Retail and wholesale trade were left out of the ambit of MSME. Under the revised guidelines, MSME has issued order to include retail and wholesale trade as MSME and extending to them the benefit of priority sector lending under RBI guidelines. The revised guidelines will benefit 2.5 Cr Retail and Wholesale Traders.
MSME borrowers with up to Rs 25 crore outstanding and Rs 100 crore turnovers will be eligible for the emergency credit line to their businesses under the package with loans having a four-year tenor with moratorium of 12 months on the principal repayment. However, retailers with around Rs 100 crore of revenue will not be able to avail themselves of the loans as they are not classified as MSMEs.
Many retailers across the country, from optical chains to large franchisee operators of global brands and standalone local business with less than Rs 100 crore of sales, have said they should also stand to benefit from the stimulus packages for the medium sized enterprises.
“MSME has a very vague definition and they have to be either a manufacturer or into other services and they say retailers are not part of services,” said Akshay Jain, managing partner at Greenways, which operates fou ..
Commenting on the development, Confederation of All India Traders (CAIT) said, with this decision, traders will be able to avail requisite finances from banks and financial institutions under priority sector lending.Besides, now the traders can avail the benefits of several other government schemes for MSMEs, it said in a statement.
Kumar Rajagopalan, CEO of Retailers Association of India (RAI) said that this is a major boost to smaller retailers across the country, especially since this has been a specific ask of the industry since last year. Currently, 95 percent of the retail industry in the country are MSMEs and this move is set to benefit 13-14 million retailers in India.
“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,” he said.
What is MSME
In India, MSMEs contribute nearly 8% of the country’s GDP, around 45% of the manufacturing output, and approximately 40% of the country’s exports. It won’t be wrong to refer them as the ‘Backbone of the country.’
The Government of India has introduced MSME or Micro, Small, and Medium Enterprises in agreement with Micro, Small and Medium Enterprises Development (MSMED) Act of 2006. These enterprises primarily engaged in the production, manufacturing, processing, or preservation of goods and commodities.
