Trader associations question denial of delayed payment benefits to retailers and wholesalers

The supply of branded as well as unbranded essential goods to kirana stores has suffered due to the lockdown.

Retail and wholesale trade associations have questioned a recent government notification that denies them access to redressal on account of delayed payments by their customers.

Retailers and wholesalers cannot approach MSME Facilitation Councils with their grievances over delayed payments, the micro, small and medium enterprises said in a notification earlier this month. MSME Facilitation Councils have been set up at the state level to help settle disputes arising out of delayed payments to small businesses by government departments, ministries and central public sector enterprises.

The ministry clarified that benefits related to delayed payments are restricted to the priority sector lending (PSL) category.

Although MSME and agriculture are included in the PSL category, retailers and wholesalers were dropped from this classification four years ago because they were not considered manufacturing or service units. However, the Union government reinstated retail and wholesale traders as MSMEs in July.

“Firstly, we must be thankful that retailers and wholesalers are looked at as MSMEs. This country has millions of retailers and wholesalers. If they are not included, it’s not fair,” said Kumar Rajagopalan, CEO of the Retailers Association of India.

According to Rajagopalan, priority sector lending alone will not help – retailers and wholesalers must be treated as full-fledged MSMEs.

“While priority sector lending is a good start, we don’t know why exclusions of this kind have been made,” he added.

Rajagopalan said there are specifications for MSMEs to participate in government tenders that exclude retail and wholesale MSMEs.

“Retailers and wholesalers are now being considered MSMEs, so what is the reason that we are being denied so many benefits?” asked Praveen Khandelwal, secretary general of the Confederation of All India Traders. “We are being treated as MSMEs, so by default we should be eligible for all the benefits being given to manufacturing and service MSMEs.”

According to the statement by the MSME ministry, retail and wholesale traders will be allowed to register on the Udyam Registration Portal to avail of the ministry’s schemes and programmes.

Apart from agriculture, loans given to the MSME sector come under priority sector lending.

As per the existing definition, enterprises in manufacturing and service are considered MSMEs. The government had removed retail and wholesale traders from the MSME category in June 2017, saying that they were neither involved in manufacturing nor were they service units.

But the exclusion of retail and wholesale traders in the definition of MSMEs has denied them this benefit.

Commercial banks are required to extend 40 percent of their total lending to the priority sector, while the PSL target for regional rural banks and small finance banks has been set at 75 percent of total lending.