Government includes retail and wholesale trades as MSMEs

The government in June 2017 removed retail and wholesale traders from the MSME category.

As per the existing definition of MSMEs, enterprises in the manufacturing and service categories are considered to be MSMEs.

Earlier in 2021, Retailers Association of India (RAI) had also made representations to the government for the restoration of MSME status to the traders.

Retail and wholesale trade was not classified under Micro and Small enterprises and hence doesn’t come under the priority sector.

Loans given to the MSME sector come under priority sector lending. But the non-inclusion of retail and wholesale traders as MSMEs had denied them of this benefit.

Apart from agriculture, the loans given to MSME sector also come under the ambit of PSL and as per the RBI's guidelines, commercial banks should extend 40 percent of the total lending towards the priority sector while for the regional rural banks and small finance banks, the PSL target has been set at 75 percent of the total lending.

As per the statement by the MSME Ministry, the retail and wholesale trades will now be allowed to register on the Udyam Registration Portal.

On June 26, 2020 the Ministry of Micro, Small and Medium Enterprises issued a notification changing the definition of MSMEs and introducing a new process for enrollment known as Udyam Registration.

MSMEs, which self-certify their existence by registering on the government portal, are eligible for a wide variety of benefits ranging from interest rate subsidy on bank loans, to exemption under direct tax laws and concession in electricity bills, among others.