Another big announcement emerges as the Government of India continues its attempts to ease the burden on the pandemic-affected Indian economy. Retail and wholesale traders would now be deemed MSME, i.e., Micro, Small & Medium Enterprises, according to the government.
Retailers and wholesalers, which were formerly included in the MSME sector under the MSME Development Act of 2006, were removed from the sector in 2017. Unfortunately, the economy has suffered significantly due to the spread of Covid-19 and the subsequent lockdowns. As a result, the government appears to have made this choice to revitalise the economy and relieve the burden on retailers and wholesalers.
Industry organisations hailed the centre’s decision as “ground-breaking,” saying it will aid in the standardisation of the sector. This would benefit 2.5 crore merchants and wholesalers, who can reap the benefits of priority sector incentives from financial institutions by registering on the Udyam Registration Portal.
It is a free, digital, online registration gateway that allows for immediate registration. MSMEs that self-certify their business by registering on the portal are entitled to a wide range of advantages, including interest rate subsidies on financial loans, exemption from direct tax legislation, and electricity bill concessions. Aside from access to priority sector loans from banks, retail and wholesale trade firms can benefit from other MSMEs programmes.
This transition will also allow smaller retailers and traders to take advantage of the Reserve Bank of India’s COVID-19 Relief Resolution Framework, under which MSMEs with an annual turnover of up to 250 crore rupees and classified as standard as of March 31, 2021. They can benefit from this plan without being demoted to a different asset class. Traders can receive short-term financing through different programmes introduced as part of the Aatmanirbhar Bharat programme.
The ministry launched several initiatives to assist MSMEs in obtaining financing to help them overcome the repercussions of COVID-19 on their operations. The Mudra loans, Credit Guarantee Trust Fund for Micro & Small Enterprises (CGT MSE), Credit Guarantee Scheme for Subordinate Debt (CGSSD), Emergency Credit Line Guarantee Scheme (ECLGS), and other programmes that assist MSMEs to save their business.
Several measures introduced last year for the MSME sector would now apply to retail and wholesale traders too. Another major benefit is that traders can now take advantage of loans to the MSME sector known as priority sector lending (PSL). According to the RBI’s regulations, commercial banks should provide 40% of their total lending to the priority sector, while regional rural banks and small financing banks should allocate 75% of their total lending.
Retail and wholesale traders can now get financing under the government’s different programmes by registering with Udyam. By incorporating the wholesale and retail enterprises in the category of MSMEs, many small retail and wholesale enterprises affected by the pandemic will have a chance to restart and develop their businesses.