkari, announced revised guidelines for Micro, Small and Medium Enterprises (MSMEs) that include retail and wholesale trades as MSMEs. The inclusion of retail and wholesale trades as MSMEs will benefit 2.5 crore retail and wholesale traders.  

In 2017, the Ministry of MSME excluded the retail and wholesale trades from the ambit of the MSMEs. With the inclusion of the retail and wholesale traders under the MSMEs, they will be eligible for priority sector advances by financial institutions and banks as per the Reserve Bank of India (RBI) guidelines.

Under the RBI guidelines, commercial banks should extend 40% of the total lending towards the priority sector. The small finance banks and the regional rural banks should extend 75% of the total lending towards the priority sector under the RBI guidelines.

The retail and wholesale traders can register themselves on the Udyam registration portal to avail of lending benefits provided to the MSMEs. After obtaining the MSME/Udyam registration, the retailers and wholesalers will get lower interest rates on bank loans, direct tax rebates and preference for government tenders. 

The retail and wholesale traders can avail immediate term finance from various schemes announced under the Aatmanirbhar Bharat programme. The inclusion of retail and wholesale trades as MSMEs will benefit the small and medium retailers and wholesalers having an annual turnover of up to Rs.250 crore. 

Shri. Praveen Khandelwal, Secretary-General of the Confederation of All India Traders, welcomed this move of the Ministry of MSME. He stated that the pandemic-affected traders would restore their businesses by getting the necessary finances from banks due to the inclusion of retail and wholesale trades as MSMEs.

The government has launched various schemes to help the MSMEs get access to funds to overcome the impact of COVID-19 on their businesses. Some of the schemes which help the MSMEs are the Emergency Credit Line Guarantee Scheme (ECLGS), Mudra loans, Credit Guarantee Trust Fund for Micro & Small Enterprises (CGT MSE),  Credit Guarantee Scheme for Subordinate Debt (CGSSD), etc.

Now, the retail and wholesale traders can obtain credit under the various schemes of the government by obtaining Udyam registration. By including the wholesale and retail trade under the scope of MSMEs, many small retailers and wholesalers hit by the pandemic will get help to resume and grow their businesses.

For any clarifications/feedback on the topic, please contact the writer at mayashree.acharya@cleartax.in

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