03 Jul , 2021 By : Kanchan Joshi
NEW DELHI: The inclusion of retail and wholesale traders as micro, small and medium enterprises (MSMEs) will help in the formalisation of India’s retail trade and enable financial support to small and mid-sized retail businesses, industry body Retailers Association of India (RAI) said
This follows Union minister of MSME and road transport and highways Nitin Gadkari on Friday announcing revised guidelines for MSMEs with the inclusion of retail and wholesale trades as MSMEs. The revised guidelines will benefit 2.5 crore retail and wholesale traders, the minister said.
Retail and wholesale trade were left out of the ambit of MSME so far, but now under the revised guidelines, retail and wholesale trade will also get benefits of priority sector lending under RBI guidelines, the government said.
With the revised guidelines the retail and wholesale trades will now also be allowed to register on Udyam Registration Portal.
"...This landmark decision will have a structural impact for the sector, helping it get formalised by giving better finance options for businesses that want to get structured. It will give retail MSMEs the support they need to survive, revive and thrive," said Kumar Rajagopalan, chief executive, Retailers Association of India (RAI).
To be sure, retail trade was not classified under micro and small enterprises, as a result, retailing didn’t come under the priority sector.
In fact, RAI has in the past made multiple representations to various authorities, including one to Gadkari seeking the restoration of MSME status for retailers that was withdrawn in 2017.
The sector provides employment to millions - it is also largely unorganised with scores of small traders selling a wide range of goods.
Small and medium retailers represent 80% of member base. These are entrepreneurs with turnover ranging from Rs1 crore to Rs250 crore. Further, the remaining 20% large retailers work closely with a majority of SME and MSME vendors, RAI said in its statement.
Loans given to the MSME sector come under priority sector lending. The objective behind primary sector lending is to promote agricultural and labour-intensive businesses in the economy and hence loans are available at concessional rates.
Due to withdrawal of MSME status retailers were forced to either borrow at a higher rate or from informal financial sources, RAI said.
The pandemic has been particularly hard on small businesses—this is especially true for those engaged in non-essential retail.
The inclusion will now help retails seek better benefits and help boost their business.
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